What are crypto and Web3 wallets?
Wallets in Web3 go by a couple of different names. Some call them crypto wallets, others refer to them as Web3 wallets.
Neither is wrong and they're simply different terms for the same thing.
Web3 wallets offer a pretty unique service.
They're basically your gateway to...
- Interact with decentralized applications
- Access bankless financial services
- Collect and store digital assets (like NFTs and Crypto)
- Store on-chain identity data & credential
- Collaborate with various types of communities
They offer huge functionality.
It's a centralized address and identity in Web3 that you can use to log into dApps, send and receive messages (with a good Web3 CRM), store assets, and engage with others in the space.
Wallets really are a great addition to the tech world.
What is the best crypto and Web3 wallet?
There is no one best. Each wallet has specific functionality and usage. You need to match the wallet that answers your needs and helps you engage with the platforms you want to.
generally speaking, wallets fall into one of two categories.
- Hardware wallets (also called cold wallets)
- Software wallets (also called hot wallets)
Let's look at the difference and then look at the best options for each.
What’s the difference between a crypto hardware wallet and a software wallet?
A software wallet - sometimes called a hot wallet - stores your private key on your computer.
While hardware wallets store your keys on a separate device that has to be manually linked to the internet, software wallets store your keys on your desktop or mobile device.
While this is more convenient and means you have more recovery options should you lose your key, it’s also more susceptible to hacking attempts.
And if someone gets your software wallet key they have full access to your investments and can take any action they want - including sending themselves your currencies.
You can reduce the chance of this by linking software wallets with a 2FA app (highly recommended).
Here's a quick and dirty suggestion on how to use these.
Soft wallets - use for daily usage and to connect to dApps in the space (great for general Web3 engagement)
Hard wallets - Use to store large amounts of crypto or assets
What is a Web3 hardware wallet?
Hardware wallets are, currently, the most secure method of storing your crypto investments.
They store your private key - which is the critical piece of information needed to access and move your crypto investments - in a device that’s not connected to the internet.
In effect, it isolates the information that could be used to hack your investments and removes it from easily hackable elements like your desktop or mobile device.
If you’re using a software wallet and someone hacks your computer, they have the key to access your investments.
Hardware wallets simply store the key in an offline environment so, even if your computer is hacked, the key is stored in a separate location thus thwarting the attack and theft.
The best Web3 hardware wallets
As mentioned above, you';ve got to choose the wallet that best fits your needs.
The below are simply a shortlist of the most popular. Before you jump in on one, make sure you read the customer reviews to understand if it really is the best option for you.
Most popular hardware wallet
Ledger produces some of the most popular hardware wallets.
Ledger wallets look like a typical USB thumb drive but with a steel shell for added durability.
The device can be connected to any mobile device or personal computer with a USB or Bluetooth interface making it even more secure.
In addition, it supports over 30 cryptocurrencies including Bitcoin, Ethereum, Dash, Litecoin, Tron, and more. This makes the Ledger Nano X one of the most versatile hardware wallets on the market today.
Ledger has become increasingly popular due to its comprehensive marketing efforts featuring secure multi-faceted protection and convenience.
With superior connectivity options through Bluetooth or USB connection and mobile support, it is well loved by both beginners and experienced users alike.
they're also highly trusted as Ledger themselves work with a lot of the top brands in the crypto space to help them secure their project assets.
Ledger offers 2 key hardware wallets.
The Nano X which is slightly more expensive and comes with more features.
The Nano S is more of an entry-level model but is still really quite good.
The Trezor Model T is a wallet from Satoshi Labs.
As the original provider of hardware wallets, this latest model features a touchscreen interface that allows for easy setup and operation.
It supports countless cryptocurrencies including Bitcoin, Dogecoin, Namecoin, Dash, Ethereum, and more so you never have to worry about them being incompatible with your wallet.
With the Trezor wallet, you can easily convert any of your stored cryptocurrencies into fiat currency with just the press of a button.
The exchanges inside the wallet also come with many functionalities such as atomic swap which helps users swap one cryptocurrency to another in a safe and secure manner.
Moreover, its integrated fiat exchange makes it easier than ever to get started in the world of crypto investing.
Great entry-level wallet
The KeepKey hardware wallet stands out among its competition for a number of reasons.
Aesthetically, it has a beautiful design with a rugged metal case, and its screen is larger than those of other hardware wallets.
Additionally, for less than $50, it is an incredibly cost-effective solution to securely store your cryptocurrency.
KeepKey was acquired by Shapeshift back in 2017 which resulted in full integration with the Shapeshift platform and its exchange which can be directly accessed from within the KeepKey wallet itself.
All your account management can then be done via the Shapeshift Platform when the device is plugged into a computer via USB.
What is a Web3 soft wallet?
Web3 hot or soft wallets are a little different to heir hardware counterparts.
These wallets generally work as browser extensions.
They're far more convenient than having to check your hardware wallet and approve transactions. But that convenience comes with an added risk of the wallet being more susceptible to hacks.
Because the wallet is always connected to the internet it has more possible potentials for being hacked.
That said, what most people do is use a hot wallet to interact with dApps as they're super easy to use.
Then, after they've bought an asset they want to hold, they simply move those funds to a hard wallet.
The best Web3 soft wallets
The soft wallet game is dominated by a few major players.
These are all generally free to use and it's really just about who they integrate with and whether you like the UI.
Below are the most popular in the soft Web3 wallet categories.
Most popular hot wallet
MetaMask is probably the most popular hot wallet around.
It's an open-source browser extension that enables users to easily access Ethereum-based applications without having to run the Ethereum node themselves.
It can store any token, asset, or crypto built on Ethereum, totaling more than 700,000.
MetaMask integrates with various Web3 applications that require crypto transactions for their functionality and boasts mobile and browser-based wallets for convenient use.
However, it lacks a desktop app and does not offer staking directly in its app either, though there are compatible apps on the web for easily staking tokens.
Overall, MetaMask provides an intuitive way of safeguarding assets from external threats as well as providing access to multiple dapps via one convenient platform.
Good Solana wallet
The Phantom crypto wallet is a secure, lightweight wallet that supports a variety of cryptocurrencies that works on Soalana (and is soon to come to Ethereum and Polygon).
It offers users an easy-to-use interface for managing their crypto assets, trading between coins, staking assets and more. It also offers a built-in exchange that provides users with quick access to the most popular exchanges on the market.
The wallet is open source and has been tested by security researchers to ensure maximum security of your funds.
One thing I love is that the Soalana wallet looks out for you when logged in. For example, I tried to go to MetaMask (.) com. This is not the real MetaMask site and has probably been snapped up by a phishing scammer hoping to drain some wallets.
Phantom sent me this warning in my browser saving me potential lost funds.
Great bitcoin wallet
Electrum is a hot wallet that stands out among its peers for its private key encryption and two-factor authentication.
It's basically more secure for users’ funds. Electrum works to ensure that all bitcoin transactions are validated by the blockchain and stored in a secure environment.
Additionally, the wallet offers an impressive variety of interfaces, from mobile and desktop solutions to a command line interface, allowing users to optimize their user experience according to their needs.
Moreover, Electrum provides integration with other popular wallets including Ledger, Trezor and Keepkey, alleviating any issues relating to compatibility or cross-usability between different wallets.
This means you can enjoy seamless navigation between various tools under one umbrella.
Last but not least, Electrum’s cold storage feature allows you to spend bitcoin without being connected online; instead it involves signing transactions from your offline computer which gives you an extra layer of security if desired.
Best of both worlds with electrum.
Should you use a crypto hot or cold wallet?
If you're just getting started in the space, go with something like MetaMask.
It'll help you ease into the space without having to worry too much about setting everything up.
Hot Web3 wallets are easy as there's no cost involved. You can try one out and, if you don't like it, simply move. Just make sure you don't leave funds or assets in a wallet you no longer want to use.
Eventually, you'll need a combination of hot and cold wallet (which is terrible UX someone needs to solve).
If you're wondering when you make the switch to start also using a cold wallet, here's a little advice.
When should you get a crypto hardware wallet?
There's no hard and fast answer on this.
It really depends how comfortable you are with risk when it comes to your finances.
However, our advice is to think about the amount of money you feel comfortable keeping in your house as fiat cash before you'd go to the bank.
If you feel comfortable keeping $500 in your home, then $500 in crypto is where you should draw the line and purchase a good hardware wallet.
If you're like me and have been cashless for some time, I'd say that $1000 is the limit.
As soon as you have $1000 in crypto assets, get a hardware wallet to ensure they stay safe and secure.
How to choose the best crypto hardware wallet
The recommendations above are all solid choices when it comes to choosing a hardware wallet. And all will help you better secure your crypto.
However, knowing which one is right for you can be a difficult task.
Before you jump in and start looking at which to buy, I’d recommend using the below decision-making flow to find which best suits your purposes.
If you can’t afford to drop $250+ on a wallet, don’t get drawn in to the higher price options.
The money you’d save here would be better spent on necessary bills or in investing in your portfolio.
All of the above-recommended wallets are secure. Get what you can within your budget now, then upgrade later.
Asset volume and value
All of the above-recommended hardware wallets will improve security of your crypto holdings.
However, you also need to consider the value and volume of trades you;re making.
If you’re trading between multiple currencies, then you might be better off splashing out a little more cash to get one of the more expensive wallets that support a higher number of currencies.
Currencies you invest in
If you’ve narrowed your search down to the hardware wallets within your budget and that would fit your portfolio’s scope, you need to check whether or not it supports your primarily traded currencies.
For example, if you invest primarily in $LUNA, but your wallet doesn’t support it, then it needs to be discounted.
If you follow these three simple questions you should be able to find a wallet that fits your needs.