A crypto wallet is a must-have tool for securing your Bitcoin and other digital assets.
They act as a personal safe for your private keys, which give you access to your crypto on the blockchain.
Without a wallet, the crypto that you own is vulnerable to hackers and scammers online.
For beginners, knowing which wallet to use can be overwhelming, as there are a variety of wallets available and different types of crypto wallets for beginners to choose from.
Picking the correct wallet for you will simplify your transaction process and also protect your assets.
What Are the Main Types of Crypto Wallets?
Before we dive into the best wallets, let’s go over the different types of crypto wallets for beginners.
Hot Wallets
These are digital wallets connected to the internet. They can be associated directly with crypto exchanges or separate platforms.
Popular examples are mobile wallets, like Trust Wallet, and desktop/web-based wallets like Exodus and Coinbase Wallet.
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🚨Over $6.78 billion in cryptocurrency has been stolen since 2022 in hacks, with hot wallets being the main target.
Hardware Wallets
Hardware wallets are offline crypto storage devices that keep your private keys safe by keeping them offline.
There are two versions of hardware wallets:
1. Electronic Hardware Wallets: Devices like the Blockstream Jade or D’Cent Wallet that store private keys on the physical device, but need to connect to a mobile phone or computer to make transactions.
2. Non-Electronic Cold Wallets: Physical “items” such as paper wallets or metal plates, where private keys are manually stored, such as Material Bitcoin.
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⭐Cold wallets are virtually impossible to hack. Any breaches typically are a result of physical theft and not a cyberattack.
Self-Custodial or Custodial Wallets?
Both hot and cold wallets can be categorized as either custodial or non-custodial, depending on who controls the private keys.
Understanding these distinctions is crucial when choosing a wallet that is best for you.
So, which one is better: self-custodial wallets vs custodial wallets?
Custodial wallets are managed by a third-party service, usually a crypto exchange or wallet platform. They control your private keys, meaning that they have custody of your crypto.
Self-custodial wallets alternatively mean that you have custody of your private keys and therefore, have full control over your crypto.
| Category | Pros | Cons | Example |
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| Custodial Wallets |
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Exchange wallets like Binance and Coinbase. |
| Non-Custodial Wallets |
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Hot wallets like MetaMask, and cold wallets like Material Bitcoin. |
ℹ️Always use a cold wallet backup to protect your recovery seed phrase. This is the only way to regain access to your private keys if your wallet is hacked or physically stolen.
Why Cold Storage Wallets Are the Safest Option
Cold storage wallets are the best hardware wallets available. They keep your crypto safe from online threats such as hacking, phishing, and malware by storing your private keys offline and never connecting to any separate device.
This is also referred to as an air-gapped wallet.
By protecting private keys from internet access, cold wallets eliminate the risk of unauthorized access.
Material Bitcoin is the easiest and safest cold storage crypto wallet available.
It is designed from stainless steel and can withstand severe physical damage, including water and fire.
There is absolutely no setup required. Simply use the public address on the metal plate to receive BTC directly to your Material Bitcoin wallet.
Paired with the Material DIY seed phrase wallet, this is a winning combo in crypto protection.
A Beginner’s Checklist for Crypto Wallet Security
Understanding Private Keys
- Your private keys are the only way to access your crypto.
- Keep your private keys secret; never share them with anyone!
Backups and Recovery
- Always back up your wallet.
- Use a metal crypto backup for seed phrase protection.
Avoiding Common Mistakes
- Stay vigilant when online from phishing scams and fake wallet apps.
- Verify wallet sources and only download software from official websites.
How to Choose From the Different Types of Crypto Wallets for Beginners?
Choosing the right wallet that is best for you depends on your specific needs and level of experience.
As a beginner, it’s best to think about your needs, future goals, and whether you’re tech-savvy or not.
1️⃣Your Security Needs & Accessibility
If you plan to make frequent transactions, then a hot wallet is a good starting point. This is not to say that a hardware wallet is so much more time-consuming, however, you cannot compare it to simply taking out your phone and opening an app.
However, it’s important to mention, that large amounts of crypto should be moved to a cold wallet. You can keep smaller amounts on a hot wallet for easy access but long-term hold should be done offline for better protection.
2️⃣The Frequency of Transactions
Are you planning to trade or use crypto regularly? A hot wallet will give you quick access and ease of use. If you are planning on buying crypto and leaving it for long-term HODL, then we suggest moving it to cold storage where you can leave it for years.
3️⃣Comfort Level with Technology
If you’re more tech-savvy, non-custodial hardware wallets that give you full control over your assets are a good option. They do require careful management of private keys and typically have a longer setup process.
As a beginner, you might prefer a custodial wallet for simplicity, although we really don’t recommend it as there are so many easy-to-use self-custodial options available, like Material Wallets.
4️⃣Knowing Your Investing Strategy
Choosing a wallet should align with your crypto investment goals. Are you focused on trading and short-term gains, or are you investing in crypto for the long term?
Advanced Features in Crypto Wallets
As your experience grows and you want to become more active in the crypto space, there are advanced wallet features that can help you get more out of your investments and explore the blockchain’s potential.
💵Staking Rewards: You can earn passive income by staking coins like Ethereum or Cardano directly from your wallet.
🎮Access to dApps: Connect to DeFi platforms, NFT marketplaces, and games.
🪙Multi-Crypto Support: Manage a diverse portfolio.
🔁Built-In Swaps: Exchange crypto directly in your wallet without relying on an external platform.
The Right Wallet for You
Choosing the right wallet is a crucial step in managing your cryptocurrency securely.
Hot wallets offer convenience and are ideal for frequent transactions, while cold wallets provide unmatched security for long-term storage.
Understanding your needs, comfort level with technology, and investing strategy can help you decide which wallet type suits you best.
Understanding the different types of crypto wallets for beginners is an important step to starting your crypto journey. From hot wallets to cold storage, many options are both easy to use and highly secure.
Remember to keep security as your top priority, and you’ll be able to enjoy investing in crypto!
FAQs
What is the safest crypto wallet?
- Cold wallets like Material Bitcoin are the safest, keeping your private keys offline.
Should I choose a hot or cold wallet?
- Hot wallets are more popular with traders and frequent users; cold wallets are best for long-term security.
What if I lose my private keys?
- Without a backup, funds are lost. Always securely store your private keys and set up a seed phrase recovery wallet.
What’s the best type of crypto wallet for a beginner?
- For a beginner, a simple yet secure cold wallet, such as Material Bitcoin, is the best. It doesn’t have a complex setup but offers all the best in protection.
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