Hot wallets are connected to the internet. They’re often available as a standalone product—a “software wallet”—or as a feature offered by acrypto exchange—a so-called “exchange wallet.”
Crypto investors may store the same coins in multiple wallets. That means you can hold the same token or coin in both a cold and a hot wallet. Whichever you choose, the purpose of a wallet is to store the “keys” to your crypto. In cryptography, a key is an encrypted string of characters. With the correct key, you can decrypt (“unlock”) the wallet and access the stash of crypto.
Hot wallets make it easy to execute crypto transactions. But since hot wallets are hosted online, they are more vulnerable to hackers. That’s why some users look to place their crypto in cold storage as a long-term solution.
Compatibility between wallets helps if you’re looking to access additional features. But a word of caution: If you have multiple wallets for the same crypto or token, you may have heightened security risks, since there are more touchpoints to reveal the keys to your crypto.
Security takes center stage when it comes to crypto, so some hot wallets offer a form of repayment for stolen crypto. That’s an important feature for assuring your peace of mind and ensuring it’s a good place to park your non-fungible tokens (NFTs).
3 Best Cold Wallets of November 2022
Cold wallets are physical gadgets designed to store crypto in a format that is not connected to the internet, enhancing security. They are typically hardware devices, and some even look like USB sticks.
Whatever their form factor, a cold wallet provides cold storage for your crypto keys. This greatly reduces risks associated with hacking, but cold wallets lack many of the additional trading and integration features prevalent among hot wallets.
Best Bitcoin Wallet of November 2022
Bitcoin remains the top cryptocurrency by market capitalization. Whatever the vicissitudes of the crypto market, investors remain committed to Bitcoin as both a buy-and-hold asset and as a means of exchange.
Like other cryptocurrencies, Bitcoin requires a crypto wallet for storage. Most of the leading crypto wallets—hot or cold—support BTC.
There are a few specialized wallets that do not support Bitcoin. Metamask, for instance, doesn’t directly support Bitcoin, but that’s because the wallet is specifically designed for Ethereum-based crypto tokens. Other wallets may have a few quirks. Coinbase Wallet Web3 only supports Bitcoin via its mobile app, for example.
Conversely, some crypto wallets are solely dedicated to the big “B.” Electrum only supports Bitcoin. If that’s going to be the only crypto you own, Electrum could be a great choice. It’s never experienced a hack, plus it integrates with Ledger and Trezor.
Here are some leading crypto wallets that support Bitcoin and other top major cryptocurrencies by market cap.*
*At the time of this writing, the top major cryptocurrencies (excluding BUSD) by market cap: Bitcoin, Ethereum, Tether, USD Coin, BNB, XRP, Cardano, Solana, Dogecoin, Polkadot, Dai, Polygon, Shiba Inu, Tron, and Avalanche.
If you’re looking for a crypto wallet that supports Ethereum, Bitcoin, and other major cryptocurrencies, Robinhood’s new Web3 Wallet or eToro’s exchange wallet might be a good fit.
Forbes Advisor performed an in-depth assessment of the features and options offered by the leading crypto wallets. The data was collected between Aug. 1 and Oct. 7, 2022. From the data gathered, each wallet was scored and assessed based on seven key variables:
- Stablecoins.The number of popular stablecoins supported, with particular emphasis on Tether, USDC, Dai, TrueUSD, and Paxos Standard.
- Top cryptocurrencies.The number of supported major cryptocurrencies by market capitalization. We put a specific focus on the availability of the most popular 20 cryptocurrencies.
- Usability.The approach for this metric differed for Best Exchange/Hot Wallets and Best Cold Wallets. But both types of wallets were measured for exchange integration(s) and staking accessibility. This metric also measures utilization, such as the ability to convert coins within the wallet.
- Customer service.Types of customer support available, ranging from phone, email, and live chat to 24/7 support, as some prime examples.
- Costs and fees.Fee structures were assessed differently for Best Exchange/Hot Wallets and Best Cold Wallets. Fees for Best Exchange/Hot Wallets were assessed on a range of costs of fees charged to users, such as fees for moving coins in or out of a wallet, associated conversion costs, and transactional costs. Additional data sets were used to evaluate costs and fees for Best Cold Wallets, such as the initial cost for a hardware storage solution.
- Security.With security paramount when it comes to crypto storage, security was heavily weighted in the scoring of Best Exchange/Hot Wallets and Best Cold Wallets. Some of the features assessed in both rankings include whether the wallet recoups stolen assets and provides several security measures (e.g., two-factor authentication, password encryption, etc.). Previous security breaches or hacks were also noted.
- Additional features.Other areas measured include, but are not limited to, whether the wallet provides educational resources and live charts, and support for non-fungible tokens.
For each ranking, the sum of weighted values across all or some of these key factors was calculated to award each crypto wallet an overall rank.
Cryptocurrency exists as nothing more than a string of code on a larger blockchain. When you purchase cryptos, such as Bitcoin or Ethereum, your proof of ownership is based on a public key and a private key.
The public key is like your bank account number: It tells you where your crypto is, but it doesn’t provide access to it. The private key identifies you as the “true owner.”
If you lose the private key, you could lose access to your crypto. Likewise, any person who gets a hold of your private keys has full access to your crypto.
There’s a popular expression in the crypto world, “Not your keys, not your coins.” If you don’t control your keys, you don’t have full access to your crypto assets.
“Hot” wallets can be desktop, mobile, or web-based applications, requiring an internet connection. The connectivity to the web makes these types of wallets more accessible. But it comes with a trade-off: security. Online wallets are more susceptible to hacks.
Q3. What’s a Cold Wallet?
Generally, A more secure type of wallet is a “cold” wallet. These hardware wallets come in several shapes and sizes, and they can be a USB stick that connects to the web or a device that scans a QR code, linking to a software application.
Hardware wallets help keep your private keys safe from hackers who would need to steal the physical wallet to gain access, and usually involve a PIN as an extra layer of security.
You can typically purchase a hardware wallet for between $50 and $150, although there are some higher-priced options, too.
