Stellar is a decentralised payment ecosystem created to provide a global financial network, in which people, payment systems and banks can freely transfer funds in a secure, cheap, and quick way. The native cryptocurrency of Stellar is called Lumens (XLM), which powers this network and is critical for its survival. A Stellar wallet is crucial for any crypto buyer who wishes to store XLM for short-term or long-term purposes. This guide will share some important details related to Stellar wallets including their workings, types of crypto wallets, how to pick a good wallet, and the best Stellar wallets in 2021.
Our List of the Top Stellar Wallets
The cryptocurrency market is flooded with a huge variety of crypto wallets, each one being marketed as better than others. So how do you pick a good Stellar wallet? To help you out, we have shortlisted some of the best Stellar wallets with their distinct advantages and features.
What is a Stellar Wallet?
A stellar wallet can be defined as a crypto storage medium, which can be in either an online platform (web wallet), a hardware device, a desktop software, a mobile app or even a printed piece of paper that safeguards the private and public keys associated with your Lumens (XLM). Except for paper wallets, the other kinds normally allow you to buy/sell Lumens and stay updated about your XLM balance too, by interacting with the Stellar platform’s blockchain.
The primary purpose of a Stellar wallet can be anything ranging from securely storing your XLM for the long-term to keeping it safe & handy at all times, so you transact and/or trade with it whenever you desire.
Types of Cryptocurrency Wallets
There can be various types of crypto wallets, differing based on their security features and the purpose they fulfill. All of them have their unique pros and cons. Let’s go over a few of their broad categorisations as follows:
A hot crypto wallet is a kind of wallet that stays constantly connected to the internet. It’s an ideal storage medium for individuals who frequently transact or trade-in cryptocurrencies like Lumens and others. Being online most of the time, hot wallets come in handy to process frequent online/off-line crypto transactions. However, being connected to the Internet also exposes them to possible hacking attempts and thefts. A good number of desktop, mobile and web wallets belong to this category of crypto wallets.
Comparatively more secure than hot wallets, cold wallets are either completely disconnected from the internet or connect rarely whenever the user needs to execute some crypto transactions. All popular hardware wallets, which come in the form of portable devices resembling USB flash drives, belong to this category. So do paper wallets which are pieces of paper printed with private and public keys associated with a crypto coin.
Hot vs Cold Wallets
It’s the internet connectivity of the cryptocurrency wallet which defines it as a hot or cold wallet. Additionally, whilst cold wallets are normally non-custodial, implying that you maintain custody of your coins (and not some platform), the hot wallets can be either non-custodial or custodial. Please note, there are all kinds of reasons why an individual might choose his/her crypto wallets to be connected or disconnected to/from the Internet, depending upon their usage-preferences. In fact, many even actively use multiple wallets at the same time.
Widely perceived as the safest way of storing your cryptocurrencies, and hence used commonly by ‘Hodlers’, hardware wallets come in the shape of physical devices that look quite like USB drives. As explained above, these are a type of cold wallet, and come equipped with their own UI (user interface), buttons, and an OLED screen. The wallet can be connected online whenever needed, to execute buy/sell transactions, by communicating with the cryptocurrency’s blockchain. It stays off-line otherwise. The better ones enable you to easily store multiple cryptocurrencies and usually cost $100 or more.
A paper wallet or purse is nothing but a piece of paper, with a cryptocurrency’s public and private keys printed out on it. As the keys remain off-line, many consider this wallet to be the most secure way of storing one’s cryptos. However, paper wallets must be used with a high level of caution as they are vulnerable to other risks like getting torn, trashed, crumpled or washed. Furthermore, they cannot be used for transferring partial funds. Nonetheless, a paper wallet is the most malware-free a crypto storage medium can possibly be.
Mobile & Desktop Wallets
A desktop wallet is an installable software available for all popular operating systems like Windows, Linux and Mac. A desktop wallet if not used cautiously can fall prey to hacking attempts. Therefore, it is encouraged to always use it with a good anti-malware software, a solid firewall and a well-known antivirus program.
Mobile wallets also fall into the category of hot wallets, but as they are in the form of apps installed on mobile phones, these web wallets are far more portable compared to the desktop version. That’s also the reason why many such wallets are regularly used for carrying out online/off-line crypto transactions. All prominent mobile wallets have their versions for both iOS and Android platforms.
How do Stellar Wallets Work?
When it comes to how a Stellar wallet or any crypto wallet works, it essentially comes down to how it stores a cryptocurrency’s private and public keys and allows you to use that info to execute buy/sell transactions. A good way to understand these keys is by using a bank account analogy.
Whenever you’d like someone to transfer funds to your bank account, you’d hand them your account details. But for fund transfers from your account, you’d need to log into it first, with a password, and then perhaps will have to authorise the transaction using a PIN number or some other mode of verification. A Stellar or crypto wallet works quite the same way. You’d need to give your cryptocurrency’s public address (derived from the public key) to anyone interested in sending coins to you. However, when you wish to transfer coins to someone, you’d need to first log into your wallet using a password/key and then authorise the transaction with the help of the private key associated with your cryptocurrency.
In the same way, anytime you transact on a crypto exchange, broker exchange, P2P network or any other crypto trading platform, the purchased Stellar cryptocurrencies will always be transferred to your public address, whereas any cryptocurrencies you decide to sell will need to be authorised by you using their private keys.
Key Things to Consider when Choosing the Best Stellar Wallets
As far as choosing the best Stellar wallet is concerned, it’s very important to first understand your requirements, and then go with the type which best meets those needs. You must also carefully examine the unique features offered by different wallets and factor-in multiple other considerations, such as the following:
- Security – The security features offered by a crypto wallet should be high on your priority list, as no one likes losing money. In that respect, make sure that the wallet offers various security features including multi-sign on function and 2FA (two-factor authentication).
- Ease of use – There would be no point picking a crypto wallet that proves to be too technical for you to use. If you’re new to the cryptocurrency world, go with a wallet that features a simple UI (user interface) and can even be used by someone with minimum crypto knowledge.
- Purpose – Your choice of wallet will be greatly determined by what purpose you expect it to meet. If you’re an investor who would like to hold onto a currency for the long term, a hardware cold wallet would be the best option for you. However, if you’d like to use the crypto wallet for making frequent online/off-line purchases, a mobile wallet is what you need.
- Cost – The cost factor comes normally into play in case of hardware wallets as the better ones among them are priced $100 and upwards. Most other wallets can be used free of cost.
- Single or multi-currency – If you plan to trade or invest in just Lumens, then a dedicated Stellar wallet would be good enough for you. Else, you can even opt for a multi-currency wallet that also offers Lumens as one of the currencies.
Pros and Cons of Using Stellar Wallets
Stellar Lumens is counted among the top 15 cryptocurrencies in terms of market cap. Owing to its promise of truly democratising the worldwide financial network, it is attracting plenty of attention. The growing popularity and usage of Lumens also underline the importance of using a safe & secure Stellar wallet. With that in mind we went over multiple aspects of a Stellar wallet in this guide, including what it means, different kinds of crypto wallets, how they work and how to find the best ones.
Frequently Asked Questions
Yes, it’s not impossible to hack a Stellar wallet. However, you can prevent it by using a reliable and proven wallet.
Yes, owing to their benefits, particularly with regard to security, it makes a lot of sense to buy hardware wallets.
Yes, cryptocurrencies including Lumen and others are legal to buy/sell in several countries of the world today, including the UK and US. Still, it is always better to cross-check with your local laws to confirm.
Yes, it’s possible to do that through a crypto exchange.
Yes, many people do that to spread risk and improve security.
You can use your private key and/or restoration code to regenerate your wallet.
Yes, it’s possible to get a loan by pledging cryptocurrencies stored in a wallet.
No, unless you choose to use a good hardware wallet.