Cryptocurrencies continue to become popular, creating real waves in the trading environment. The exponential growth however makes them a favorite target for hackers and cybercriminals. You can keep your Bitcoin or altcoins safe by purchasing essential tools such as cryptocurrency wallets, particularly hardware wallets and learning about modern technologies like cold storage practices. It doesn’t matter if you’re buying Bitcoin, Litecoin, Ethereum or any of the multitude of altcoins that are finding their way into existence, a safe wallet is a must. Also if you’re earning bitcoin, then it’s vital you store it in a cold storage wallet.
This guide aims to help you understand the importance of investing in the best cryptocurrency wallet. We also aim to explain the differences between hot wallets and cold wallets, security feautres of online and offline wallets, and best practies for backing up. Before we get into the heavy stuff, we have compiled a selection of the best crypto wallets, security keys, and USB adapters to help you make the right decision. Let’s take a look at these first
The Best Cryptocurrency Wallets For Cold Storage
Ledger Wallet Nano
This ledger wallet will secure your crypto keys through a microprocessor that can handle any attacks. Many banks and financial companies have used this technology for many years. The hardware wallet will perform the cryptographic lifting like signing transactions within a secure environment. Thus, you can transact crypto coins even on an insecure computer.
The wallet comes with security card, backup sheet, and instruction manual. At the same time, it works on different protocols or Ox for decentralized exchange. The product’s sophisticated security makes it resistant to malware. Besides, users will find the wallet very accessible.
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Ledger Nano S
The Nano S can hold Bitcoins, Altcoins, and Ethereum. Consumers like this wallet because of its robustness and capacity to store assets as well as secure electronic payments. It connects easily to the USB and inserts a safe Organic Light Emitting Diode display for verification of transactions with one tap on the side buttons. Nano S will conceal private keys using a Secure Element with a PIN code. As a result, unauthorized parties cannot tamper transactions.
Compatible platforms include Fast Identity Online (FIDO) security standard, Universal 2nd Factor Authentication (U2F), GNU Privacy Guard (GPG), and Secure Shell (SSH). The Ledger Nano S product supports FIDO on Google, Dashlane, Github, and DropBox. With a recovery sheet as a backup, users can look forward to hassle-free restoration on Ledger devices or matching wallets.
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Trezor Bitcoin Wallet
The Trezor wallet facilitates a complete and protected payment system as a remote environment for the signing of offline transactions. It uses a small display for verification of contents. This Bitcoin wallet complements Windows, Linux, and Mac OS X. Just connect Trezor to the PC and follow the guidelines. Choose from two buttons to authenticate or reject any action without difficulty.
Any user can back up all contents manually to recover lost coins. It makes use of contemporary encoding algorithms without the need to read lengthy manuals or becoming an expert in cryptography. Independent third parties can easily audit the Trezor open-source code to guarantee transparency between parties involved.
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KeepKey Crypto Hardware Wallet
The KeepKey hardware stores Bitcoin is securely making it very hard for malware to steal coins. This USB supports wallet computer software manages the generation and storage of private keys as well as signing of transactions. This wallet uses a custom random number generator compatible with the hardware to generate the private key. Users can come up with a 12-word recovery code as the backup.
A secret PIN protects KeepKey while the confirmation button approves each transaction manually. The wallet comes with a USB cable and backup card for recovery purposes. The absence of an OS makes it more resilient against malicious software, viruses, and keystroke logging surveillance technology. KeepKey supports not only the BTC but ETH, LTC, Dash, Testnet, Namecoin, and Dogecoin.
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YubiKey4
Two-Factor Authentication or 2FA remains YubiKey4’s main strength because it adds another security layer to the user’s account. This tiny device similar to that of a USB stick provides unlimited access to Google Universal 2nd Factor (U2F) applications, Dashlane, Github, and Dropbox. The hardware conforms to authentication, encryption of public keys, one-time passwords, and U2F procedure the FIDO Alliance created.
YubiKey4 does not have moving parts or components and fits on the keychain or plug into the laptop USB. The manufacturer claims the device as unbreakable and water-proof. Use this model in gaining access to a broad range of consumer and enterprise apps as well as securing Dropbox and Gmail accounts.
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Fido U2F
With the Fido U2F security key, users need not worry anymore about hacking, essential logging fraud, phishing, and stolen passwords. This key relies on absolute security and public key encryption for stronger authentication Users can just pop in the Fido U2F into any USB port. It runs with websites supporting the key’s protocol like Google (Gmail), FaceBook, Cloud, G Suite, and many others.
The device matches MS Windows, Apple OS X, and Linux perfectly. Users only have to touch the button that triggers the security process without typing passwords. The USB human interface device fits into all kinds of desktop computers without installing drivers or software. The key weighs only three grams and fits into the standard key chains.
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YubiKey Nano
Some users compare the YubiKey Nano to a Trusted Platform Module activated with a touch button for verification purposes. It matches with all USB ports as well as the camera connection kit of Apple iPads. Unlike other Yubico-manufactured keys, this model stays attached to the port as per requests of numerous users. While this acceptable practice makes the keyless platform secure, it also prevents unauthorized access because of the user’s presence as well as multiple logins to the same account.
More than one million individuals and corporate clients use the YubiKey Nano. The LastPass password management service that keeps enciphered codes in private accounts supports YubiKey Nano confirmation. This tiny device comes with the PKCS#11 external modules for cryptographic projects.
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Swiss Bank in Your Pocket or SBIYP Wallet
The SBYIP hardware wallet refers to a Microsoft Windows desktop app that offers functionality for five Bitcoin wallets and one BTC vault. It needs a USB key to function and performs transactions. Swiss Bank in your Pocket matches with MS Windows versions 7, 8, and 10. However, the cryptocurrency transfers coins only to wallets within the program. Each purse can receive a maximum of five addresses. The manufacturer designed an easy to use interface for the convenience of customers.
Users can access the vault and wallets or change user profiles on the app’s dashboard. The wallet’s control panel opens after clicking the Bitcoin wallet. Users can access or modify wallet names by clicking the specified wallet. Other features of the SBYIP hardware wallet include privacy without any third-party, complete control of private keys, and customized security made possible by the secret USB key.
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KeepKey BTC Hardware (Limited Gold Edition)
This Limited edition product simplifies the process of Bitcoin security, particularly for amateurs. The simple wallet stores Bitcoin, Litecoin, Ethereum, Namecoin, Dogecoin, and Dash with support coming from Mycelium, Multi-Bit, and Electrum. The hardware wallet facilitates direct trading between devices utilizing ShapeShift digital exchange. The USB shows resistance to a virus or malicious software and works on Android, Linux, PC, and Macintosh.
Just like a computer keyboard or mouse, the gadget does not require a driver. It takes care of securing and storing Bitcoin with the OLED screen display and authentication button reviewing and approving all transactions. This device manages generation and storage of keys, signing of deals, initialization, and backup.
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Card Wallet Cryptocurrency Multi-Pack
Hardware wallets contain public and private keys. The public number receives the cryptocurrencies while the private (secret) integer sells or spends the coins. The online services that create the wallet do not supply a secret number. However, hackers can take advantage of the situation if the web service gets disconnected and becomes offline.
This water-proof plastic (PVC) multi-pack wallet card ensures safety for users using a combination of letters, numerals, and Quick Response (QR) codes. A protective cover safeguards the private code. Users can view their balance through the Blockchain platform. To ascertain absolute security, an offline PC generates the card wallets and color-printed employing dye sublimation digital printing technology. An automated script destroys the keys after printing. This card wallet stores Bitcoin, Litecoin, Dash, and Ethereum.
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The Best Entirely Offline Cold Storage Crypto Wallet
Cryptosteel Mnemonic Cold Storage Wallet
Cryptosteel refers to the non-breakable backup implement for Bitcoin wallets that store private information of users minus third-parties or intermediaries. The wallet owner must craft the confidential sentence from a pattern of letters and numerals (Mnemonic) that come with the hardware. Put the data inside cold storages to ensure safety. Nothing can break crypto steel which maintains fire-proof and rust-resistant qualities.
Third parties cannot access users’ confidential information because this wallet functions offline compared to imprinted plates with QR codes. The container consists of a maximum of 96 characters. The lightweight stainless steel wallet can resist acid and shock with the fireproof temperature of 2, 100 Fahrenheit or 1, 200 degrees Centigrade. This cold storage wallet accepts Bitcoin and other leading virtual currencies. Users control their anonymity and data security.
The Best Bitcoin Wallet Bundles
Ledger Nano S Wallet with VUVIC Micro-USB and USB-C MacBook Adapter
The bundle of hardware wallet and USB adapters facilitates connectivity to different mobile phones and laptops. Ledger Nano S refers to the storage wallet for BTC, ALT, and ETH. The VIVUV USB 3.0 for USB 3.0 and USB-C represent the two adapters. The S wallet’s built-in feature checks and verifies transactions utilizing physical buttons as anti-malware authentication factor (2FA). An isolated environment with locked PIN Code secures the confidential information. Nano S supports the Fast Identity Online universal 2nd factor standard for verification.
This Nano S differs from the two other wallets by Ledger due to the screen used on PCs that have acquired Malware. This Ledger kit contains the adapters, and cables users require for connecting their portfolios to USB Type-C category laptops and Android mobile phones. Incidentally, the confirmation process for the recovery phrase requires verifying the correct order of particular words in the phrase
Trezor Bitcoin Wallet Bundle VUVIC Micro-USB and USB-C MacBook Adapter
Bitcoin users describe the Trezor crypto wallet bundle as an assurance of an entirely safe payment platform with two USB adapters that come with a bonus. The Trezor brand stores Bitcoin separately but maintains the functional design of the customary web wallet. This hardware wallet indicates exceptional engineering and third-party compatibility thereby keeping its position as one of the safest options to store cryptocurrencies.
While processes bear a resemblance to the Nano trademark, Trezor makes use of a PIN decoder or conversion device that comes into view on the screen each time the user consummates a transaction. It works by matching the succession of produced files shown on the wallet to the user’s PIN. Then, the user must enter that PIN on the online wallet’s interface. Confirmation or cancellation requires pressing a physical button. Many observers point to Trezor as one of the most established brands on the market today.
Trezor White BTC Wallet Bundle (5 Items)
This Trezor hardware wallet comes with a VUVIV Radio Frequency Identification (RFID) pouch, two VUVIV USB adapters for faster and stable connection, and one archival ink pen (Sakura) for the recovery seed sheet. The five-item package from Trezor can hold multiple digital currencies aside from Bitcoin and Bitcoin Cash. The RFID feature provides extra protection while the archival ink guarantees waterproof as well as fade and chemical resistant writing on the recovery seed.
The wallet includes a two-step verification element and password manager allowing connections to other widely held wallets like My EtherWallet and Copay. The small, lightweight and manageable device connected without problems to the desktop computer and hooked on the keychain. The elegant packaging includes a short cable with brief instructions. Industry experts describe the Trezor White as the original and safest hardware wallet.
Its distinct PIN and recovery seed or mnemonic phrase must be confirmed on the Trezor using standard keys. Mnemonic stands for a listing of words that preserve all the necessary information in recovering a BTC wallet. The wallet produces a backup phrase typically and instructs users to write the words manually.
Trezor Hardware Wallet (Gold-Plated and Copper Physical Coin)
Trezor affords excellent security precautions for Bitcoin and other digital tender protecting the user’s assets against physical and virtual pilfering. The HD wallet regulates the owner’s personal key with the entire device backed up by 24 words produced in the setup. The seed, created offline, shows on the screen of this wallet and ensuring it does not appear on an Internet-connected platform. The system requires a PIN cryptogram for setting up and spending.
The primary selling points of this Trezor product include reliable security to avert hacking attempts, robustness, flexibility, and user-friendliness. Reviewers observed other brands do not carry the features available in Trezor making it a more popular storage solution. For instance, Trezor can integrate with other wallets like Electrum along with a possible Chrome extension.
The brand works with Android but not Apple or Windows and matches services such as Coinmap, Coin payments, Strip48it, WordPress, OS Class, Bitwala, Bitex, and Bitstamp. It can sign and confirm messages enabling secure storage and smooth transfer of documents through the Blockchain platform.
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What Is A Cryptocurrency Wallet?
A cryptocurrency wallet can come in a variety of different states. They can be physical items, or digital. In either case, rather than storing ‘currency’ like a traditional wallet, they store data. To be more specific, they store public and private keys and interface with the blockchain for your specific cryptocurrency. Whether you are talking about Bitcoin, Litecoin, Ripple or any of the other cryptocurrencies, the method of storage is the same. In short, a cryptocurrency wallet, sometimes called a Bitcoin wallet or Ethereum wallet (though in the vast majority of cases a crypto wallet will work with any cryptocurrency) is a safe place for you to keep the keys to the data that show the records of your transactions on the blockchain.
Why You Need A Cryptocurrency Wallet
Not investing in a crypto wallet, and relying solely on the online platform where you buy the currency to ‘look after’ your coins, is risky. You could compare it with walking down a busy high street, rife with pickpockets, with a thick wad of cash in an open pocket. Most the time you might get away with it, but your exposure to theft and threat is much higher than when your cash is in a secure location. They only need to get lucky once. You should only ever leave small values exposed online. For serious values of crypto currency, you need a safe wallet for storage.
Types Of Crypto Wallet
You can basically brake down the types of cryptocurrency wallets into two main categories, Hot Wallets and Cold wallets. These categories can then be broken down again into different product types. Let’s look at Hot Wallets first.
Hot Wallets
This category of crypto wallet effectively refers to any type of crypto wallet that runs on an internet connected device. If you have a crypto wallet on a PC or Laptop, Android or Mac phone or tablet, then that is a hot wallet. One important thing to know, is that while not all hot wallets have a web interface (which makes for easy transactions), all online wallets are hot wallets. These can be broken down further into product types as follows:
– Desktop Wallet
These are software programmes that are installed directly onto a PC or Mac and are only accessible from that specific device. While security on desktop wallets is higher than say a ‘cloud’ wallet, you still have the risk of hacking or viruses such as ransomware that is inherent with internet use.
– Mobile Wallet
The name speaks for itself really. This type of crypto wallet is effectively an app installed on your mobile device. Very convenient for day to day transactions but not something you should consider for storing large sums.
– Cloud Wallet (web wallet)
A cloud wallet is effectively a crypto wallet that lives in the cloud and is accessed online. Access to a cloud wallet, by their very nature is not restricted to a single device as they do not ‘reside’ on your computer, but rather on a server or multiple servers. These servers may be in one but potentially in many different locations. This type of crypto wallet is essentially Software As A Service (SAAS).
With a cloud wallet the private keys are stored online and out with your own control. While this type of wallet may be the most convenient to access, particularly on the move, that ease of access comes at the price of security. We would not recommend these for holding large quantities of cryptocurrency, but they are certainly convenient for low value day to day transactions.
The Best Hot Wallets For Cryptocurrency
Before we move onto cold wallets, here are a few of the best hot wallets today, for storing and transacting in bitcoin or various altcoins.
Green Address – Cloud Wallet
While cloud/web wallets provide perhaps the lowest level of security, Green Address, up the security by requiring a multisig approval for the movement of your funds. This means a manual confirmation is required by you, and that Green Address themselves must also authorise to verify any transaction before it can take place. The Green Address platform is good for beginners and those with a basic knowledge in the tools. It is user friendly, with good security for its type. One downside though, is that Green Address themselves must approve any payments as part of the multisig security.
Verdict
Good for beginners, multisig good for security but on the flipside requires a third-party to approve any transactions.
Exodus Wallet
The Exodus wallet is currently only desktop based, but the platform is great for beginners. Offers trading in multiple cryptocurrencies including Bitcoin, Litecoin and Dash. It is one of the best desktop wallets for altcoins as well as Bitcoin. Another great feature is the ability to trade between different cryptocurrencies, such as trading Bitcoin for Ether, or Litecoin for Bitcoin.
Verdict
Good for beginners and for trading between different cryptocurrencies. On the flip side it is still quite a new platform and while the security appears good, time will tell on that one.
Armoury Wallet
The Armoury Wallet is another desktop only platform for trading Bitcoin. While the software is opensource, the interface is rather advanced and only really suitable for experienced users. Armoury does have some of the best security features of all the desktop wallets, and you can have several wallets at the same time. However, it is complicated there is no getting away from that.
Verdict
A great desktop wallet with good security. For advanced users only.
Mycelium Wallet
Mycelium provide an advanced mobile wallet for both Android and iPhone devices. It has some of the best features to be found from the mobile wallet marketplace, for both security and functionality. There is not any web or desktop interface however, this is purely for mobile. It is free to download and install and the software is opensource.
Verdict
Good mobile platform for advanced users. Not for beginners.
Jaxx Wallet
Jaxx is a great wallet for trading in multiple cryptocurrencies such as Ether, Litecoin and Dash, as well as the obvious Bitcoin. However, it is proprietary software rather than opensource so innovation and improvement can only be in the hands of the developer. That being said it is multi platform, working across the major web browsers and platforms as well as Android and Apple devices. So you can use it on your computer as well as your tablet or phone.
Verdict
Good for using across different devices and good for beginners. It can however be slow and as the software is not open source, only the inhouse developers can do anything about that.
Bread Wallet
Bread Wallet is an open source mobile wallet for trading Bitcoin, but it currently has no web or desktop interface. While it is mobile only, the downloadable app has versions for both iPhone and Android. Bread Wallet is good for beginners, easy to use and it’s free. The lack of features however, make it more suitable to casual traders or beginners than more advanced users.
Verdict
Bread Wallet is simple to use but lacks advanced features. Great for beginners that want simple trades on their mobile, but a bit lacking for those wanting a bit more from their platform.
Electrum Wallet
Electrum is a desktop wallet for use on Apple, Windows or Linux desktops. It offers support for hardware wallets and securing your Bitcoins offline. There are enough features to make this a good platform for both beginners and advanced users, but it is still very much ‘lite’ in terms of functionality.
Verdict
Good solid desktop wallet for both beginners and experienced users. A bit light on features but adequate security.
Cold Wallets
A Cold Wallet for Cryptocurrency, is essentially a physical storage device for the sole purpose of securing your cryptocurrency offline. As with hot wallets, cold wallets can come in a variety of forms. Let’s break these down:
– Paper Wallet
A paper wallet may be the least technological wallet solution for storing cryptocurrency, but that doesn’t mean it’s not good at what it does. A paper wallet is probably the easiest type of cold wallet to use. Transferring Bitcoin or any cryptocurrency from your online wallet to your paper wallet or vice-versa is easy. The public address/key to do this is printed on your paper wallet, often accompanied by a QR or scannable code.
– Hardware Wallet
A Hardware Wallet, sometimes known as a Hard Wallet is by far the best way to store your cryptocurrency offline. While transactions are still carried out online, as with any cryptocurrency transactions, they are stored offline on a ‘hard’ device such as a USB style stick. The private keys are stored on this external offline device. Our guide has primarily focussed on these hardware crypto wallets because they are the best storage devices for your cryptocurrency.
A hardware wallet is easier to interact with than a paper wallet. To make transactions, you simply plug your hardware wallet into a compatible device that has internet access, confirm some security criteria such as pin or password and send or receive currency. When done, remove the device and your cryptocurrency is safely stored offline. Storing your private keys on an external device keeps them away from vulnerability of online fraud or hacking. Even if a thief was to physically steal your hardware wallet, they could not access your currency without the pin or password.
How Does A Cryptocurrency Wallet Work?
We won’t go into too much detail here, but give a brief overview. Some of the functionality of a crypto wallet will differ depending on if you are using a hard wallet or a digital wallet, but in all cases the following functionality is common. A cryptocurrency wallet is a program or device that, as mentioned above, stores personal and private keys, and allows you to interface with blockchains. While buying and selling crypto currency will usually take place on a ‘platform’, it is not really safe to leave large volumes there as you do not essentially ‘own’ the keys to that storage place.
A crypto wallet provides you a place to transfer the currency to a safe location, either online or offline, where you have all the keys. A crypto wallet will also allow the user to make and monitor transactions. However, the main difference between an online Hot Wallet and offline Cold Wallet, is where your private and public keys reside. If you use an online solution, while you may ‘own’ the keys, they ‘live’ online and are vulnerable to online attack. If you store them on an external cold wallet, they are secure from this threat.
Does a Bitcoin Wallet work as an Altcoin wallet too?
In nearly all cases, both hard and cold wallets will work regardless of if you are transacting in bitcoins or altcoins as your cryptocurrency of choice. You can invest in, and store, multiple currencies at the same time in most wallets too. As such the best Bitcoin wallet, will also be the best Monero wallet or best Ethereum wallet too. They work indiscriminately as to your cryptocurrency. Much like your leather wallet wouldn’t care if it housed Euros, Dollars or Sterling. The only thing to make sure of is that if you invest in multiple currencies, that you back up the public and private keys for each.
Backing Up Your Cryptocurrency – Offline Cold Crypto Storage
Even if you have a hardware wallet keeping your private and public keys safe offline, it is always a good idea to back up your keys with an entirely offline cold storage device. There are some great impact proof cold storage wallet backups available, such as the Cryptosteel MNEMONIC cold storage wallet we reviewed above. Such devices are completely external, and the hand entered data unexposed to anyone other than yourself.
How Secure Are Crypto Wallets?
Depending on both the type of crypto wallet, and the service provider, the level of security varies. There have been some high-profile thefts of bitcoin from online platforms and exchanges over the last year that highlight the exposure to cryptocurrencies stored online. Hot wallets are easier to interact with and make transactions on line, but they are more exposed to threat. Cold wallets are safer but require more steps to make transactions. That’s the general rule. Risks
Best Practices To Secure Your Cryptocurrency
– Only keep small amounts of bitcoin or altcoins stored in your online wallet.
– Any serious investment, or in other words any value that you want to protect from risk should be stored in a cold hardware wallet. This should be entirely separate from your online activity.
– Ensure, that at all times your software is up to date, both on your device (phone, PC) and on your hot wallet software.
– For any device, online or offline set a beast of a password. Long, with upper and lower-case words, numbers and symbols. The longer the better, but no complete words. Keep it random. Much better to have, for example ‘p4S5w0R%’ than ‘p4S5w0Rd’. But much, much longer.
– If an online wallet offers 2-step verification, pin by text, or code generators then use them. It would be fantastic if one day they offer restricted access to whitelisted static IP addresses. While this would limit you to connecting from one single IP, it would be incredibly secure. Not something that is offered currently though.
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