New to cryptocurrencies? Need a safe place to store your crypto assets? Check out our list of top hot wallets!
Adhering to the “Not Your Keys, Not Your Crypto” philosophy by keeping your cryptocurrencies in a private wallet to which only you hold access has been a core component of the Serious Crypto Owner 101 user manual after the Mt. Gox collapse in 2014. While leading exchanges like Binance and FTX have greatly bolstered up their defenses (and insurance policies), the only question for some serious HODLers is still: hot wallet or cold wallet?
(You can stop googling that manual now. Not a real book.)
This guide takes a look at the best hot wallets to use for 2022, and important points to consider. Let’s review the basics.
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What Are Hot, Cold and Non-custodial Wallets?
Wallets are used to help cryptocurrency holders secure their assets on the blockchain while safely storing them. Cryptocurrency wallets are typically split into two or sometimes three categories.
Hot wallets are the most common and diverse, acting as an app or browser extension on your device. Transactions are completed by signing them from within your wallet. Being strictly software, a variety of features are available thanks to many different wallets competing to be the most user-friendly and convenient to new users or daily traders. Hot wallets generate a 12 to 24-word code that can be used to access or recover a wallet and all of its addresses.
Cold wallets are most focused on security, privacy, and long-term storage. Their private key, or the unreadable code used to sign a transaction, is stored offline in an electronic device that requires physical impute and verification to communicate with the blockchain. Cold wallets are much more restrictive since there is less demand, and they often provide storage for cryptocurrencies on multiple chains. Hot wallets typically only operate on a single blockchain, making using multiple necessary for most investors that diversify their portfolios.
The 5 Best Hot Wallets in 2022 For Holding Your Cryptocurrency
- MetaMask (Ethereum and EVM chains)
MetaMask runs all of the Ethereum software on its own servers. Users can interact with websites running on Ethereum without having to host their own node, giving millions of people the opportunity to deploy smart contracts and access Dapp services.
MetaMask also supports cold wallets such as Ledger and Trezor, but a new wallet address must be added to ensure your private key is generated on the device and never exists online.
Tips for Using MetaMask
Each transaction, network change and smart contract requires signing with your private key. This can be as easy as accepting a pop-up within the wallet, but it can sometimes not appear, so make sure to manually open the browser extension and check if it does not open itself.
- Trust Wallet (Binance Smart Chain, others)
Trust Wallet is another mobile-only wallet, but is fully decentralized, open-source, and can manage over 160,000 different cryptocurrencies. Multicoin support is not as common as you might imagine, as most hot wallets aim to be the best option for a single blockchain. Trust Wallet takes the opposite approach, combining an assortment of features to be a one-stop shop for crypto traders.
Trust Wallet can be used on either mobile or a desktop browser. The browser extension can be directly linked to Kyber Network’s native decentralized exchange, making it easy to move or trade your cryptocurrency.
When attempting to buy cryptocurrencies, a lot of new users struggle to find an onramp that converts their fiat currency into virtual assets. Trust Wallet lets users buy cryptocurrencies with a credit card that can quickly be traded or swapped for other tokens, all within the wallet software.
Finally, Trust Wallet allows staking directly from both versions of the wallet and access to DApps through the browser version. Tron (TRX), Cosmos (ATOM), Kava (KAVA), VeChain, (VET), and Callisto (CLO) can currently be staked, but more will be added in the future. DApps can connect to Trust Wallet through your browser and allows paying for services or products in cryptocurrency, or access to other Web 3.0 content.
Tips for Using Trust Wallet
If you’re having an issue with Trust Wallet, their customer support is easily reached by opening a support ticket. Their help center is well-aware that a large number of features can be hard for new traders to use and they respond quickly to requests. Their FAQ is also helpful if you have questions about Trust Wallet before you download the app or browser extension.
- Phantom Wallet (Solana)
Phantom has taken a huge initiative to make viewing your assets simple and quick. A tab next to your listed assets can be selected to view all NFTs within the wallet, as unlike Ethereum where NFTs have their own smart contracts, Solana NFTs are SPL tokens, similar to altcoins on the network.
Phantom Wallet is especially useful if playing blockchain games, as transactions are low and fast enough on Solana to justify microtransactions to move or swap in-game assets within the app.
Tips for Using Phantom
- Coinbase Wallet (Bitcoin, Ethereum and others)
Coinbase has introduced a non-custodial wallet for users preferring to manage their own cryptocurrencies. The wallet for your Coinbase account is a custodial wall, meaning the private key is not under your control. Control of a private key reflects true ownership of digital assets within the wallet. The new Coinbase Wallet is an app that grants full control of your cryptocurrency as well as features offered to users of the exchange. Using the Coinbase wallet allows a chance for airdrops, entering into ICOs (initial coin offerings), access to DApps, and participation in the upcoming NFT marketplace.
Coinbase wallet currently supports Bitcoin, Ethereum, all ERC-20 tokens, and many other currencies supported on the Coinbase exchange. Transferring, receiving, and storing your crypto is incredibly easy, even for new users.
The wallet is free to download, but trading fees still apply when converting cryptocurrencies or trading them with other wallets. Fees vary from 1.5% to 4% depending on the currency and where the trade is occurring.
Tips for Using Coinbase Wallet
Coinbase wallet is great to receive the benefits of exchange while still remaining in control of your crypto, but be careful of the trading fees associated with the Coinbase exchange. Also consider that, unlike the non-custodial wallet Coinbase offers, the Coinbase wallet is open to the same cyber threats other hot wallets are vulnerable to.
- Nova Wallet (Polkadot, Kusama)
No, not Novi Wallet, the software being designed by Facebook. Nova is the premier mobile solution for the Polkadot and Kusama ecosystems. All tokens for both blockchains can be stored and eventually staked. Due to being a new app for a relatively new blockchain, Nova Wallet currently only allows the staking of Polkadot, Kusama, and Westend.
Nova is specifically designed for Polkadot, and Kusama, and the parachains they have elected to exist in their networks. Inside the wallet UI, each parachain (protocol that owns a slot) has its native assets organized together. Nova makes owning cryptocurrencies for each protocol easy to view and manage, and can also be used to contribute Polkadot (DOT) to future crowdloans and receive their rewards.
The wallet is currently only available on mobile and is not as established as other hot wallets on this list, but not for a lack of trying. Polkadot/Kusama wallets are still very limited and none have as pleasant of a UI or user experience as Nova Wallet, making it a great way to participate in the Polkadot ecosystem and participate in the future crowdloans.
Tips for Using Nova Wallet
Be aware that staking $DOT tokens or contributing them to crowdloans is a long-term commitment of your capital and your $DOT will be untouchable for an extended period of time. Once you have selected one or multiple validators for your $DOT tokens, a week must pass before receiving rewards, and the unstaking period is 28 full days of no rewards. $DOT contributed to crowdloans are locked even longer, as they enter into a secure smart contract for the entire period of the parachain’s rent period, usually 96 weeks.
- Atomic Wallet (multi-asset)
- Gero Wallet (Cardano)
- Keplr Wallet (Cosmos)
- Exodus (Bitcoin)
- MyEtherWallet (MEW)
The Advantages of Using a Hot Wallet
Hot wallets are the most common wallet used by cryptocurrency traders and investors, and for good reason.
Firstly, hot wallets can be used on a mobile phone, a handheld device such as a tablet, or on a laptop or computer. They’re free to download and easy to use, and serve as the starting point for almost all crypto beginners. Usually, users only graduate to a cold wallet after amassing a large portfolio or fully understanding how wallets are used to secure cryptocurrencies and other virtual assets.
Hot wallets also have the most operability out of all forms of cryptocurrency storage. Users can quickly connect their hot wallets to various DeFi protocols and exchanges and immediately trade tokens, view privileged information, or access staking pools or yield farms.
Cold wallets on the other hand usually require the physical device to be connected via USB or Bluetooth, have their PIN entered, and then the correct app selected before signing a transaction or connecting to a website. Going through so many steps may be ok with a long-term holder or someone with a sizable portfolio, but not for swing traders that make many transactions per day.
Coupled with exponential progress in Know-Your-Transaction (KYT) blockchain analytics by companies like Chainalysis and Elliptic, trying to hide your crypto from the tax man, in the long run, may very well be a costly exercise in futility.
Using a hot wallet is super convenient and a great way for beginners to get a grip on crypto, but it also comes with serious risks. If your computer or phone’s security is breached, and bad actors gain access to the wallet software, they will likely be able to steal your crypto in short order.
In many cases, users may even unwittingly do all the heavy lifting for cybercriminals, by blind signing the wrong smart contract or falling for phishing tricks via malicious email or bad links.
It’s important to make sure that your hot wallet’s software is up to date, and it is advisable not to hold the bulk of your portfolio on hot wallets, but rather in a hardware wallet if you carry some serious bags. It’s also smart to use different hot wallet applications on different devices, spreading out the risk. Using 2-factor authentication (2FA) such as Google Authenticator where possible is always advisable.
Just make sure that you keep all the private key or recovery seed details in a safe place offline which only you can access. While it might be true that “Not Your Keys” equates to “Not Your Crypto”, the same can be said for “No Keys” and “No Crypto”. So hold on tight to yours!