Introduction
Nowadays, cryptocurrency investors can effortlessly buy, sell, and trade hundreds of digital currencies due to the numerous cryptocurrency exchanges available worldwide. However, as the value of digital currencies continues to climb, so does the number of hackers and thieves seeking to exploit investors. Cryptocurrency exchanges, wallets, and individual crypto owners frequently face scams and phishing attempts aimed at stealing their crypto assets. Therefore, choosing a secure cryptocurrency wallet is one of the most crucial aspects of crypto ownership.
There are thousands of different virtual currencies on the market and hundreds of crypto wallets designed to keep them safe. But the sheer number of options can make selecting a secure digital wallet challenging, especially if you want to store all your digital assets in a single wallet.
In this guide, we will explore some of the best digital wallets for storing altcoins to help you choose the right one for your cryptocurrency assets.
What Are Altcoins?
As you might already know, Bitcoin (BTC) is the world’s first cryptocurrency, launched in 2009 by the pseudonymous Satoshi Nakamoto. Bitcoin’s unique design, including its blockchain-based ledger system, inspired developers worldwide to create their own digital currencies. While some of these developers only mimicked Bitcoin’s use of blockchain technology, others directly used Bitcoin’s open-source code to launch their own cryptocurrency projects, making innovative changes to the original design.
One of the earliest altcoin projects was Litecoin (LTC), launched in 2011. Others soon followed, including some of the most popular cryptocurrencies today, such as Dogecoin (DOGE), Ripple (XRP), Dash (DASH), and Bitcoin Cash (BCH). Nowadays, there are thousands of altcoins in the cryptocurrency market, with new cryptocurrencies being launched almost daily.
While most of these projects aren’t necessarily very useful or innovative, some of them are truly original. A prime example is Ethereum (ETH), the blockchain-based smart contract platform, showcasing how ingenious an altcoin project can be. Ethereum created a new market for altcoins because it allows developers to create and launch cryptocurrencies on the Ethereum blockchain. Therefore, while some cryptocurrencies have their own blockchains, others exist on the Ethereum blockchain and similar platforms. These altcoins are also known as tokens.
How to Choose the Right Cryptocurrency Wallet
Many cryptocurrency enthusiasts buy, sell, and trade altcoins to make profits. Some also employ the HODL (holding on for dear life) strategy if they believe the value of an altcoin will continue to rise in the future. All of this, of course, requires a secure wallet that can store these altcoins safely. While most altcoins have their own digital wallets, managing different wallets for each cryptocurrency can be exhausting and time-consuming for investors. Thankfully, there are more practical ways of storing multiple altcoins than constantly switching between different wallet applications.
To choose the right cryptocurrency wallet that will protect your funds from hackers and help you manage your assets easily, you should first understand how digital wallets work and what types of wallets are available to you. Let’s examine the different cryptocurrency storage options and the benefits and disadvantages of each method.
Types of Cryptocurrency Wallets
As you might already know, a cryptocurrency wallet is essentially a way of interacting with a cryptocurrency blockchain to make transactions. In other words, you are not actually storing coins in your digital wallet; you are storing the information – the password if you will – necessary to access your crypto funds.
Each digital wallet contains an access key, known as a private key, that allows you to move your funds on the blockchain of your chosen cryptocurrency. The private key signifies your ownership of your funds, and you can’t sell, trade, or cash out your crypto assets without this piece of information. If a hacker obtains your private key, they can easily control all your assets and drain your accounts. If you lose your private key due to forgetfulness, corrupted drives, or bad luck, you will be locked out of your wallet forever. Therefore, the most important factor to consider when choosing a crypto wallet is where and how it stores your private keys.
Two key factors differentiate cryptocurrency wallets: whether they are hot or cold wallets (connected to the internet or not) and whether they are custodial or non-custodial wallets (you control your funds or the wallet provider does).
Custodial vs. Non-Custodial Wallets
As mentioned, cryptocurrency wallets keep your private key safe. Some wallets do this by storing your private key on their servers. The advantage of this arrangement is that you don’t have to worry about hiding your private key or hackers accessing your computer. The responsibility of securing your private key rests with the wallet provider, which usually has better resources than individuals when it comes to protecting sensitive data.
On the downside, hackers often target wallet providers because they have a lot to protect. In recent years, hackers have stolen millions of dollars worth of cryptocurrency from wallet providers. There have also been instances where the wallet providers themselves have disappeared overnight with all your crypto funds, leaving you without your private keys and no way to recover your assets.
Therefore, if you use a custodial wallet service, ensure you are working with trustworthy companies with excellent security practices. This might eliminate some of the most accessible and obvious choices, but it is crucial for security.
On the other hand, if you prefer a non-custodial wallet, you must be prepared to take responsibility for the security of your funds. This might mean going the extra mile with additional security steps or investing in more expensive wallets to ensure your assets are safe.
Hot vs. Cold Wallets
Hot and cold storage, or hot and cold wallets, differ in how they keep your private keys. Online wallets like exchange wallets, desktop wallets, and mobile wallets run on internet-connected devices and are referred to as hot wallets.
Internet connection constitutes a security risk for these types of wallets because your devices are vulnerable to hacking attempts, and your funds can be stolen if your devices are successfully hacked. An innocuous-looking app or an email you open without thinking can easily infect your device with a virus designed to drain your funds. Of course, some hot wallets are also custodial wallets, so your funds are protected by the security measures the wallet provider employs.
Cold wallets, or cold storage devices, keep your private keys completely offline, away from the clutches of hackers who want to steal your crypto assets. Cold storage can be accomplished in two ways: you can use a hardware wallet resembling a USB stick or print out a private key on paper, creating a paper wallet.
Cold storage is generally considered safer than hot wallets because they aren’t connected to the internet and can’t be hacked. Cryptocurrency owners are generally advised to invest in a cold wallet if they own large amounts of cryptocurrency. However, cold wallets also have a disadvantage. If you misplace a cold wallet, you might lose your entire crypto savings. In fact, this is a major reason why people lose their cryptocurrency. Cold wallets can protect you from hackers, but they don’t protect you from being human and making mistakes like throwing out your wallet, misplacing it, or throwing it in the garbage.
Where to Store Your Altcoins
No digital wallet is perfect, and it all comes down to choosing a wallet that best suits your lifestyle and security practices.
The benefit of hot wallets is that they are very convenient. You can simply log on and trade crypto from anywhere with internet access, but you might have to take extra security measures to protect your assets. You can choose a cold wallet for extra security, but if you constantly lose and misplace your stuff, that might not be a good option for you.
Luckily, we have compiled a list of good wallets for storing cryptocurrency and explored their pros and cons, so you can make an informed choice.
Hardware Wallets
Ledger Nano S / Ledger Nano X
Ledger is one of the most trusted and well-known hardware wallet companies in the world. They have two hardware wallet models on the market, Ledger Nano S and Ledger Nano X, both supporting over 1,000 cryptocurrencies.
Out of the two, Ledger Nano S is the more basic model and comes at a more affordable price. You can start using a Ledger Nano S wallet simply by connecting it to your computer via a USB cable.
Ledger Nano X is the latest Ledger hardware model, an upgrade over Ledger Nano S. This model has Wi-Fi and Bluetooth access, so you don’t have to deal with USB cables. The price tag for Nano X is quite higher though, so you can just go with Nano S if you don’t care about all the bells and whistles of the upgraded model.
Ledger has a mobile app and a desktop version, so you can easily access your digital currencies while benefiting from the safety of using a cold wallet.
Trezor T / Trezor One
Trezor is another famous hardware wallet brand produced by the blockchain technology company SatoshiLabs. Trezor also has two models, Trezor T and Trezor One.
You can store over 1,500 cryptocurrencies in both of these wallets. Trezor One is the more basic model, whereas Trezor T is more advanced and comes with extended coin support, a full-color touchscreen, and extra security measures.
Trezor is an open-source project that is constantly developing. It has a desktop app for Windows, macOS, Linux, and Android devices, but it doesn’t offer a mobile app, so if trading on the go is a priority for you, this might not be the best option.
KeepKey
KeepKey is another hardware wallet you can use for cold storage. You can store around 40 cryptocurrencies in a KeepKey hardware wallet. While its support for altcoins isn’t as developed as that of Ledger or Trezor wallets, the advantage of a KeepKey wallet lies in its price: KeepKey is a lot cheaper than both Ledger and Trezor wallets. If you want the advantages of a cold wallet but aren’t interested in exploring the vast world of altcoins to the limits, this might be a good option. KeepKey still supports some of the most trending altcoins, so you are not entirely out of options.
Software Wallets
Coinbase
Coinbase wallet is offered by the Coinbase exchange, one of the most trusted cryptocurrency exchanges in the business. As you might have guessed, since Coinbase is an exchange service, Coinbase wallet is an online wallet connected to the internet.
This is also a custodial wallet, which means that it’s responsible for defending your cryptocurrency against hackers. Coinbase has a good security record overall and is preferred by both beginners and professionals alike. You can access your Coinbase wallet from a browser, and there is a Coinbase Mobile wallet app available for Android and iOS devices.
You can store hundreds of crypto assets, including NFTs. There’s a two-factor authentication feature for increased account protection. The Coinbase exchange also has a vault service that allows you to store your cryptocurrencies with extra security measures, like delayed withdrawals and multi-signature requirements.
Mycelium
Mycelium is a mobile wallet for Android and iOS devices. It is a non-custodial wallet that lets you be in charge of your own private keys. Mobile wallets usually get a bad reputation as mobile devices can be vulnerable to hacking attempts, but the Mycelium wallet is generally considered a secure option thanks to its deterministic and open-source code.
You can pair and connect the Mycelium mobile wallet to Trezor, Ledger, and KeepKey hardware wallets, so it is a great option for those who want the convenience of a mobile wallet along with the safety of a cold wallet.
Mycelium is primarily known as a BTC wallet, but you can still store a number of altcoins in it, including ERC-20 tokens, Ethereum (ETH), Zero X (ZRX), Tether (USDT), Huobi Token (HT), USD Coin (USDC), and Binance USD (BUSD).
Make sure you create a backup wallet and store it somewhere safe before you start using your Mycelium wallet. This way, you can still access your funds even if your phone is lost or stolen. The Mycelium mobile wallet requires a PIN code for every crypto transaction.
Exodus
Exodus is a popular non-custodial desktop and mobile wallet for iOS, Android, macOS, Windows, and Linux. The wallet supports over 150 digital currencies and frequently adds new ones to the list.
Exodus has an in-built crypto exchange in its app, so users can easily trade cryptocurrency within the safety of their wallets. However, that privilege also comes with higher-than-usual transaction fees, so it may not be for everyone.
The main problem with Exodus is that it is not an open-source project, so it lacks the benefit of independent auditors sweeping through the code to catch any security flaws. That said, Exodus is generally considered a safe and secure option for storing cryptocurrencies.
You should keep in mind that this wallet doesn’t support two-factor authentication. However, you can pair your Exodus wallet with a hardware wallet to increase the security of your assets.
Coinomi
Coinomi is a digital wallet for desktop and mobile devices, compatible with iOS and Android operating systems. The wallet supports an astonishing number of digital assets, up to 1,770 coins and tokens, including NFTs.
Aside from being one of the most versatile software wallets in the market, Coinomi hosts its own trading service within the wallet app. That means you can directly swap cryptocurrencies with others on the wallet, without sending your funds to a cryptocurrency exchange.
Coinomi has had its share of security problems: In 2017, users discovered their Bitcoin addresses were broadcast over the network without encryption, prompting Coinomi developers to address the issue. In 2019, another user discovered a critical vulnerability in the Coinomi desktop wallet that exposed users’ seed phrases. Coinomi acknowledged the vulnerability and removed the issue.
Coinomi isn’t an open-source project since 2018. That means it is hard to know how secure the wallet is because independent third parties don’t monitor its code.
MetaMask
MetaMask is a popular online wallet for storing Ethereum-based assets, such as Ether (ETH), ERC-20 tokens, and NFTs. You can access MetaMask through Chrome, Edge, Firefox, and Brave web browsers. MetaMask also has a mobile app that is convenient for traders on the go.
The wallet allows you to interact with DeFi (decentralized finance) apps on the Ethereum blockchain. You can take advantage of the wallet’s swap feature to trade Ethereum-based cryptocurrencies with other users. You can also connect your Trezor or Ledger hardware wallet to your MetaMask account.
MyEtherWallet
MyEtherWallet, or MEW for short, is another non-custodial web wallet that lets you store and trade cryptocurrencies. As the name implies, MyEtherWallet is mainly designed for Ethereum-based crypto assets, such as ERC-20 tokens, but you can store its built-in trading platform to swap your cryptocurrency for Bitcoin and fiat currencies. MEW takes advantage of smart contracts to automate wallet transactions, and it is frequently used by DeFi initiatives to raise funds.
You can pair MyEtherWallet with a Trezor or Ledger hardware wallet for better security.
Jaxx
Jaxx is a popular and easy-to-use multi-currency wallet for desktops and mobile devices. Jaxx wallet supports over 80 altcoins, including popular virtual currencies such as Bitcoin Cash, Litecoin, Dash, and Zcash.
Jaxx Wallet has a partnership with the Shapeshift exchange that allows users to trade cryptocurrencies within the wallet app.
Final Thoughts
The market certainly doesn’t lack options for those looking for a wallet to store their cryptocurrencies. Many great wallets will secure your digital funds, but the trick is finding one that suits your cryptocurrency trading practices while easing your mind over the possibility of losing your hard-earned crypto.
Most cryptocurrency wallets exist on a sliding scale of security and convenience. The closer you approach one end, the farther you get from the other. While hot and custodial wallets are often more convenient because they are easy to access and require less personal responsibility, they are generally seen as less secure. Non-custodial wallets with cold storage, on the other hand, require a lot of personal responsibility. Overall, the choice depends on how you want to manage your crypto funds: some people might prefer a personal touch, while others don’t want to stress about keeping everything in place.
One good midway option may be to use a non-custodial hardware wallet along with a hot wallet. As you have read, there are many online and software wallets that you can pair with a hardware wallet. Although hardware wallets require a bit of investment as they’re not free like most hot wallets, the peace of mind that comes with cold storage is priceless.
