The Best Crypto Wallets of 2024

What is a Cryptocurrency Wallet?

A cryptocurrency wallet can be termed as a hardware device, a software program, an online platform or a piece of paper that enables you to easily store private keys and public keys associated with cryptocurrencies.

Although you’re free to pick various brands, types, and designs, the basic purpose of a physical purse/wallet remains the same—to keep your money safe and handy. The same is accomplished with the help of a crypto wallet. While you can opt from multiple varieties, a cryptocurrency wallet’s basic purpose is to keep your cryptocurrencies safe.

Types of Cryptocurrency Wallets

A Crypto wallet can be categorized into multiple groups based on how they are used and the level of security they provide for crypto storage. All of them have their own respective pros & cons. It all boils down to which one you find the easiest to use, how good a job it does at protecting your private keys, and how well it meets your overall requirements. Let’s shed some more light on these popular crypto wallet types.

Hot Wallets

A hot wallet is a digital wallet that is connected to the internet. It enables the user to easily send, receive and store a cryptocurrency, thus making it a handy tool for anyone who indulges in frequent cryptocurrency transactions. However, because hot wallets stay connected to the internet, they’re more vulnerable to theft and hacking attempts compared to cold wallets which stay offline.  Almost all the well-known desktop, mobile and web wallets fall into this category.

Cold Wallets

A cold wallet is a physical device used for storing cryptocurrency-related information inside it. What sets it apart from a hot wallet, and is also its biggest selling point is that it’s not constantly connected to the internet (cold storage) and is, therefore, more secure than its online counterpart.

You can connect your cold crypto wallet to the internet (not paper wallets though) whenever you wish to execute a transaction. Both paper wallets and hardware wallets fall into this category, with the latter being more popular owing to their ease of usage and accompanying customer wallets support.

Cold Wallets vs Hot Wallets

As highlighted above, when it comes to hot vs cold wallets, their biggest difference is that while the former is connected to the internet, the latter isn’t. There are various reasons why someone might prefer their crypto assets to be disconnected or connected to the internet.

Hence, it’s not uncommon for people to own multiple crypto wallets. Unlike the hardware-based cold crypto wallet, the good ones among which are often above the $100 mark, hot wallets are usually free-of-cost and can hold multiple cryptocurrencies. Furthermore, hot wallets can be either custodial or non-custodial in nature, but cold wallets are almost always non-custodial wallets.

Hardware Wallets

Many consider a hardware wallet to be the most secure way of storing cryptocurrencies. It is a physical device, usually the size of a USB drive, with its own buttons and OLED screen to navigate through its interface. The main purpose of a hardware wallet is to safely store your public and private keys, and enable you to interact with crypto blockchain whenever you need to send or receive the cryptocurrency.

This device stays offline and is only connected to the internet when you need to transfer funds to anyone. The only way you can access the contents of a hardware wallet is by entering its private pin, making it almost impossible for any hacker to obtain your keys. The majority of good crypto hardware wallets cost upwards of $100 and allow storage of multiple cryptocurrencies.

Paper Purses

A crypto paper purse or paper wallet is nothing but a piece of paper that contains printed information about a cryptocurrency’s public address and private keys. While paper wallets may give the impression of being the safest form of cold wallet, as there’s no way anyone can reach it from the internet, it’s risky in its own unique ways.

In fact, it’s considered the riskiest type of cold wallet, as it can get thrown into the trash, get crumpled, splashed with or soaked in water or just get blown away by the wind! Having said that, nothing can take away from the fact that paper wallets are the most malware-free wallet you can have.

Mobile Wallets & Desktop Wallets

A desktop wallet is downloaded & installed on a personal computer/laptop and can be either a hot or a cold wallet depending upon how actively it stays connected to the internet. Available for all popular operating systems including Windows, Linux and Mac, it offers a healthy combination of convenience and security.

Please note, it’s very important to use a good anti-malware, antivirus software and a solid firewall, with a desktop wallet to ensure its safety.

Mobile wallets are a type of hot wallet that runs as a mobile application on a Windows, iOS or an Android phone device. This wallet offers quick access to the stored cryptocurrencies and is ideal for anyone who prefers shopping with them on a regular basis.

How do Cryptocurrency Wallets Work?

Before getting into how cryptocurrency wallets work, it’s important to understand what public and private keys are. Whenever you store a cryptocurrency in a wallet, you’d be provided with a private key and public key associated with the wallet. We can use the analogy of an email address to understand this better.

For instance, if you wish to receive email from someone, you’d give out your email address to them and then they can send an email to that address. However, if you wish to send an email out, you’d need to enter your password and then use the email service to send it.

The same way, anyone wanting to send cryptocurrency to you can use your public key to send it. However, if you wish to send cryptocurrency to someone, you’d need to enter your private key and then process the transaction. Hence, only you or anyone else who knows the private key can use the wallet to send the cryptocurrency. The private key must not be shared and should be kept safe at all times.

The same process is followed whenever you use a crypto broker/exchange platform or any P2P network to buy/sell cryptocurrency. Whenever you buy a cryptocurrency, it will be sent to you using the address associated with your public key and whenever you sell cryptocurrency, you’d need to authorize or complete the transaction using your private key.

Key Things to Consider When Choosing the Best Cryptocurrency Wallet

Now that you’re aware of different software wallets, hardware wallets and how they work, you should ascertain your expectations from a crypto wallet and then make a decision about the type of wallet you’d like to use. Let’s look at some commonly known factors that must be considered in this regard:

• The purpose – If your purpose is to buy cryptocurrency and then hold on to it for the long-term, you’d be better off with a cold wallet. On the other hand, if you wish to make frequent purchases with cryptocurrency, a hot wallet like a mobile device wallet or an online wallet would be more suitable for you.
• Security features – You should look at the various security features offered by the cryptocurrency wallet, including multi-sign-on functionality and two-factor authentication.
• Single currency or multi-currency capability – It’s also important to consider if you’d like to transact in just one cryptocurrency or would require multi-currency capability in your crypto wallet.
• Ease of usage – It’s important to pick a crypto wallet that matches your technical knowledge of cryptocurrencies. If you’re new to these currencies, it’d be better to go with a wallet that has an easy-to-understand user interface and can be used by anyone with minimum knowledge of cryptocurrencies.
• Cost – While the majority of the crypto wallet comes free-of-cost, some, for instance, hardware wallets can require a nominal investment.
• Security –  A hardware wallet offers increased security over that of online wallets but comes at the cost of convenience for that cold storage.

Final Thoughts on Crypto Wallets

To conclude, we’d like to emphasize that a crypto wallet plays an important role in the present-day crypto economy and give new users the confidence to invest in and use cryptocurrencies. In this detailed guide, we informed you about the meaning of crypto wallets, different types, how they work, their pros & cons, what you should look for in them and the best cryptocurrency wallets in 2024.

Methodology - How We Test and Compare Cryptocurrency Wallets

There are lots of different software and hardware wallets available in the cryptocurrency space. In this article, we have focused on a selection that satisfies different needs according to what the user ultimately wants to achieve.

With each wallet, whether a hot wallet, DeFi wallet or hardware wallet, we tested them rigorously to see how they performed in different scenarios. Things we looked for were:

• Ease of use: How easy was it to set up the wallet and start using it?
• User experience: Once set up, what was the experience of using the software like?
• Security and safety: How safe were funds when stored in the wallet?

With the hardware wallets we looked at, we tested them against each other to find their inherent strengths and weaknesses and included our findings in the pros and cons section for each.

With hot wallets, ie those connected to exchanges, we were more focused on ease of use and transaction speeds. Other considerations in our research included:

• What the unique selling points for each wallet were
• Any standout innovations the teams behind them had brought to the space
• What add-ons they had made available, such as debit cards enabling wallet holders to use their cryptocurrencies in the real world

Find out more on how we test and how we fund our site.