Not all wallets are alike. Different wallets are used for different things, just like how you have a checking account, savings account and investment accounts with the banks! Let’s break down each wallet type.
The first step to acquiring crypto is usually a crypto exchange, which is why its so counter intuitive that it can be the least secure place to store your crypto! We all heard what happen with FTX. Let’s hope that never happens again, and certainly never happens to you!
A few exchanges still come highly recommended as they’ve been around since the beginning of the crypto industry. Being that they still hodl your crypto on your behalf, nothing stops them from freezing your account (just like a bank). However when it comes to security and truswortyness, these exchanges reign supreme. Honestly, we recommend opening an account with both just incase one gives you trouble - than you’ll have a backup:
- Coinbase - Primary fiat bridge because of simple free swaps between fiat and USDC.
- Kraken - Easy to setup business and trust accounts, so used for self managed 401ks
Like an exchange, if the wallet doesn’t mention a seed phrase or private key, that means they’re holding the crypto on your behalf. As long as they allow you to withdraw the crypto, custodial wallets can act as a good starting point on your crypto journey.
Any time a custodian offers to pay you interest for hodling your crypto, that means they're lending your assets to earn interest for themselves and giving you a cut. Do you want your crypto being lent out? The choice is yours, however people who used BlockFi for example would probably recommend against it. A few custodial apps we recommend include:
- Strike - Pay any bitcoin address with money from your bank account (Signup with our link to get $5 FREE!)
- Cash App - Crazy simple way to stack sats and make crypto payments from your phone (Signup with our link to get $5 FREE!)
- Crypto.com - Has a great debit card as well which you can top up with crypto (Signup with our link to get $25 FREE!)
You hodl the power, but with great power comes great responsibility. Learn how to safely protect your private key when taking custody.
Hot wallets are wallets connected to the internet making them less secure. For example, every wallet on your phone is a hot wallet. Think of a hot wallet like a checking account. Hot wallets are great for tinkering with crypto, ecommerce stuff and sending/receiving crypto between friends but it is not recommended for hodling large balances.
- Coinbase Wallet - Not to be confused with Coinbase the custodial app, they also have a wallet which allows you to hodl your private key.
- BitPay - A great wallet for managing your business due to multisig features and ability to export to a spreadsheet.
- Metamask - The defacto DeFi wallet
For larger balances we want to create our private key and manage crypto transactions off line. Hardware wallets are to be treated more like a savings account.
- Ledger - Best in class hardware wallet, more DeFi integrations than Trezor.
- Trezor - Also a top hardware wallet, more Bitcoin focused but still supports many altcoins.
Cold Storage Interfaces
These wallets can be used as hot wallets as well, however their best used in combination with your hardware wallet.
- MetaMask - The most popular Ethereum DeFi wallet, safest when used as the interface for your hardware wallet.
- Electrum - Advanced bitcoin features allow you label your transactions and select specific utxo's when spending.
- Coinbase Wallet Extension - Coinbase Wallet, a hot wallet app for your phone, also offers a browser extension which you can use as an interface for your Ledger hardware wallet.
- Frame - A privacy focused, cross chain wallet for EVM compatable chains like Ethreum, Fantom, Polygon, etc.
For large savings and situations with multiple stakehodlers you'll want advanced security. Multisig wallets require multiple parties to verify a transaction before spending.
- Casa - Company focused on Bitcoin multisig exclusively
- Unchained Capital Vaults - Next level multisig vaults by hardcore bitcoiners
- Gnosis Safe - Biggest name in Ethereum multisig wallets
Written by: @gerbz Gerbz is the founder of BitLift and has been journeying down the crypto rabbit hole since 2013.