What are the best crypto wallets?

There are different types of crypto wallets, so it is difficult to say which ones are the best. 

The best thing to do is to differentiate between the different types and mention for each of them which ones are the most widely used. 

In fact, there are different types to meet different market needs, as not everyone has the same needs. 

The different types of crypto wallets and the best ones

Crypto wallets can be divided into two categories: custodial and non-custodial. 

The non-custodial ones are the original ones, i.e. those whose private keys are exclusively in the possession of the user. 

The first crypto wallet that ever existed was Bitcoin’s original software, v0.1, which only allowed BTC to be held and also acted as a node and mining software. It was, of course, a non-custodial wallet. 

However, non-custodial wallets do not satisfy all needs, because there are at least two needs that they cannot satisfy. 

The first is, trivially, the delegation of responsibility. 

Since crypto wallets are basically used to protect and use private keys, in the case of non-custodial wallets, the responsibility for keeping private keys is in the hands of the user alone. 

There are users who do not want to take this responsibility and prefer to delegate it to someone they trust. Although this also means denying the trustless nature of cryptocurrencies, it is a strong market need, so much so that custodial wallets are now the ones most people use. 

Moreover, if you need to give your cryptocurrencies to a third party who needs to use them, it is much more convenient to entrust them to a custodian, as the alternative is to use decentralised smart contracts that, for example, cannot interact directly with fiat currencies.

Cold and hot wallets

A special sub-category of non-custodial wallets are hardware wallets, i.e. those that store private keys on an external device that is usually kept disconnected from the network. 

These are the most secure wallets, not only because they store the keys offline, but also because these keys are stored inside the device in a way that is inaccessible to anyone. For the same reason, however, they are slightly less convenient to use. 

Wallets that store private keys offline are called cold wallets, and they are arguably the most secure because they make it impossible to access the keys themselves from the outside via the Internet while they are offline. 

Wallets that are connected to a network are called hot wallets and are less secure. 

Multi-chain wallets

Another distinction that needs to be made concerns the blockchains that crypto wallets are compatible with. 

For example, Bitcoin v0.1 was only compatible with BTC, and even today the client used to run Bitcoin nodes is only compatible with its blockchain. 

Many crypto wallets, on the other hand, are multi-chain, but you have to be careful because there is not one that is compatible with all the blockchains in the world. 

So when you decide to use a crypto wallet, you have to ask yourself which blockchain you want to use, and you almost always end up using several, depending on which blockchain you want to operate on. 

However, there are many that support many blockchains, such as the custodial blockchains of exchanges. 

Multi-service wallets

The main function of a crypto wallet is to store private keys and allow the user to use them. 

However, there are many wallets, including non-custodial ones, that also provide other services. 

For example, some allow staking, for those blockchains based on proof-of-stake. 

Others allow crypto-to-crypto exchange, and some even allow fiat currency trading. 

This is also why multiple wallets are often used, depending on the specific needs of individual users. 

Even when it comes to simply using private keys to make transactions, there are differences between wallets, as some offer transaction anonymisation and others do not.

The KYC

In theory, another distinction could be made between wallets with KYC and those without. 

However, all truly decentralised non-custodial wallets do not have KYC, partly because identity verification can only be done by an authorised third party. 

There are non-custodial wallets with KYC, but they are not fully decentralised. 

There are also rare cases of custodial wallets without KYC, but these are increasingly rare because they are de facto illegal in many countries. Those offering crypto services as non-custodial wallets are only required to do so after verifying the identity of the users in many countries. 

So in general, all custodial wallets have KYC and the vast majority of non-custodial wallets have KYC. 

The Best Non-Custodial Crypto Wallets

Of the non-custodial wallets for bitcoin, two in particular are worth mentioning. 

The first is Electrum, which has been used by many people for many years. 

It is a bitcoin-specific wallet that does not support other blockchains or services. It does, however, support the Lightning network. 

Also worth mentioning is Wasabi, which is a non-custodial, bitcoin-only wallet, but which offers transaction anonymisation through built-in blending in addition to Electrum. 

As far as Ethereum is concerned, MetaMask is worth mentioning as it is by far the most widely used. However, it is primarily a browser extension, and therefore has a slightly higher level of risk. However, it supports more blockchains and also offers buying and selling services. 

There is also Trust Wallet, which supports both bitcoin and ethereum, and Binance Smart Chaine Tron. It is widely used mainly because Binance is behind its development. 

The two most widely used hardware wallets are undoubtedly Ledger and Trezor, which are now widely used especially by those who need more security for long-term cryptocurrency storage. 

A very special, but less and less used, cold wallet is the so-called paper wallet, which is a trivial piece of paper on which private keys are pinned. It only allows you to receive cryptocurrencies, not to send them, but you only need to enter the private keys into an online wallet to be able to send them as well. It is no longer widely used because there are several problems with storing a piece of paper.

The best custodial crypto wallets

Among the custodial wallets, the most widely used are those of crypto exchanges and those of online betting or landing services. 

Of course, it is necessary to mention those of the major exchanges, such as Binance, Coinbase or Bitget, which are used by many millions of people, also because they support many blockchains and offer many additional services. 

In terms of number of users, this is by far the most common type of crypto wallet, mainly because of the variety of services offered. 

Their weakness is the exchanges themselves, because in the event of a bankruptcy (such as FTX), for example, you lose access to all the funds held on them. However, their convenience and ease of use, combined with the variety of services offered, make them the preferred choice for most users. 

It should be noted, however, that users of these custodial wallets are often also users of other non-custodial wallets. 

Some users also use the crypto wallets of landing services such as Celsius and BlockFi, which went bankrupt last year, or Nexo, which is still fully operational. In this case, the choice really depends on the use of the landing service and, in particular, the interest that can be earned on deposits. 

In fact, there are thousands of different options, many of which are very different from each other. In any case, users almost never use only one crypto wallet. 

Finally, it is indeed advisable not to hold all your cryptocurrencies in a single wallet, so that you do not lose access to your entire wallet in the event of a problem.