As 2022 draws to a close, the story rocking the Cryptoverse are the allegations that Sam Bankman-Fried fraudulently diverted FTX customer funds to his sister-company, alameda Research, where they were subsequently squandered and lost. Billions vanished within a week. Both institutional and retail investors were badly hurt. Some people lost everything.
“Not your keys, not your crypto” is one of the few crypto maxims that unfortunately continues to ring true. If you have a substantial amount of crypto and are holding all of it with a centralized exchange or custodian, then you’re just not paying attention. Do your future self a favor and self-custody at least a portion of your crypto. You’ll likely find the process liberating and empowering.
Today’s article will be looking at the best self-custody wallets for 2023. Specifically, we will examine the following:
- What are self-custody cold and hot wallets;
- What are the best cold wallets for 2023; and,
- What are the best hot wallets for 2023.
What are Self-Custody Cold & Hot Wallets
Before we dive into the wallets, let’s make sure we’re on the same page with the technicals:
- Self-Custody Wallet: A crypto wallet where the owner has possession over their private keys. So long as only the owner retains their private keys, then only the owner has control over their assets. Here is an in-depth explanation of private keys; but briefly stated, private keys are unique, blockchain issued passwords for newly created crypto wallets. Private keys unlock a wallet for the purpose of sending crypto out of that wallet.
- Hot Wallet: A crypto hot wallet is one that’s always connected to the internet. Thus, hot wallets take the form of software applications on computers and smartphones. Self-custody hot wallets are generally known to be more convenient, but less secure, than self-custody cold wallets.
- Cold Wallet: A crypto cold wallet is one that can be disconnected from the internet and sit offline. Cold wallets take the form of USB or bluetooth devices. The wallets are extremely secure because hackers cannot access them.
Best Self-Custody Cold Wallets
Arguably, the two best cold storage crypto wallets are the Ledger Nano X and the Trezor Model T. The Nano X seems to balance high level security with convenience while the Model T maximizes security.
Ledger Nano X
Ledger’s Nano X is a second-generation cold storage wallet solution. The device itself is sleek and sexy, resembling a USB flash-drive, built with brushed stainless steel and plastic. The device features a small LED screen and lithium-ion battery. The Nano X weighs about 34 grams and is 72 mm x 18.6 mm x 11.75 mm in size.
The Nano X connects to computers via a USB cable and to Android or iOS devices via Bluetooth. The device is integrated with Ledger Live, a software platform where users can manage, send, and receive crypto through their cold wallet. Ledger Live also features an exchange that supports more than 5,500 coins.
During setup, users create a PIN, which allows access into the wallet. A 24-word seed phrase is auto-generated, which acts as the wallet’s private key. The wallet comes with a USB cable, setup guide, recovery sheets, and other items. Ledger ships to all countries and the wallet costs…
David learned about bitcoin in 2015 and has closely followed the crypto industry since then.
His professional interests center around bitcoin, layer-one blockchain protocols, decentralized finance, and clean energy.
An attorney by trade, David has held licenses to practice law in the State of Hawaii and in US federal courts.
