![]() ![]() A custodial wallet is still a wallet, but if you don’t have access to the wallet's private keys and must ask permission from the exchange to move or spend your crypto, then whose wallet is it? We bought crypto on a centralized exchange, and the exchange held the crypto. The alternative would be custodial wallets, which is how many of us started our crypto journey. Another name for a wallet you control is a self-custody wallet. The crypto wallet types above are all non-custodial, meaning you hold your crypto rather than a third party like an exchange providing custody. Neither wallet type has reached broad adoption as of yet, as both bring some limitations, such as challenges connecting to dApps. Smart-contract wallets - as the name suggests - use smart contracts to secure your crypto, letting you set withdrawal limits and recovery options.Online crypto wallets are accessed through a website or crypto wallet app - and likely use smart contracts under the hood (Nexo Wallet does).Online crypto wallets, like the Nexo Wallet, covered in our Nexo exchange review, and smart-contract wallets, such as Argent Wallet and Gnosis Safe, round out the crypto wallets list. Examples: Trust Wallet, Ledger, Sparrow.Con: Cumbersome to use for routine transactions.Pro: Ideal for businesses, crypto project treasuries, or high-value portfolios. ![]() Multi-sig is one of the safest crypto wallet types, and the feature is supported by several top crypto wallets like Trust Wallet and Electrum. For example, you might need two of three signatures to approve a transaction. Multi-sig wallets require a predefined number of signatures (approvals) to sign transactions. To get in, you’ll need more than one key. You can think of a multi-sig wallet like a vault door with more than one lock. Con: Must connect the wallet to make transactions.Pro: More secure because your private keys are stored on a separate device.Once connected to your computer or mobile device, apps can ask your wallet for “permission” to make transactions, which you can approve or deny. Hardware wallets, also called cold wallets or cold storage wallets, generate and store your wallet’s private keys on a device that’s not connected to the internet. Examples: MetaMask, Electrum, Trust Wallet, Coinbase Wallet.Con: Less secure compared to a hardware wallet.Pro: Convenient to use and easy to connect to dApps.Hot wallets trade some security for convenience. The same is true for nearly all mobile crypto wallets for phones and tablets. For example, a browser extension wallet would be a hot wallet because the computer is online. Hot WalletsĪ hot wallet, sometimes called a software wallet, is a wallet for which the private keys were generated and stored on a device connected to the internet. Let’s explore the different types of crypto wallets. The Ethereum network supports EOA accounts as well as smart contract accounts, covered in just a bit. This lets you connect to dApps easily while protecting your crypto in your hardware wallet.Ī wallet for which you control the private keys and seed phrases is also known as an externally owned account (EOA). For example, you can use a hot wallet like MetaMask paired with a hardware wallet like Ledger. But in some cases, you can use two wallet types in parallel. There are several types of crypto wallets, each with its pros and cons. Token Detection: It’s entirely possible to have crypto in your wallet that you can’t see, especially on Ethereum Layer 2 networks.Customer Support: Product support for crypto wallets can range from phone help to email to Discord support or even non-existent support.Ease of Use: Crypto can be complicated extra points for wallets that are people-friendly without sacrificing security. ![]()
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