Raise your hand if you have a bank account. Almost every grown person does today. Now that’s an example of a centralised wallet. But did you ever save money as a child in a wooden box? Or even your everyday leather wallet. That’s a decentralised wallet. And that’s our focus for today. Suppose you own cryptocurrency and are considering switching to DeFi wallets. In that case, we can hook you up with the best decentralised cryptocurrency wallets. Stay with us.
Every crypto beginner learns about wallets- the storage protocol that contains your crypto assets and from which you can transfer or receive cryptocurrency. Most beginners need to know that there is a difference between centralised and decentralised crypto wallets.
In this article, we’ll unpack everything you need to know about decentralised crypto wallets, how they compare to centralised wallets, the benefits and the top 15 best decentralised cryptocurrency wallets in 2023.
What Are Decentralised Cryptocurrency Wallets?
Decentralised crypto wallets are simply wallets controlled directly by the owners instead of a third party, like an exchange. The wallet owner manages the access keys and uses them to send and receive digital tokens. Unlike centralised wallets, third parties like cryptocurrency exchanges do not have access to or control the use of those keys.
You control your decentralised cryptocurrency wallets like you control all the cash in your wallet. You don’t have to pay fees to access it, like the money in your traditional bank account. But the same risk that comes with a traditional leather wallet comes with a DeFi wallet – an increased risk of losing your assets if you lose your private keys or the hardware itself. Remember the popular crypto saying, ‘No keys, no crypto”?
Decentralised Cryptocurrency Wallets in Hot And Cold Wallets
One popular category of wallets in cryptocurrency is hot and cold wallets. They are both the fundamental storage means for cryptocurrency tokens. Crypto owners can also send and receive digital assets from these wallets hosted on their respective blockchains. The differences between hot and cold wallets do not have a huge impact in the DeFi space because they are mostly used together or the hot wallets are used independently.
Hot wallets are cryptocurrency wallets that have access to the internet. Simply put, they are internet-based. Anyone using them can access them on any device with an internet connection. Hence, they’re very convenient and easy to use. Hot wallets come in apps on your browser or mobile phone. Examples are Coinbase DeFi wallets.
On the other hand, cold wallets are physical storage devices that hold cryptocurrency without access to the internet. To send crypto, the owner has to connect it to an internet-enabled device, unlike hot wallets hosted on the internet. Cold wallets are usually in the form of USB drives, cards, or even paper (with private keys printed). The allure of this type of wallet is the extra security.
Decentralised crypto wallets are mostly hot wallets. However, cold wallets are also used by many crypto holders. The basis for transactions is strictly a peer-to-peer protocol. This means that wallet owners send and receive crypto tokens directly. For this reason, it is also referred to as a non-custodial wallet.
Keypoint💡 Hot wallets are often centralised but can be decentralised. The main distinguishing point is who holds the private keys to the wallet. If you have them, it’s decentralised. If an exchange holds them, it’s centralised. Crypto exchanges host centralised wallets. This means crypto owners open an account with the exchange and make requests for transactions; then, the exchange performs these transactions on behalf of the owner using their private keys. Decentralised wallets let the owner manage the private keys and transact by themselves.
What are The Benefits of Decentralised Crypto Wallets?
Decentralised crypto wallets are becoming more appealing because of the benefits they bring. The appeal of this type of wallet is as follows.
1. Privacy From Public Eyes
Your transactions are private. Nobody is looking over your shoulder. As we say in local Nigerian parlance, “Nobody dey chook eye for your parols“. The regulatory bodies that “watch over” exchanges and monitor the movement of digital assets cannot monitor your activities. There is no KYC protocol as is present in centralised wallets. And this comes with the drawback of bad eggs using decentralised crypto wallets for illicit purposes.
2. Security From Thefts and Hacks
Another advantage is that your investment is very secure. It is not prone to hacks, thefts, or even the collapse of third-party institutions. An example is the FTX collapse in November 2022 due to hacking, according to the reports issued by the company.
3. Quick and Easy Access to Loans
Without third-party involvement, users on decentralised wallets can easily get loans with low-interest rates. The peer-to-peer structure enables this advantage. The fees attached to transactions are also reduced.
Top 15 Best Decentralised Cryptocurrency Wallets
Decentralised wallets can be hot or cold. Hot wallets are often affiliated with or supported by a financial institution, usually a Decentralised exchange (DeX). They are therefore called DeFi wallets (Decentralised Finance wallets).
We have listed the top 15 from some of the best decentralised crypto wallets comprising hot and cold wallets. You can rest assured that your digital assets are safe with the following.
- Ledger Nano X
- Trezor Model T
- ZenGo
- Metamask
- MyEtherWallet
- Defi Wallet by Crypto.com
- Coinbase wallet
- Trust Wallet
- Argent
- Electrum
- Eidoo
- Guarda
- Frame
- Mycelium
- Exodus
1. Ledger Nano X
Ledger Nano X is a cold wallet that looks like a USB drive. It also works with an app – the Ledger Live app. It is Bluetooth-enabled. The wallet supports the storage of more than 1800 different cryptocurrencies. The advantage of this wallet is that it is both secure and easy to use because of the hardware and accompanying app, respectively. The drawback? If you lose your hardware by misplacing it or it gets damaged by natural factors, say goodbye to your digital assets.
2. Trezor Model T
This is another hardware wallet. This one has a touch-screen and allows you to encrypt your MicroSD. It can connect to exchanges like Changelly and CoinSwitch through its dedicated app, Trezor Suite. Hence, you enjoy the benefits of cold storage. You can also conveniently access your tokens and transact whenever you want without the help of an exchange.
The Trezor Model T supports more than 1600 cryptocurrencies. What more can you ask for? The drawback is that if your hardware gets damaged, your keys are lost forever, and you know the implications of losing your keys.
3. ZenGo
One of the most secure decentralised crypto wallets, ZenGo is a hot wallet hosted on Web3. It does not require private keys or passwords. Instead, your biometrics give you access! It is exciting because this completely removes the risk of thefts and hacks because who can hack your biometrics? The app supports over 70 crypto assets and has 24/7 customer support. The drawback? If Web3 crashes, you can kiss all your assets goodbye. But that’s unlikely to happen anyway.
4. Metamask
Metamask is a hot wallet, but more specifically, it is a DeFi wallet. This simply means that it needs the help of an exchange to carry out transactions. The difference between it and regular centralised wallets is that DeFi wallets let their owners carry out transactions with multiple exchanges.
Metamask is an app or web browser extension-based wallet. Its most significant appeal is that it finds exchanges with minuscule fees whenever you need to swap your crypto.
5. MyEtherWallet
If you hold cryptocurrency hosted on the Ethereum blockchain, such as Ether, you could consider using MyEtherwallet to store your assets. It’s an open-source hot wallet, more of a wallet host. You can create Ethereum-based wallets by yourself. An advantage is that it’s highly secure because it’s not a regular web-based wallet. A drawback is that it cannot hold the keys to any other cryptocurrency outside the Ethereum network.
6. Crypto.com DeFi wallet
Another good option is this DeFi wallet from Crypto.com. This excellent DeFi exchange gives you custody of your cryptographic keys and, consequently, your assets. Crypto.com Defi wallet supports more than 100 altcoins. It can also be integrated with a tax service app to enable you to do stress-free tax reporting. Here’s another fun thing – you can choose the speed of your transfers to other wallets! This way, you spend little on network fees.
7. Coinbase wallet
Although Coinbase is a popular centralised exchange platform; its wallet is another solid option on the list of DeFi wallets. It’s pretty simple to use as it comes as an app and browser extension. One of its very appealing features is that you can integrate it with the Ledger Nano X cold storage. How amazing is that? With the Coinbase wallet, you can store hundreds of assets and access dApps (decentralised apps). It also uses 2FA and multi-factor verification to ensure security.
8. Trust Wallet
Although Trust Wallet is an offshoot of Binance, it is a DeFi wallet. It supports 65 different blockchains! Now that’s the most significant selling point if you ask us. The implication is that you can store up to 4.5 million assets. If you’re an oldie in this crypto business, you should have your eye on this wallet. It supports the storage of NFTs and dApps too.
9. Argent
If you’re just starting to learn the ropes in DeFi, Argent is a good wallet. It’s an app-based hot wallet that uses biometrics for security. There’s also 2FA and a recovery phrase for whenever you forget your access information, making it an overall beginner-friendly wallet with high security.
10. Electrum
Electrum is one of the original hot wallets founded back in the day. The downside is that it is strictly for the Bitcoin blockchain. So, you can’t store any altcoins on it. However, you’ll love this wallet if you’re big on Bitcoin. It has top-tier security protocols like 2FA and multiple signature support.
Did you know that you can determine your transaction speed, thereby determining how much you spend on transaction fees? Another impressive feature is that it doesn’t download the entire blockchain onto your computer, only the necessary parts to keep it running smoothly.
11. Guarda
Guarda is a wallet that supports multiple blockchain assets such as Ethereum, Litecoin, Bitcoin and more. It features an exchange that lets users swap between cryptocurrencies with ease. The Guarda wallet comes with multi-factor verification and 2FA for added security.
12. Eidoo
Eidoo is a wallet in the form of a mobile app. It’s an excellent choice as it supports multiple blockchains, including Bitcoin and Ethereum. You can even buy NFTs, swap your crypto for fiat and access multiple dApps. It’s integrated with various DeFi protocols, including Uniswap and Ledger. Overall, it’s one of the most versatile wallets on the list and is quite secure too.
13. Frame
Another Ethereum-based wallet that is user-friendly is Frame. This wallet supports hardware wallet integration and allows users to access their tokens and swap on the supported dApps easily. But this wallet is best suited for more experienced DeFi users.
14. Mycelium
If you’re looking for a wallet that supports investment and trading in a DeFi setting, Mycelium might just be your plug. This app-based wallet also integrates excellently with hardware/cold storage. An exciting feature of the wallet is its decentralised exchange marketplace – Mycelium Local Trader. It lets you connect with other users and provides a secure environment for Bitcoin trading.
15. Exodus
Exodus is a hot wallet with desktop and mobile apps. It can be integrated with Trezor hardware wallet, which is a plus security-wise. The wallet supports over 260 cryptocurrencies, including altcoins, some memecoins, and NFTs. Users can manage and swap their crypto using the desktop or mobile app.
You could explore other cold storage options if you fancy the idea of combining both hot and cold wallets.
How to Choose The Best Decentralised Crypto Wallet for You
If you’re new to the DeFi scene and think you’re ready to jump in, you’ll probably ask yourself, how do I choose a good decentralised crypto wallet? To guide you, here are some factors to remember before you pick any of the wallets listed above.
- Blockchain support
- Wallet features
- Security protocol
- Knowledge level
1. Blockchain Support
Start by checking all your crypto assets and which blockchain they fall under. For example, Solana can’t be used on a wallet that only supports Ethereum blockchain assets or even Bitcoin. So knowing the blockchains your assets fall under will help you choose a wallet that supports multiple blockchains or the particular one your assets belong to.
2. Wallet Features
Do you want to access dApps easily from the wallet? Or do you want wallets that let you see NFTs? Are you looking to store your holdings with no trades? Different wallets have different features. So you should know what you need and then cross-match it with the features of the wallets you’re considering.
3. Security Protocol
This may seem unnecessary since decentralised cryptocurrency wallets are generally more secure. But how the wallet protects your assets matters too. Is there biometric encryption or a multi-signature feature? Do you want a security protocol that supports multi-person confirmation before a transaction is carried out? An example is Argent. Consider this while choosing.
4. Knowledge Level
You can always start from here to choose. If you’re a newbie in the DeFi world, you’ll want to choose something simple with a beginner-friendly interface.
These factors are paramount in choosing a decentralised crypto wallet, whether you’re a novice or a pro.
How to Set Up Your Decentralised Cryptocurrency Wallets
After choosing to leap into the ‘off-the-grid’ world of decentralised crypto storage, you’ll need to know how to get started. Better put, how to set up your decentralised cryptocurrency wallet. The following is a step-by-step guide on how to set it up.
- Choose the wallet you want to use.
- Open your browser and search for “[Name of wallet app] download,’ e.g., Argent wallet app download. You can also check your iOS and Android app stores for the mobile versions.
- Once the download is complete, create your account. This step does not require entering personal biodata since it’s a decentralised wallet. What you’ll need to set up is your security details.
- Write down or print your recovery phrase in a safe place. This is an important step. If you lose this phrase, you may not be able to log in to your account, and your assets will be gone if they’re there.
- Move your crypto to your wallet. You can transfer your holdings from a centralised wallet to your decentralised wallet through the app settings. Just follow the prompts to add crypto to your wallet.
Follow the guide below to set up your decentralised crypto wallet with hardware storage.
- Buy the hardware wallet.
- Download the accompanying software or open the software wallet that supports hardware storage.
- Turn on the device, set up your PIN, connect it to your computer, and log in to the software.
- Move crypto to your wallet. You could buy through a centralised exchange and transfer it to your cold wallet if you have none. You can move it to the device using the wallet address if you already own some.
How to Keep Your Decentralised Cryptocurrency Wallets Safe
How do you secure your decentralised crypto wallet? Are there extra measures you must take to safely hold onto your crypto holdings? Yes. Do the following, and you’ll have an added security layer on your DeFi wallet assets.
1. Safeguard Your Login Details.
Your software and hardware wallets require some kind of PIN or password to log in. Losing it means losing access to the wallet itself.
2. Keep Your Hardware Devices Safe.
Apart from keeping your security details safe, You want to keep your devices safe too. Cold storage can be damaged by water or heat, which you don’t want. So, ensure you keep your devices in a cool, dry place.
3. Use Multi-factor Authentication
Don’t joke with this. Set up multi-factor authentication to reduce thefts and hacking attempts from people who might know you.
4. Use a Wallet From a Reputable Provider.
Don’t use wallets you don’t know. Thankfully, we’ve provided you with a list of wallets. Do your due diligence. Talk to crypto oldies before you purchase or download any wallet.
5. Backup Your Wallet
Many wallets come with backup features. Leverage these features and back up your wallet.
6. Carefully Choose Where You Buy Your Crypto.
Some centralised exchanges are not stable, nor are they trustworthy. When you want to swap your tokens or buy new assets, carefully do so. Avoid exchanges that are not well-known by other crypto-savvy people.
Final Words
Whether hot or cold wallets, numerous platforms provide some of the best decentralised cryptocurrency wallets. We’ve listed the top 15 options for you to choose from. While DeFi still has some drawbacks, like the complexity and lack of trading volume leading to low liquidity. It is still largely appealing. Those who choose it have their reasons. The advantages are exciting and reason enough to join the DeFi ecosystem.
Choose a DeFi wallet today and start managing your crypto assets without the extra burdens of regular exchanges.
Disclaimer📢: Prestmit is not responsible for any choices you make. Kindly do your due diligence before you engage with any platform.
