July 28, 2022

An Exploration of the Crypto Wallet*

5 min read

social_wallets_zengo-uphold@3x.png

Crypto wallets are both a necessary and often confusing gateway to the world of Bitcoin, NFTs, and different chains like Ethereum or Solana. Adding to the complexity are the dozens of wallets that are available. The purpose of wallets is easy to grasp, but how wallets achieve their purpose can be complex. Rather than simply review a collection of wallets, it seems more helpful to explore the idea of wallets relative to how they are likely to be used. By considering what you want to do with a wallet and understanding a little about how they work and looking at a few popular examples, this article will hopefully help you understand the world of wallets a little better.

At its simplest, a cryptocurrency wallet allows you to buy, sell, (sometimes) trade, and secure your digital assets. They range from very simple wallets that may only access a few coins or a single chain, to others that are entire ecosystems and provide a wide range of utilities. Whether simple or vast, fundamentally they ensure that the owner of the cryptocurrencies and blockchain assets is the only one who can access them.

As for so much else in life, knowing what you want to do helps in choosing a wallet that will best fit your needs. Asking yourself how many currencies are you likely to use, how often and in what way you want to use them and whether you want other functionality like lending, staking or collecting NFTs will help narrow the field.

Simple Wallets

What makes a wallet simple? Ease of use, clear focus on one or a few uses and smooth setup certainly help. One of the most popular uses of wallets is to trade cryptocurrencies. Unsurprisingly then, some of the most highly recommended wallets for beginners are associated with large crypto exchanges.

Binance, Kraken and Coinbase offer wallets with a robust feature set and well thought out user interfaces. Kraken in particular is focused on delivering a simple user interface that makes buying and selling straightforward. While all three are large exchanges, their wallets can be used with other platforms like Structure.

Another way of simplifying is to help users create and access their accounts. The use of biometric technology by wallets like ZenGo avoids the complexity of seed phrases and simplifies the setup process. Many wallets are secured by passwords that, if forgotten, would cause you to lose your assets. This is a “dead” wallet. By providing a series of seed phrases that can be stored safely, a path is created to aid if access is lost for some reason. Biometric approaches bypass this by using your face or fingerprint as a password and hence eliminate one source of trouble - forgotten password. If you feel like you always lose your passwords, biometric security might be for you.

Finally, many wallets like ZenGo and Mycelium are optimized for mobile use, have easy setup and excellent customer support. Wallets with mobile first design are often preferable if you are going to mostly use your phone for accessing your assets. Further, they are often easiest to set up.

Finally, looking for projects with great customer support reduces worry because you know you can get help if you need it. This often overlooked feature is important, particularly for beginners.

More Complex Wallets

Some wallets are designed to provide an entire suite of uses. For instance, Crypto.com’s wallet allows access to an entire world of Defi. You can swap, mine, stake, loan, earn returns and more. Another example is Uphold that allows users to access different networks, earn interest, even invest in stocks. Like Cyrpto.com, Uphold’s wallet is a gateway to a diversified suite of applications. If you want to explore the full possibilities of decentralized finance and tokenized assets these more feature filled wallets will likely be better suited to your needs. If you don’t know what staking and lending protocols are but want to explore, these types of wallets give you an opportunity to learn.

Specialty Wallets

Some wallets are very good at specific tasks. Metamask is the most popular wallet for use with the Ethereum network and operates more like a browser than simply a wallet. It helps you access the entire ecosystem that is built on top of the Ethereum chain.

Xdefi is a wallet that is becoming increasingly popular with NFT collectors. Where Metamask focuses on the Ethereum chain, Xdefi allows access to Ethereum, Avalanche, BNB, Polygon and Terra chains. You can explore, collect and compare your NFTs across all these chains from within a single wallet. For the NFT connoisseurs this is a great help.

Finally, it is quite common for people to have more than one wallet. As you become more experienced and your needs change, it often makes sense to diversify. Generally, wallets are simple to install and experiment with. A little trial, and hopefully not too much error, will quickly give you a sense of what is best for your uses.

When researching wallets, it helps to understand some basic concepts that will recur throughout different reviews and descriptions.

Blockchain: Cryptocurrencies are recorded on a blockchain ledger. A blockchain is a public digital ledger that records transactions. The shared nature of a blockchain creates an immutable registry that prevents duplicate spending of cryptocurrencies and validates transactions. Different chains, like Ethereum or Avalanche, operate as independent systems. They are connected by bridges and by dapps that allow interoperability across different chains.

BTC: The currency code for Bitcoin. Bitcoin was created by Satoshi Nakamoto as the first decentralized cryptocurrency.

ETH: The currency for the Ethereum chain created by Vitalik Buterin and the Ethereum foundation.

Foundation for Wallet Interoperability (FIO) Network: The FIO is an interoperability standard developed in “pursuit of blockchain usability through the FIO Protocol.” The protocol is meant to develop a standard for interaction between various crypto-related entities.

Hot Wallet/Cold Wallet: Hot wallets are digital wallets hosted on a server. Cold Wallets are hardware wallets, often in the form of USB drives, that are not connected to any networks.

Biometric Security: Uses face scans or fingerprints as part of the private key to enhance security while making it hard to 'lose' or 'forget' your password.

Open-source: Software that has a source code that anyone is free to study, modify or distribute.

Seed Phrase: A string of 12 to 24 words generated by many crypto wallets. It’s effectively a private key that humans can read.

*Structure does not endorse any products or services mentioned

    1
  • Please see our fee schedule for more information.
    • 2
  • Not all assets will be available to trade without restriction at any time. Assets currently available for trading will be displayed in the application.
    • 3
  • For additional details, please review our Terms of Service.
    • 4
  • Structure has partnered with custody providers who utilize secure multi-party computation and other security measures to protect your assets and information. No system is ever completely secure and Structure is not responsible for any losses incurred due to issues at our custody provider.

© Copyright 2022 Structure Financial, Inc. All Rights Reserved. Neither Elon Musk, Tim Cook nor Tim Apple are customers of Structure Financial, Inc. Zero-commission refers to $0 commissions for accounts that trade tokenized assets via mobile devices. Please see our Commission and Fee Schedule. Structure Financial, Inc.'s services and STXR are not available in the United States and other prohibited jurisdictions. This is not an offer, solicitation of an offer or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Structure Financial, Inc. is not registered. Structure Financial, Inc. does not recommend any assets or securities. All investments involve risk and the past performance of an asset, security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The content included at https://structure.fi and any affiliated websites, including social media sites (the “Website”), is provided for general informational purposes only. It is not intended to constitute investment advice or any other kind of professional advice and should not be relied upon as such. Before taking action based on any such information, we encourage you to consult with the appropriate professionals. We do not endorse any third parties referenced within the Website.

Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in the Website were or will be profitable. Past performance is no guarantee of future results. There is a possibility of loss, including the complete loss of invested capital. Historical or hypothetical performance results are presented for illustrative purposes only. Investors should be aware that system response, execution price, speed, liquidity, market data, and account access times are affected by many factors, including market volatility, size and type of order, market conditions, system performance, and other factors. These risks are to be assumed by the customer. Third-party information provided for Structure Financial, Inc. product features, Structure Financial, Inc. communications and communications emanating from its social media community, market prices, data and other information available through the Website are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information provided is not warranted as to completeness or accuracy and is subject to change without notice. Any comments or statements made herein do not reflect the views of Structure Financial, Inc. or any of its subsidiaries or affiliates. Note that certain Structure Financial, Inc. product features listed are currently in development and will be available soon. All assets, and investments are offered to self-directed customers by Structure Financial, Inc. Structure Financial Inc. is not a member of FINRA or SIPC.