Tezos is a blockchain ecosystem, not unlike Ethereum, that allows developers to build smart contracts. The network is decentralised and is powered by its own native XTZ token. The Tezos network uses a unique Liquid Proof of Stake (LPoS) system, allowing the token holders to stake and be a part of the governing community. XTZ is a popular crypto token and has attracted the interest of both big corporations and retail investors.
If you want to hold XTZ, we bring you a list of the best Tezos wallets in 2021.
Our List of The Top Tezos Wallets
Each Tezos wallet listed below has been checked against their advertised features to see what holds true, along with their shortcomings.
What is a Tezos Wallet?
As with all other cryptocurrencies, the Tezos network requires users to have wallets to keep their XTZ tokens. There are several wallet types, each with its pros and cons, but essentially, every wallet works in the same way—send and receive the tokens.
A Tezos wallet also gives the wallet owners a passive source of income. Unlike most other decentralised systems, the chain governance of Tezos allows anyone with enough tokens on hand to become a miner through the network’s Proof of Stake system, called baking. This gives the node operators not only a chance to earn XTZ through block creation, but also gives them voting right in all the proposed changes of the network.
Many Tezos wallets also come with a delegated baking option for people who don’t possess enough XTZ to bake directly or don’t want to go through the hassle of setting up a whole node. The tokens are staked with the wallet developer’s node and all successful tokens earned by the node are distributed according to the wallet’s ratio in the stake pool.
Another difference of baking in Tezos wallets is that the tokens are not locked in. The wallet users can send and receive the delegated tokens without hindrance, their earnings calculated on their share of baked tokens at the moment of each successful block creation.
Types of Cryptocurrency Wallets
Since all types of cryptocurrency wallets are designed to hold digital currencies such as tokens and coins, they can come in many configurations and varieties. Generally, however, cryptocurrency wallets can be classified as:
- Hot Wallets: These wallets come with complex alphanumeric keys for access and many wallet providers store these online on their servers, letting wallet owners use simplified passwords and QR codes to access their tokens. To achieve this, the wallets have to be connected to the network at all times, hence the term hot wallet. The wallets come with the developer’s interface, which can be very user-friendly, allowing anyone with an average understanding to send and receive cryptocurrencies. The downside is that as a hot wallet, the wallet keys and passwords are saved online, increasing security risks as they are vulnerable to data hacks.
- Mobile & Desktop: With different operating software for devices, cryptocurrency wallets have to be designed specifically according to the host platform. A wallet designed for a PC will not run on a mobile and vice versa. Desktop-based wallets are convenient for people as they can operate the wallet and browse the internet at the same time. However, for people with extreme mobility requirements, a mobile-based wallet means they can access their cryptos on the go.
- Cold Wallets: Wallets that do not store the keys on servers are called cold wallets. The name stems from the fact that they can be disconnected from the blockchain networks and put in metaphorical cold storage.
- Hot vs. Cold Storage: Hot and Cold storage offer different advantages and therefore, suit different needs. Hot wallets offer instant access to funds and are digital, whereas cold wallets can be hardware-based too and require the user to enter the entire private key to access the funds. Cold wallets offer better security, but at a cost of ease of access.
- Hardware Wallets: As the name suggests, these wallets are physical devices that store cryptocurrency. They normally come in a USB interface, require hooking up to a computer, and enabling the token holder to send and receive cryptos. Hardware wallets also come in other forms, such as Bluetooth powered (with the ability to connect to mobile devices). The ability to be physically disconnected makes them the most secure wallet option. A hardware wallet can be stored away and with the private keys stored on the device itself, any party attempting to access the device would need physical access to the device itself.
- Paper Purses: Another form of a hardware wallet, paper purses are the purest form of a crypto wallet. Usually, there are three different pieces of information printed, the wallet address, its private key, and a QR code to give ease of access to others for transferring coins. A paper purse holder needs to go to a web interface of the respective blockchain and enter the complete keys to access the wallet. A major drawback of paper purses is the perishable nature of the paper itself. The paper can be lost, stolen, or damaged, taking away the wallet access with it.
How do Tezos Wallets Work?
Analogous to banking accounts, Tezos wallets work as storage devices for the XTZ token. Every Tezos wallet has two sets of alphanumeric strings of characters.
One string is known as the public key, a unique identifier of the wallet, just like your bank account number. Every wallet public key is randomly generated using complex mathematical algorithms. The length of the key means that statistically, two wallets having the same address is impossible, making sure that your wallet is unique. The second is the private key, acting as the password of the wallet. A person holding these sets of keys has complete access to a Tezos wallet.
To send XTZ to another person, one needs the public key of the recipient. Using their public and private key, they must first navigate within their wallet, selecting the option to send their coins. The wallet will ask for two data fields to be filled, the receiver’s public key (also sometimes referred to as wallet address) and the number of coins to be sent.
Though Tezos is a decentralised network that has removed the middleman, there still is a small charge associated with a transaction. Node operators expend energy to keep the hardware running and are compensated for their costs through a little fee. Tezos, however, has such a small transaction fee that at times node operators can record the transaction on the blockchain even if the fee is set at zero, their prime source of income being mined XTZ from block confirmations.
If you are on the receiving end of XTZ, you can simply give your public key to the sender and just sit back for a node operator to confirm the transaction.
Many centralised exchanges, brokers and other platforms will only give you a public key. Since users access the platforms using traditional methods of entering usernames and passwords, the websites only use the public keys to identify which tokens are inbound to which user account. The platforms store all of the cryptocurrencies centrally in different wallets at their end—the combined crypto storage giving their operations liquidity.
Since Tezos allows wallet users to delegate their tokens for baking, many exchanges and other trading platforms also follow the same rule. These platforms stake the XTZ tokens in their possession and offer their users a portion of profits from the pool.
Key Things to Consider when Choosing the Best Tezos Wallet
Tezos network may not be as big as other smart contract blockchains such as Ethereum, but its innovative modular and three-layered ecosystem has been much appreciated and has attracted big organisations around the world to leverage its offerings. The popularity has also led a wide variety of developers supporting XTZ in developing existing wallets and also in creating new ones.
This can be overwhelming for people new to Tezos, with different wallet options in front of them. However, choosing the best Tezos wallet isn’t that difficult. Anyone wanting to put XTZ in their wallet needs to note down their requirements first.
A person who is always on the go, requiring access to their Tezos tokens on the fly, can benefit a lot from using a mobile-based wallet. All the token holder will need to do is to whip out the mobile device, and open up the app to send or receive the tokens. On the other hand, a person who frequently uses a desktop or a laptop device to access their crypto finances (exchanges, using Tezos smart contracts etc.) might prefer to use a desktop wallet.
If frequent access, along with ease is what you are after, you should go for a hot wallet. These wallets store the keys online and offer a secondary access layer in which the users only needs to enter their traditional usernames or passwords.
Paper purses, cold and hardware wallets are the preferred choice if you are looking into long term storage of the Tezos coins and tokens. The ability to be disconnected from the internet makes them extremely secure. A secondary concern does come into play here though. Paper purses are free, costing you mere pennies for printing out one piece of paper. Hardware wallets’ costs can run up into several hundreds of dollars. Depending on the total quantity of XTZ you want to hold, a hardware wallet’s price might be negligible, or too much. The near free cost of a paper purse is attractive, but ultimately you have to decide if it’s worth the cost of losing access to your paper purse.
Pros and Cons of Using Tezos Wallets
Holding one of the most successful ICOs of 2017, Tezos is a multi-layered blockchain network that has been able to have an energy efficiency level like none other. With a Proof of Stake (PoS) variation that allows nearly anyone to take part in block confirmation and earn XTZ tokens as a reward, the Tezos coins are in high demand.
A good wallet can help to keep your coins and tokens safe and secure. The article provides a list of the best Tezos wallets in 2021 if you want to store Tezos coins securely.
Frequently Asked Questions
Check the list of the best Tezos wallets to select one that supports delegated staking.
It depends on the ratio of your delegated coins in the pool multiplied with the reward of the total pool.
Some wallets allow your public key to be stored in the form of a QR code. Show the QR code to a sender and he can simply scan it to recognise your wallet address.
If you are using only private keys for your wallet, unfortunately, no. If your wallet is using layered security such as a password, it might have the option to recover the password. Check with your wallet provider.
Centralised platforms hold your Tezos coins in their own wallets and you can only access these by logging in to your platform account.
Yes. The purse only contains the public and private keys.
Unfortunately, no. Lost coins cannot be recovered.
Confirm with the sender that the right wallet address was used. You can use a Tezos blockchain explorer to find out the status of the transaction using your public address or the hashcode (the sender can provide the code).