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Decentralized cryptocurrencies have made their way into financial conversations across the globe since Bitcoin was first released as open-source software in 2009. A crypto-wallet can be software existing on your cellular/ mobile device or a physical external database that protects your crypto assets; they can be hot or cold. This article will break down the differences between these two classifications of crypto-wallets and evaluate the best offerings in the market today for crypto owners.
Essentially, there are two types of crypto wallets that investors should be aware of: hot and cold wallets. Hot wallets are software-based and provide storage online, on the other hand, cold wallets are external devices that provide offline storage. If you’re looking to store your cryptocurrencies, either option can work, but one option can provide better benefits than the other depending on your needs.
Hot wallets are accessed with a wireless internet connection. They are often accessible via a mobile app or through your desktop browser. This makes the hot wallets considerably more user-friendly as it makes it significantly easier to buy and trade cryptocurrencies while storing your crypto in a hot wallet. Similarly, hot wallets facilitate exchanges faster than cold wallets.
However, one of the major drawbacks to hot wallets is their security system. Hot wallets are considered to be less secure than cold wallets because it is connected to the internet, which makes them more susceptible to hackers and malicious malware.
Cold wallets store your crypto offline and require a wired connection (e.g. plugging your computer into an ethernet cable or using a USB stick). With cold wallets, you can actively trade your crypto when your USB is connected to your computer. This makes it incredibly difficult for hackers to gain access. If you plan on holding onto your coins long-term, cold wallets can be a more ideal option.
However, there are some drawbacks to cold wallets as well. Due to the added security, trading and transfer times often take a longer time than hot wallets. Moreover, if you lose your USB key or paper wallet, there’s no way to recover your assets.
Below, we will be discussing the best options for crypto-wallets in Canada, their unique features, and what sort of trader they are suited to.
Cost | Wallet Type | |
Bitbuy Built-In Wallet | $0 | Hot (Software) Wallet |
The Ledger Nano X | $150 | Cold (Hardware) Wallet |
The Ledger Nano S | $75 | Cold (Hardware) Wallet |
Coinomi | Free | Hot (Software) Wallet |
Trezor Model T | $210 – $240 | Cold (Hardware) Wallet |
Electrum | Free | Hot (Software) Wallet (with cold storage capabilities) |
KeepKey | $39 CAD | Cold (Hardware) Wallet |
Bitbuy is a cryptocurrency platform that is owned and operated in Canada. While its main function is to provide users with a platform to buy and sell different crypto, it also offers a built-in wallet to store your crypto. When you create an account with Bitbuy users will automatically have access to this built-in wallet. Moreover, due to their partnership with Knox; Bitcoin custody provider, Bitbuy is able to offer its users an offline vault to store their crypto holdings.
The Nano S and Nano X are among the most popular wallets for crypto users. They are both cold wallets that resemble a USB stick and offer offline storage. Both models support over 1,100 coin types including major cryptocurrencies like Bitcoin, Ethereum and XRP. However, the Nano X supports far more crypto apps which are often preferred by crypto users with diversified holdings.
Both options are considered to be the most trusted cold crypto wallets available, which is why they are included on this list. The Nano S and X both have automatic timeout following periods of inactivity and a sleek design.
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Coinomi was founded back in 2014, making it one of the oldest multi-chain wallets to exist in the current market. There are currently millions of users globally who live by Coinomi for their crypto transactions. Coinomi provides access to over 125 blockchains, but if there is a token not included on the site, you can still add it to your wallet manually! Coinomi facilitates the storage and exchange of over 1,770 crypto assets. Other benefits include:
Although Coinomi is inexpensive and easy to use, it cannot be guaranteed as a safe wallet because it is not a regulated service. Once again, risk is a matter of personal preference. With that being said, blockchains are always encrypted to keep your funds safe and Coinomi also uses password protection amongst other things to keep your assets as secure as possible.
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The Trezor Model T was first released in 2014, making it one of the older wallets, like Coinomi. It supports over 1,600 tokens and Exodus (a free and hot wallet) is compatible with Trezor. While it is a bit expensive compared to other wallets, they make up for it with their cutting-edge features.
Trezor, unfortunately, does not offer Bluetooth or mobile capabilities as the Ledger Nanos do. Though they do intend to release an app in late 2021.
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Electrum is a hot wallet for Bitcoin that has been operating since 2011 and is one of the most reputable Bitcoin wallets on the market. While its layout may be simple, they do offer advanced features such as third-party plug-ins, Multisig services and other complex options.
KeepKey is an affordable cold wallet available to traders in Canada that is compatible with third parties like Coinbase (Mobile) while maintaining high levels of security with offline protection. KeepKey does not support as many cryptocurrencies as other wallets; it can only support 40 different tokens.
This wallet safeguards your private keys offline but allows you to take advantage of software wallets to conduct transactions. Other benefits include:
While both of these types of wallets are popularly used, some traders choose to simply keep their coins in their exchange (e.g. Coinbase). Once you begin accumulating a large number of crypto assets it is recommended to switch to a wallet. This, of course, is all based on personal preference.
If you’re only keeping a small number of crypto assets, it’s perfectly normal to keep your coins within the exchange you’re currently using (e.g. Wealthsimple Crypto). As a rule of thumb, however, it is suggested that you should begin using a wallet once you own more crypto than you can stand to lose.
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