Digital wallets for cryptocurrency can be defined as an account where you store your cryptocurrency. Basically, it’s a software application that stores your cryptocurrency while offering security, reliability and ease of use.
In essence, cryptocurrency wallets can be categorized in two distinct types:
- Custodial
- Non-custodial
Custodial wallets are usually offered by crypto exchanges where users can trade and store their cryptocurrency. In custodial wallets, users do not hold the private key to their funds and rely on the service provider for the safety of their funds. For example – Binance, WazirX.
Custodial wallets have their own set of value-proposition and shortcomings. As mentioned earlier, trusting a centralized party to hold your funds is one of the major shortcomings of custodial wallets. However, custodial wallets also offer pros such as – avoiding the hassle of key-management, less transaction costs.
Non-custodial wallets, on the other hand, offer private keys to the users. In essence, when you hold the private keys, you truly hold the funds. However, in case, if you lose access to private keys, there’s no way to restore your funds.
Non-custodial wallets can be further sub-categorized in three different segments:
- Hardware Wallet
- Paper Wallet
- Browser-extension Wallet
Hardware wallets are a type of non-custodial wallets that come with a dedicated hardware device with a software application pre-installed in them. These kind of wallets allow you to safely store your crypto assets in case you lose your laptop or smartphone. Hardware wallets also allow users to keep their funds disconnected from the internet – thereby ensuring an additional layer of security. Example – Ledger, Trezor, Opendime, etc.
Paper wallets are yet another offline mechanism to store your crypto funds. Paper wallets are essentially a way to physically write down your private key in a piece of paper and placing it in a locker.
Browser-extension wallets are one of the modern solutions of non-custodial wallets. As the name suggests, these wallets can be installed as a browser-extension and allows you to interact with Web 3.0 applications. For example – MetaMask, Terra Station, etc.
Now that we’ve understood the type of digital wallets for cryptocurrencies, let’s have a look at the top crypto wallets.
Electrum Bitcoin Wallet
Known as one of the first mover wallets in this space, Electrum wallet has been here since 2011. It is a non-custodial wallet offering users a private key for their wallet. It is a widely adopted wallet application and also supports the compatibility with most of the hardware wallets.
Electrum wallet is available for Windows, Linux, MacOS, and Android.
Key Features:
- Locally stored private keys
- Funds can be recovered using seed phrase
- Decentralized servers
- Offers multisig feature
Exodus
Exodus is known amongst the leading crypto wallets with trust and credibility. The Exodus wallet is available for desktop, mobile, as well as a hardware wallet. It supports 100+ crypto assets and also allows users to manage crypto assets in Exodus from their hardware wallets such as Trezor.
Key Features:
- 24/7 Human Support
- Desktop sync with 12-word seed phrase
- Easy to understand user interface
- Encrypts private keys and transaction data locally on your device
Trezor Hardware Wallets
Trezor offers a range of hardware wallets to safely store your Bitcoin and other cryptocurrencies. You can easily plug the hardware wallet into your smartphone or computer to access your funds. In case you lose the device, Trezor also allows you to recover access to our funds with a 12/24 words long recovery seed.
Key Features:
- Intuitive and convenient interface
- Additional security with offline storage of funds
- Good track record
- Audited by security researchers
- Supported platforms; Mac OS, Linux, Windows
MetaMask
MetaMask is a browser-extension wallet opening the gateway to Web 3.0 and blockchain apps. It is available as a browser extension as well as a mobile app, allowing users to interact with blockchain based apps known as DApps.
It’s a non-custodial wallet allowing you to generate and store your private keys along with a backup phrase. However, MetaMask only supports Ethereum blockchain
Key Features:
- Equips users with a key vault
- Offers token swap and exchange
- Interact with decentralized exchanges (DEX)
Trust Wallet
Owned by Binance, Trust Wallet is a non-custodial wallet offering users to hold the private keys and store them locally on users’ devices. It supports approx 160+ crypto assets including Bitcoin, Ethereum, BNB, and more.
Similar to MetaMask, it also allows users to interact with decentralized apps with a built-in browser available for mobile users. The wallet is available for desktop users as well.
Key Features:
- Buy crypto right from the wallet
- DApps browser
- Option to earn interest on your crypto assets
- Track price charts within the wallet
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