February 19, 2024, 7:17 am | Read time: 5 minutes
A software wallet stores cryptocurrencies that users manage themselves, either as a desktop app, browser extension, or app. It’s a type of blockchain wallet and is usually available for free download in common app stores online. Which wallets are recommended? TECHBOOK provides an overview.
Overview
Recommended Software Wallets
Metamask
Metamask was launched in 2016 by the U.S. company ConsenSys and is the most established and popular software wallet. Whenever you visit a Web3 site and are prompted to connect your wallet, Metamask usually appears as the first option. As a browser extension, it can be connected to Chrome, Brave, Edge, Opera, and even Firefox. The mobile version is available for Android and iOS.
The wallet is secured with a password and a secret security phrase. If you accidentally delete the wallet or lose the device, you can easily restore it after downloading again using the security phrase.
Coinbase Wallet
When considering which software wallet to use, the Coinbase Wallet should definitely be included in your considerations. It has a close connection to the centralized crypto exchange Coinbase. This U.S. crypto exchange is licensed by BaFin in Germany and offers a decentralized wallet with an intuitive interface.
The connection between Coinbase and Coinbase Wallet is straightforward from both sides. If you prefer to manage your cryptocurrencies yourself rather than trust an exchange, you can send your coins and tokens to your personal Coinbase Wallet after purchase.
Also read: The Best Crypto Exchanges Overview
Exodus Wallet
With a beautiful design and several advantages over competitors, such as sleek and clear charts and good customer support, the Exodus Wallet stands out. Swapping, or exchanging one coin for another within the app, is seamless. Exodus also collaborates with Trezor, one of the most popular hardware wallet manufacturers, making integration with Trezor wallets simple.
Hardware Wallets
We have already provided a detailed introduction to hardware wallets in a separate article. They offer a physical alternative to software wallets and come with both advantages and disadvantages.
Trezor is one of many manufacturers of high-quality hardware wallets. The collapse of the crypto exchange FTX and similar events have triggered a new boom in crypto self-custody, particularly with hardware wallets. Established manufacturers like Trezor and Ledger still dominate the scene.
However, new players are increasingly entering the market with their own wallet projects. Among other newcomers, the crypto network 1inch aims to make a strong impact. The battle for the best hardware wallet is entering the next round. With its Zero Wallet, the Belgian manufacturer Ngrave has launched an impressive model with a stylish interface. Ngrave calls Zero the “coldest” wallet. Cold wallet is often used as a synonym for a hardware wallet, distinguishing it from a hot wallet, which is an app or browser extension installed on laptops or smartphones that can send and receive cryptocurrencies online.
Generally, all online contacts are considered risks. Therefore, more hardware wallets are interacting only via QR codes. This includes the Titan model from the Chinese manufacturer Ellipal. Other interesting competitors in the market include the established Swiss manufacturer BitBox, which recently renamed the company after the successful BitBox model, previously known as Shift Crypto. Also noteworthy are the simply but elegantly designed wallet model from KeepKey and the stylish eye-catcher from Keevo. New manufacturers are constantly entering the growing hardware wallet market, developing new, innovative security concepts.
Hardware Wallet–Digital Wallet for Cryptocurrencies
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How Secure Is a Hardware Wallet?
A wallet doesn’t store the acquired cryptocurrencies but rather the access to them. The coins are not located in any specific place; they circulate globally on blockchains. You enter the wallet with a seed phrase and password. From here, transactions can be initiated, depending on the model, either online or even without any contact with the computer via QR codes. The latter is considered extremely secure.
If the wallet is lost, you don’t actually lose the wallet itself but the device on which it is installed. When you buy a new gadget, you can restore the old wallet using the secret seed phrase.
When Is a Hardware Wallet Worth It?
Whether it’s worth acquiring a hardware wallet ultimately depends on the value of the cryptocurrencies being stored. Spending 200 euros on a wallet hardly makes sense if only 50 euros worth of Bitcoin are on it. Even potential value increases are only a limited argument. Prices for most hardware wallet models range from 50 to 280 euros. Many believe the extra security is worthwhile at least when holding a four-digit euro amount in cryptos.
However, software wallet manufacturers are not idle and continuously strive to improve security. Therefore, it’s always necessary to reassess which purchase is sensible.
If wallets seem too complicated or expensive, you can also have your coins and tokens stored on centralized crypto exchanges (CEX), where most users acquire them anyway.
All hints and information mentioned in the text do not constitute investment advice or a recommendation to buy or sell securities (§ 85 WpHG).