As crypto slowly creeps into the public eye, it’s important that new investors understand the importance of wallet choice. Cryptocurrency investors, unlike the traditional investors have an unrivaled interest in privacy and owning their wallet keys.
Owning your keys is akin to being the one person with access to certain assets, such as writing your password on a piece of paper and nowhere else. Banks have part ownership of your fiat even if it's in your bank account. Ownership is at the heart of the cryptocurrency community which is why wallet choice is always a fierce debate.
What is a Crypto Wallet?
A crypto wallet is a digital or physical storage space for digital assets. Wallets are either hot or cold. The most common crypto wallets are centralized exchange’s ‘hot' wallets, meaning assets are easily accessible and tradeable.
Cold wallets on the other hand are meant for storage, privacy, and complete ownership. Almost all ‘cold’ wallets are physical, such as ledgers, which grant complete privacy and unrivaled ownership - but come with their own risks.
Wallets on popular centralized exchanges, such as Binance will be stored on a hot exchange wallet so the crypto assets are always ready to be used. For this reason, most wallets on this list will be ledgers or software-based hot wallets, like MetaMask.
A software wallet is simply a storage for any cryptocurrency online. Examples can be a centralized software wallet like your wallet on Binance or a wallet where the user owns the keys ex: Metamask.
Hardware wallets such as Ledgers are physical storage devices for your cryptocurrency where the owner has complete access over their ‘keys’ to the cryptocurrency inside.
*Lists are in a random order
The Best Software-based Wallets
- Coinbase Wallet
The Coinbase wallet is a great example of a non-custodial wallet offered by an exchange. The Coinbase wallet gives the user complete ownership of their cryptocurrency. Accessed through a dApp browser, its clean interface means it’s a great option for beginners wanting to take control of their assets. The sending and receiving of cryptocurrency is incredibly simple with easy to share addresses and usernames.
However, the coinbase wallet lacks the ability to store hundreds of different cryptocurrencies like other wallets and hence limits its usage.
You can start using a Coinbase wallet here.
MetaMask is an Ethereum wallet with a simplistic design and open source code, attracting users with its dedication to privacy. Like most non-custodial wallets, you have the ability to interact with dApps and DEXs.
The downsides of MetaMask include its expensive gas fees included with the ETH blockchain which is not MetaMasks fault but a steep learning curve for new traders. Also, being a browser-based wallet, it’s online like the Coinbase wallet making it more vulnerable to attacks compared to a hardware wallet.
You can start using a MetaMask wallet here.
- Exodus Wallet
Available on desktop and mobile, the Exodus wallet boasts a fresh and easy-to-follow interface in the shape of a pie chart and great access to major hardware wallets like the Ledger Nano S, which we will review later.
The wallet's main features are a growing list of ERC-20 tokens such as VeChain, Tron and Loopring with storage for crypto fundamentals like Bitcoin and Ethereum. Also, Exodus wallet has been around since 2015 which gives its users safety and reliability.
You can start using an Exodus wallet here.
Another completely open source wallet Mycelium offers lightning fast connection for coins such as Ethereum, Bitcoin and stablecoins like USDT. It has low fee’s starting at around $0.25 and has great hardware wallet support. Its dominant goal is to be an extremely secure storage place for Bitcoin.
Mycelium may be the gold-standard for long-term cold storage of cryptocurrencies, especially for a software based wallet. They allow users to delete their private key, making the wallet unattainable until the user wants to regain access.
Some of the wallets only flaws are its inability to store several cryptocurrencies and a steep learning curve, not made for beginners.
You can start using a Mycelium wallet here.
- Trust Wallet
Owned by Binance, the largest cryptocurrency exchange, Trust wallet has over 5 million active users worldwide. It supports a wide array of cryptocurrencies to store in its mobile app wallet. Trust Wallet is non-custodial, meaning all assets are stored by the users.
A great feature of Trust wallet is its ability to offer staking options inside the wallet on several popular cryptocurrencies such as Tron, Vechain and Cardano.
Simply put, there are very few downsides to the trust wallet, other than it’s not a hardware wallet. It boasts in-app charts, a free-to-download app, and a partnership with Binance, what more can you want?
You can start using a Trust Wallet here.
The Best Hardware-based Wallets
For in-depth details on each wallet's security ability, please see the link attached. Most wallets on this list will share the same penetration deflection, small details are listed on their site.
- Ledger Nano X
Price: $215 (CAD)
Security: Security market leader with a pin code access, seed backup
Features: Holds up to 100 apps, Bluetooth pairing to devices and support for over 1,000 coins.
- Trezor Model T
Price: $335 (CAD)
Security: Touchscreen means no connection required, Open source software from a reputable company, Satoshi labs.
Features: Support for 1,000 coins and touchscreen interface
Price: $119 (CAD) (only biometric wallet)
Security: Certified by EAL5+, highest level of security available, similar to ledger products.
Features: 3 in 1 (Hardware wallet, software wallet and card wallet all managed via phone app), portfolio management
- SecuX W20/V20
Security: Certified by EAL5+ secure lament, Pin code for access and passphrase, Hidden wallet
Features: Lightweight and built in browser makes it easy for transactions
- Ledger Nano S
Price: $85 CAD
Security: Not Open Source and Part of security market leader of ‘ledger’.
Features: Proven track record like Nano X, affordable, 1,000 coins supported, Limited app space
Wallets are the foundation of the crypto sphere, allowing users to safely store their assets as security and privacy are at the heart of most investors. This is why choosing a wallet that suits your needs entirely can be difficult. Just like we like several bank accounts, having several crypto wallets is the best way forward and utilizing several different wallets will mean there is always one available which suits your needs.
The three main wallet uses you should have covered:
- A hot wallet for common transactions and trading making it easier for exchanges
- A decentralized wallet such as MetaMask to grant DeFi access
- A ledger for cold storage for those long term HODLs
Disclaimer: CRAs relationship with Cryptocurrency
Although CRA continues to slowly create guidelines for Canadians investing in cryptocurrency, they are still way behind several other developed countries when it comes to the rules surrounding taxation. Many DeFi protocols, such as yield farming and staking are yet to receive proper guidance from CRA. We should expect to see the number of guidelines rapidly increase as Canadian investors call for them but until then, crypto investors have to take positions that may or may not be accepted by CRA.
*Opinions are for discussion purposes only. This does not represent the views of MetaCounts Cashflow Inc. or its affiliates. Furthermore, this does not constitute legal, accounting, or tax advice of any kind and should not be relied upon as such.