There are 19+ wallets available for Cardano, but not all wallets are built equal. We will discuss the different types of wallets with their security features from least secure to most. Plus the best method for holding your Crypto securely while still being easy to use.
A big misunderstanding, probably coming from the name, is that wallets do not hold your ADA, as the ADA balance is recorded on the blockchain. Your Crypto wallet, at its core, holds your private key for signing transactions and sometimes provides other support functionality like GUI’s or even DeFi Swaps.
Hot Wallets
As with anything related to security, wallets tend to follow the same pattern, security being inversely proportionate to functionality/ease of use. The greater the security features, the more complex and time-consuming the wallets are to use.
Hot wallets are the least secure form of wallet. These are defined as any wallet connected to the internet and include custodial and exchange wallets.
However tempting it is to keep your coins on an exchange, be warned, “not your keys, not your crypto”, which is even more prominent after the FTX collapse fiasco.
Browser-Based and Browser Extension
These are some of the most common wallets and make up most of the ADA wallets.
Based on either your browser through an extension or a web page, these wallets work through the internet and typically store your keys in some form of security software.
However, these wallets are more open to security issues and most likely to be compromised and attacked. And secondly, there are vast security disparities between the software; only store your keys in tested and reputable software.
Good web-based wallets include:
- Yoroi
- Nami
- Eternl
- Typhon
These wallets are great to use as your spending wallets. Have a small amount of ADA here to use in the daily transaction, but not your main stack.
Desktop Wallets
These are wallets where your keys are stored in software based on your device, unlike browser-based, which are stored on third-party servers.
While this type of wallet is much more secure while still being convenient, security is placed upon the user and not reliant on 3rd party systems. Any malicious software on your device can result in your keys being stolen.
Daedalus is the official Cardano wallet:
Daedalus is a full-node desktop wallet. Daedalus downloads a full copy of the Cardano blockchain and independently validates every transaction in its history. This provides maximum security and completely trustless operation without centrally-hosted third-party servers.
Daedalus is not recommended for beginners due to its complexity and size, but it is an excellent and reliable wallet to store your stack.
Cold Wallets
Cold wallets are physical devices or objects that store your keys and are not connected to the web, often referred to as cold storage.
This is the most secure method of holding your keys as it completely negates malware or software vulnerabilities.
On the other hand, these wallets are not great for daily use, and there is potential for physical damage or loss.
Hardware wallets
Hardware wallets such as the Ledger Nano X or Trezor Model T store your keys on a safe chip that is never exposed. The wallet can then be connected to a computer or mobile device to sign transactions.
These wallets work perfectly with Yoroi, Daedalus, Eternl, Nami Wallet, GeroWallet, Typhon, NuFi wallet. You can also stake your ADA safely and earn passive income but also all other kinds of transactions.
Paper Wallet
A paper wallet is the simplest form of wallet, where you write down your private and public keys on a piece of paper. Documents such as these can be stored in a secure environment and are highly secure as they can’t be exposed to online attacks.
This is one of the best forms of long-term crypto storage while also being free. Write down your keys and store the document in a swiss bank vault for ultimate security.
However, be aware that any physical damage to this document will result in total loss of your Crypto; some people go as far as to engrave their keys into metal to make them fire-resistant.
The Most secure way to store your Crypto while also being easy to use.
This tip was taken from CZ, the CEO of Binance.
- First, buy an iPhone, as it has much greater security than some androids.
- Do a complete factory rest, and make sure everything is removed from the device.
- Install a secure mobile wallet such as Yoroi
- Never put a sim card into the phone, and always have wifi off.
- Only connect to secure wifi to send transactions, and disconnect straight after.
- Never install anything else on this phone.
This is like your hardware wallet, but with better, similar security, easier to sign transactions and your Crypto is not lost if you lose the phone, as long as you have the keys or seed phrase backed up somewhere secure.
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