How to properly store cryptocurrency in 2022. Review of wallets

What to choose - hardware, exchange or software wallet. How do they differ and what tasks are they best suited for?

Many people often say that cryptocurrencies are “stored” in wallets, but this is technically incorrect. Funds are stored on the blockchain: a distributed, decentralized ledger that is the basis of the cryptocurrency ecosystem. Wallets, in turn, contain important data that allows the user to access these funds directly within the blockchain and, if properly managed, ensure their safe storage. Today we will talk about the structure of wallets, their classification, and provide a list of the most convenient for the end user, in terms of comparing their functions.

How do cryptocurrency wallets work?

To work with cryptocurrencies, special software is usually required - this is a wallet program integrated either into the software, exchange, or hardware environment. It allows the user to work with the blockchain and create transactions or receive transfers to their address

Each wallet, regardless of its operating environment, contains private and public keys.

A public key is a digital string that can be seen by anyone. It consists of a set of letters and symbols and is used when sending funds to a wallet.

A private key is a type of security key consisting of a series of cryptographically generated random numbers that cannot be cracked. Essentially, it is a hexadecimal number consisting of 256 bits or 32 bytes, which is created for signing translations.

The signed transaction is sent to the network and, after approval, reaches the recipient.

Crypto wallet #5 Jaxx

A “thin”, cross-platform wallet, which is free software for a computer. The brainchild of Canadian developers has collected a large number of positive reviews due to the following advantages:

• Possibility of “cold” storage;
• More than 60 cryptocurrencies for storage;
• There is a mobile application.

Flaws:

• There is no Russian version.

Jaxx has received a lot of positive reviews, but there are also those who were dissatisfied with the crypto wallet due to missing assets.

User reviews about the Jaxx wallet

@DinDon

Convenient desktop wallet. The English interface is a little annoying, but overall, nice design, simple functionality.

@Cram

I lost Dash from this wallet. I made a transaction using this cryptocurrency. Then once all the coins are missing, they updated it to zero anyway. I contacted technical support, they seemed to have solved it, but the problem remained.

@Daffy

The most convenient wallet, I quickly transfer money to exchanges, commissions are small, convenient to use.

Is it safe to use cryptocurrency wallets?

In cryptocurrency systems, the security and integrity of your account is guaranteed by a network of agents (segmented file transfer or multi-source file transfer) that are verified by miners. They protect the network by maintaining high speed processing algorithms.

Breaking existing security in cryptocurrency is mathematically possible, but the cost of achieving it is unacceptably high. For example, an attacker attempting to double-spend the BTC blockchain would require more computing power than all the miners in the system. But even then it won't have all the control capabilities. A hacker needs to pass the 51% power threshold to even get close to this goal.

Ledger Nano S

• Storing 27 types of digital money and tokens on the ERC20 standard is available on Ledger Nano S;
• Dual-chip protection and virus protection;
• Possibility of recovery using a password in case of loss or damage to property.

What choice do you have?

A non-custodial wallet is a type of decentralized wallet in which the client owns his private keys. The user receives a file with private keys and must write a mnemonic phrase with which he can regain access to his funds. Having private keys means that the user has complete control over the funds. However, it should be borne in mind that complete control over money also means that only the consumer bears full responsibility for his funds.

On the contrary, a custodial wallet is a type of digital wallet in which private keys and backup of all data, that is, the protection of funds, are on the developer’s side.

From the user’s point of view, of course, a non-custodial wallet is the most acceptable option, because in this case, attackers will not be able to steal assets, however, if you rely on the human factor, and allow for the possibility of making mistakes, then storing funds in custodial wallets (not in in all cases), gives hope for the recovery of lost funds.

Wallets in which currency is stored can be classified:

• Custodial wallet

Exchanges. For the most part, keys on exchanges are generated and remain on the developer’s servers, without reaching user devices.

Software wallets. There are also certain software wallets, such as FreeWallet, that store data on their servers. However, there are not many such services.

• Non-custodial wallet

Software wallets. Software wallets can be mobile or desktop wallets that are downloaded directly to your device.

Web wallets. Such wallets are most popular among novice users and people who trade a lot. Web wallets are usually offered on the websites of major cryptocurrency exchanges. They can store any purchased currency and help you quickly sell it or transfer it to other users. The popularity of this type of wallet is due to the ability to quickly and easily sell various coins and make transfers directly on the website, which is very convenient for novice users. Web wallets are also great because they can be accessed through a browser from anywhere in the world. This allows you to always manage your funds if you need to pay for something or make a transfer. The main problem with such wallets is the potential risks of hacker attacks, so storing large amounts of money in them is very dangerous. Despite the fact that the corresponding sites do everything possible to ensure the security of the wallets they offer, they cannot monitor other people’s computers and find viruses and spyware on them, with the help of which hackers steal money from accounts.

Mobile wallets. Mobile wallets are usually used to store both small amounts and very impressive ones. More and more stores around the world are starting to accept payments in Bitcoin or Ethereum, so it's convenient to store some of these tokens in a mobile wallet in case the user needs to pay for something.

Paper wallets. A paper wallet is considered the most secure storage mechanism for cryptocurrencies. To use them, the user prints keys on paper and integrates them into an online wallet.

KeepKey

Source: 2bitcoins.ru
Cost: $100

For those who need the core features that hardware wallets were invented for, KeepKey is a great option. Being one of the cheapest devices on our list, the wallet will provide good value for money. This is a simple device that allows you to store and exchange most cryptocurrencies thanks to the built-in ShapeShift function.

The outer part of the case is made of anodized aluminum, and the screen is surrounded by a polycarbonate body. It's well made and has the confidence-inspiring heft you'd expect from a device made from high-quality materials.

The wallet is twice the size of its main competitors, Ledger Nano S and Trezor One. However, the KeepKey's large size allows it to accommodate a relatively large 3.12-inch OLED display. Unfortunately, finding this wallet is not so easy, since it is quickly sold out on the market.

Review of software wallets

A software wallet is one of the most common storage methods, which implies multi-platform, quick access to your funds, and relative security. It should be understood that each software wallet, in one way or another, is tied to its physical medium, and its loss, in most cases, will lead to irrevocable loss of funds.

Blockchain Wallet

Blockchain Wallet is by far the most popular digital wallet that allows users to store and manage their cryptocurrencies in full. Blockchain Wallet is powered by Blockchain, a software company founded by Peter Smith and Nicholas Carey. A blockchain wallet allows you to make transfers in cryptocurrency and convert them into foreign currency.

Pros:

• Support for a mobile application with a well-designed UI/IX;
• Web interface support;
• Support for leading cryptocurrencies;
• Open source code freely available.

Minuses

• If attackers manage to gain access to the user’s mail, they can easily cash out all the funds stored in the wallet;
• Lack of desktop version of the wallet;
• Storing keys on the developer's side.

Conclusion. Blockchain Wallet is the most popular place to store funds, however, the level of security leaves much to be desired. Blockchain allows users to store funds in relative safety, and is aimed at convenience as much as possible. This option can be considered if the user does not intend to store large amounts, and is new to the crypto space, for whom simplicity of functionality is important.

Coinbase Wallet

Coinbase Wallet is an application that allows users to store their own cryptocurrency and interact with the blockchain through a decentralized application. This wallet combines the versatility offered by its predecessor, Toshi Wallet, with the support offered by Coinbase. In this wallet, the user can not only store ETH and ERC tokens based on the Ethereum network, but also interact with BTC, BCH and LTC.

Pros:

• Mobile application support, with excellent UI/IX;
• Web interface support;
• Support for leading cryptocurrencies;

Minuses:

• Storing keys on the developer's side.
• Lack of desktop version of the wallet;
• Lack of open source code freely available.

Conclusion. The Coinbase wallet is a great alternative to storing your funds. Firstly, it generates a security seed, and secondly, it allows you to protect the application from using a fingerprint reader. Overall, this is a very simple and easy to use application, but with a lot of tools. Additionally, this wallet is supported by Coinbase. On the other hand, it can cause some inconvenience. When opening some decentralized applications, the browser may freeze, which does not always allow the transaction to be completed in a matter of seconds, as required by the quality standards set by users.

Trust Wallet

Trust Wallet is an application for mobile devices that allows you to send, receive and store cryptocurrency tokens on the Ethereum blockchain. Designed with simplicity in mind, the open source portfolio aims to provide a platform that is easy to set up and use. Trust Wallet allows users to store their private keys on their devices and provides a backup feature for easy recovery.

Pros:

• Allows you to store any ERC token;
• Private keys are stored on the user's device;
• Ability to work with decentralized applications (dApp);

Minuses:

• Lack of support for many tokens;
• Does not provide two-factor authentication;
• Not user-centered interface design.

Conclusion .Trust Wallet includes a built-in Web3 browser that makes it easy to explore decentralized internet applications. This application meets quality and safety standards and is optimized to perform at a high level. Trust Wallet is perfect for those users who are not too picky about functionality and do not need to hold a large portfolio of various non-ERC standard tokens.

Guarda

Guarda is an Estonian project that is a hybrid of all types of wallets. It has the ability to functionally use all types of crypto-currency solutions in one place, use from the browser or download the desktop application. Guarda supports over 45 coins and is compatible with all modern token standards.

Pros:

• Mobile app support
• Web interface support
• Desktop version support
• Private keys are stored on the user's device;
• Open source
• Web3 support
• Support for a huge number of tokens

Minuses:

• No two-factor authentication
• Lack of Wallet Connect support

Conclusion. Guarda Wallet is a project created by a team of highly qualified specialists. The level of confidentiality and implementation of innovations is at a high level. Summarizing all these factors, we can say that Guarda is a reliable wallet for storing cryptocurrency. However, among the negative points that can be noted is the lack of support for Wallet Connect, which does not allow working with most DeFi protocols, and the lack of two-factor authentication.

Atomic Wallet

Atomic Wallet is a unique cryptocurrency wallet that allows you to manage over 300 different crypto assets, in addition to the ability to add custom ERC20 tokens. Another characteristic that this wallet boasts is that it has the ability to conduct atomic swaps, which are based on the implementation of exchanges without intermediaries using smart contract technology

Pros:

• Mobile app support
• Desktop version support
• Multicurrency
• Multi-signature
• Open source
• Private keys are stored on the user's device;

Minuses:

• Lack of web interface support

Conclusion. Atomic Wallet is theoretically completely safe for storing funds. The wallet is open source, which significantly reduces the likelihood of errors or hidden vulnerabilities being introduced into the program. Moreover, sensitive data such as passwords are encrypted and stored only locally on the end user's device.

Crypto wallet #3 HolyTransaction

A “hot” version of the popular wallet, which is loved by many for its convenient service and multi-currency.

Advantages:

• Supports more than 30 digital assets;
• Convenient functionality;
• Buying different coins;
• Quick registration and access to your account.

Flaws:

• Low level of security (hackers can gain access using phishing links and other methods);
• There is no Russian version of the site;
• Currency exchange restrictions.

Whether or not to store money on HolyTransaction is your choice. If you need to change tokens or conduct quick transactions, for example, make a deposit on an exchange, it is perfect. But it is not suitable as a “safe” for capital.

User reviews about the HolyTransaction wallet

@Dmitry

I got some coins, it seems convenient, but I’m worried about the security, I don’t trust it yet. I'll keep using it and we'll see. I hope I won't be left without coins.

@ARI

A good convenient application, you can buy cryptocurrency inside a crypto wallet. Lots of cryptocurrencies, fast registration. In general, very good for a hot wallet.

@CryptoTrader13

A good wallet for working with exchanges, quick access, the ability to exchange, many types of currencies, relatively fast transactions - these are some advantages for those who actively trade.

Review of exchange wallets

There is an opinion that storing funds in exchange accounts is an undertaking doomed to failure. However, millions of investors and traders around the world choose exchanges, because only custodial wallets provide a subsequent return of funds in case of loss of the physical media.

Currency.com

Currency.com is an online tokenized asset trading platform designed to make cryptocurrency transactions quick and easy. The Currency.com platform facilitates not only trading of tokens, but also other types of financial assets. Recently, Currency has significantly improved its functionality, and now the exchange can rightfully be called not just an excellent place for conducting transactions, but also the safest place to store your cryptocurrencies.

Pros:

• Official regulation: the exchange is entirely aimed at interacting with the user, and stores his funds in accordance with the legislation of the Republic of Belarus. This reduces non-stock exchange risks
• Easy deposit and withdrawal of funds: cryptocurrency stored on currency.com can always be easily withdrawn, just as it is easy to replenish your wallet.
• Full Russian localization: all exchange functionality is completely in Russian
• For residents of Russia and the CIS countries, you can always use the withdrawal of funds to Sberbank accounts
• Over 1000 liquid assets that allow you to store not only cryptocurrency, but also any kind of other financial instruments in complete safety and in accordance with global legislation.
• Currency.com can always provide the user with the necessary reporting, which will confirm the legal origin of the funds.

Conclusion. Currency.com is one of the best options for storing cryptocurrency for investors located in the CIS countries. Low commission costs and fast withdrawal of cryptocurrencies to any payment systems make Currency a clear leader in the storage market. The security of the end user is the priority goal of the Currency crypto exchange, for which advanced technologies were used in its development. For example, all the necessary data is stored on Equinix data processing servers, which services such giants as NASDAQ and Dow Jones, the Frankfurt and London Stock Exchanges.

Binance

Binance is currently one of the largest cryptocurrency exchanges in the world, and is the most popular among traders. The platform has a huge amount of functionality and allows you to store funds safely, constantly improving its protocols.

Pros:

• Large list of supported tokens
• When exchanging cryptocurrency for cryptocurrency, Binance's fees are the lowest in the industry.
• Binance takes security very seriously, and upon registration, users are asked to set up two-factor authentication (2FA), further demonstrating the exchange's commitment to secure storage.
• Since Binance has become one of the most popular exchanges for buying, trading and selling cryptocurrencies, there are a lot of transactions happening on its platforms all the time. This is an important factor that allows you to quickly carry out transactions with assets, and, if necessary, move funds in such a way as to extract maximum profit from storage.

Minuses:

It is unknown in which country the exchange is registered.

Conclusion. Binance offers a huge number of internal digital wallets for over 80 cryptocurrencies, with the most popular ones including BTC, ETH, USDT, EOS and BNB and many others; In addition, for those who still consider using an exchange wallet unreliable, a “trusted” wallet option called Binance Trust Wallet was invented, which allows you to store Ethereum and more than 40 tokens from the decentralized application environment; Integrated directly with the blockchain, Trust Wallet is a wallet that allows you to fully control your assets without leaving the Binance environment.

Coinbase PRO

Coinbase Pro, formerly known as GDAX, is a cryptocurrency exchange and trading platform. This exchange stands out among other things due to its low fees and strong security measures (it has never been hacked). Additionally, the platform stores 98% of user funds offline using cold storage.

Pros:

• Currently, this is the easiest, safest and cheapest method of exchange due to low commission costs.
• High security of the platform due to the storage of 98% of funds offline and frequent technical and financial audits.
• Very good user interface and intuitive navigation.
• Wide range of fiduciary deposit and withdrawal options.
• Insured deposits.

Minuses:

• Private keys are stored on Coinbase servers, which does not protect users from hackers gaining access to their funds;
• Large volumes of requested personal data: KYC and AML are impeccably observed on the exchange, which will not allow you to fully interact with the platform without entering your personal data into the database.

Conclusion . Considering all its features, Coinbase Pro is undoubtedly one of the best exchanges on the market if the user is not confused by the amount of personal data requested.

Huobi

Huobi is a fairly secure, trustworthy platform that has managed to maintain a positive reputation, free from issues related to fraud or major glitches. Although today, due to active restrictions on cryptocurrencies in China, its jurisdiction has been transferred to other countries, Huobi continues to increase the volume of transactions and provide users with safe storage of funds.

Pros:

• High liquidity;
• Has an interface compatible with mobile devices.

Minuses:

• Transaction fees are quite high;
• Provides several ways to top up your account.

Conclusion. Huobi Exchange has invested heavily in security and has undergone many third-party tests. They offer two-factor authentication, SMS and email notifications, and PGP encryption. Over 98% of client assets are stored in a multi-signature cold wallet, providing a high level of security for the funds stored there. By the way, once the exchange was hacked, however, the attackers were unable to steal user funds.

Crypto wallet #4 COINOMI

Mobile application for Android and IOS, characterized by quick access. Although Coinomi falls under the “hot” category, users report high security.

Advantages:

• Support for more than 80 crypto assets;
• Russian-language interface;
• Dynamic commissions;
• Conversion within the application;
• Quick registration;
• Possibility of anonymous use.

Flaws:

• Lack of KYC (verification), which is not always good for some users;
• Mobile version only;
• There is no possibility of additional security methods, for example, when connecting to third-party Wi-Fi points.

COINOMI users note its convenience.

User reviews about the COINOMI wallet

@Andrew

I like the ability to convert currencies within the app. There is no need to enter or withdraw currencies anywhere. Everything can be done using your phone within 5 minutes.

@CoinMania

A normal wallet for some functionality, but I don’t see the point in storing all the coins there. The phone constantly connects to “left” Wi-Fi, so it can hardly be called secure.

@Rom

A good wallet for my phone, many currencies I need, adequate commissions. I like.

Results

A cold cryptocurrency wallet is an excellent solution for storing electronic money. If you are not irresponsible about the safety of your keys, nothing will happen to your cryptocurrency.

For example, I always make backup copies , storing them not only in text documents, but also offline . A couple of times there were situations when only this precaution came to the rescue. Therefore, I advise you - do not neglect safety and show maximum vigilance in this matter .

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Trezor

• Trezor provides storage for 11 cryptocurrencies and tokens based on the ERC20 standard, including EOS;
• Two-factor authentication;
• Password manager;
• Convenient design with two buttons and an informative display.

Wallets with the ability to synchronize desktop and mobile devices

When two devices are synchronized, the level of protection increases significantly.

For example, the Trust wallet, a multi-currency wallet, transfers all control over private keys to protect assets. Coins can be protected using biometric data (for example, a fingerprint) and a PIN code.

This wallet allows you to accept and send payments in different cryptocurrencies - it supports 53 blockchains and more than 160,000 assets. In addition, here you can buy cryptocurrency using a card for fiat money.

As with other wallets, the user gains access to cold storage accounts without revealing their private key. To send/receive assets, a simple scheme of scanning a QR code from the screen is used.

Security of funds

Working with the “old guys” and at the same time studying which cryptocurrency will grow in the near future, you can’t do without a wallet. Of course, you can use the paper version - write the wallet address and passwords on the page and not show it to anyone, but no one works like that anymore. The safety indicator remains one of the most important in choosing a particular model. In order to make an accurate choice, it is worth considering the following aspects:

1. Code type: open or closed.
2. On whose side the keys are stored: the owner of the wallet or the manufacturer.

Popular developers are constantly concerned about the security of clients, and if hackers hack the keys, they can even return savings so as not to lose their reputation. To enhance security, create complex passwords by combining numbers and letters, uppercase and lowercase characters.

Alternative options

Types of crypto wallets
In addition to the generally accepted methods listed above, you can also pay attention to the following options, which in one way or another relate to the cold storage of Bitcoin coins.

Multisignature

It is planned to create a Bitcoin wallet, from which funds can be transferred only if the transaction is verified by a pre-agreed combination of the number of users. For example, 2 out of 2, 3 out of 4, 4 out of 7...

☝️

The maximum possible option is confirmation with 15 private keys.

In fact, this is one of the most secure variations of a Bitcoin cold wallet, provided that all the keys required for multi-signature are stored offline. If one of the private keys is lost, access to the wallet is maintained (subject to allowing a variable number of signatures).

Fragmentation of private keys

Dividing the alphanumeric sequence necessary to access bitcoins into several parts, each of which is stored in different places. It is similar to the previous method, but in this case a multisig wallet is not required and the entire process can be implemented manually by simply breaking the key into elements of a linear puzzle. Such a cold wallet has one main drawback - the loss of one of the fragments automatically deprives you of access to the coins.

Smart banknotes

They are analogues of Bitcoin hardware cold wallets. Issued by several manufacturers in the format of credit cards with chips that provide access to a certain amount of BTC.

Physical coins

Gift items with recognizable Bitcoin symbols, on which public and private keys are minted, sometimes in the form of a QR code.

Commission

Let's figure out why Bitcoin has a high commission in Exodus and Jaxx wallets and how to reduce it?

This problem arose at the end of 2022, when the fees on the Bitcoin network were very high. Now the commissions are minimal, but in the future they may be changed upward, so this scheme is needed for familiarization. Most of the commission goes to pay miners to quickly confirm the transaction and get it into the first generated block. The size of the commission is determined automatically and depends on the mempool . It is impossible to set a commission manually; the developers specifically created this functionality for fast transfer speeds. The only way to save money is to monitor the mempool by sending transactions during off-peak hours.

Also, the size of the commission is affected by the frequency of use of the address ; its value decreases with a small number of transfers.

Example

We have Petya - a miner, and Ivan - a holder. Ivan bought one Bitcoin a long time ago and put it in cold storage, and Petya’s farm digs Bitcoin around the clock. When a block is found, a small amount is sent to its address. Let's imagine that in a month he will have 1 BTC at his address.

What do you think, if Petya and Ivan now want to withdraw their Bitcoin to other addresses, who will have a higher commission? Of course Petya has, because the Bitcoin network has a lot of work to do to integrate all his small “changes”. And Ivan has only one input and one output, which means fewer calculations will be required.

Instructions for reducing commissions on exodus and jaxx

You can log in using the uploaded private keys to the electrum.org wallet and make a transaction from it on the BTC network, choosing the optimal commission size.

• Install the electrum.org wallet;
• Select “ Use the private key of another wallet ” (in our case exodus or Jaxx);
• We log into Electrum and see the balance of our Bitcoin wallet;
• In the “ Sending ” tab, insert the desired BTC address to which we want to send money;
• After entering the wallet and transfer amount, go to preview and we see the amount of bytes of our transaction. Next we go to bitaps (a site where you can see the recommended commission) and calculate its value as product of number of bytes per satoshi. You can also simply move the commission slider to the average value (it is not recommended to set minimum commissions, since the transfer may hang on the Bitcoin network for several days);

• We enter the resulting amount into the commission slider line.

Done, we have reduced the cost of network commissions.

There are four ways to buy cryptocurrency - exchangers , crypto exchanges , from a wallet and using a payment system . The fees for these methods are often very different. Let's look at them in more detail.