Robert has reported for a variety of international publications including the Associated Press, The Guardian, Vice, and Decrypt. Current areas of interest include the political economy of technology, cryptocurrencies, and privacy. Robert has a Bachelor of Science from UCL, and a Master's degree from the University of Oxford's Internet Institute.
This article will explore the safest crypto wallet for your bitcoin transactions and discuss some of the best crypto wallets available for Canadian investors.
If you want to own or trade bitcoin, you’ll need a wallet. But do you need a software wallet or a hardware wallet? A hot wallet or a cold wallet? Both? And should you even be calling it a bitcoin wallet? (Here’s a hint: no.) We’ll help you answer all of those questions below. But first, a little background.Buy and Sell Bitcoin, Ethereum, and over a dozen other cryptocurrencies with Wealthsimple. Sign up and Trade here.
What is a bitcoin wallet?
A bitcoin wallet is the same as a crypto wallet; it doesn’t matter which currency you have. Think of it as a way to “store” crypto. They’re the bank accounts of the decentralized web.
Wallets operate using a public and a private key. The public key is kind of like a street address. Anyone who knows your address can send you letters — or, in this case, crypto. But not anyone can get them out. For that, you need the mailbox’s corresponding private key, which only you have. With that, you can get into your wallet and get to your crypto.
There are two types of wallets — hardware and software — which we’ll get into more below. The biggest difference is that software wallets, which live online, are more susceptible to hacking than hardware wallets, which are not connected to the internet.
Why do you need a crypto wallet?
Without a trusted address that only you have access to, you won’t be able to receive bitcoin or any other crypto securely.
While many crypto platforms offer built-in wallets for storing your holdings, it’s better to have a personal wallet for larger sums. This way, if a platform ever collapses, you will still have control of your money.
The lack of regulations around cryptocurrency platforms can also leave you open to hacks, data leaks, and cybercrime. Throughout 2021, North Korean hackers managed to steal over $395 million worth of bitcoin across a range of attacks.
What are software wallets?
A software wallet lives in the cloud. That means you can access it nearly anywhere, as long as you have an internet connection. The big caveat with software wallets is that, like anything on the internet, they can be hacked.
Hacks and other cryptocurrency cybercrimes are among the leading concerns for investors. And for good reason: more than $8 billion of cryptocurrency was stolen and laundered in 2021. While some of the crooks were caught, a lot more were not, thanks to the lack of regulation that defines crypto.
Whether you’re looking for a desktop wallet, mobile wallet, blockchain wallet, or paper wallet, there are plenty of bitcoin wallet options available.
What are hardware wallets?
A hardware wallet is a physical object that can be completely unplugged from the internet for security. It’s like storing your crypto on a flash drive. Affordable, mid-tier hardware wallets tend to cost around CAD $79, but can retail for as little as $38.
Because it’s not always connected to the internet, hardware wallets are much more secure from hackers. Of course, as physical objects, they can also be stolen, but they are worthless to thieves without your private key.
That private key is… key. If you forget it, there’s no way to get your crypto back — no matter whom you ask or how nicely.
What are hot and cold wallets?
A hot wallet refers to any digital wallet that is constantly connected to the internet. Hot wallets are (usually) software wallets that are used to exchange cryptocurrencies. Mobile wallets are often hot wallets as well.
Cold wallets are perfect for offline storage because they don’t require an internet connection to work. Cold wallets are typically seen as more secure, but as mentioned above, if you lose the key, you won’t get your bitcoin back.
Some investors go with a combination of hot and cold wallets. They might use the software wallet provided by an online platform and pair it with a cold wallet to hold larger, more long-term purchases.
What are custodial versus non-custodial wallets?
Custodial wallets are generally more convenient but much less secure, as another party controls your private keys. Bitcoin wallets provided by the crypto platforms are the best examples of custodial wallets. Non-custodial wallets are more secure and allow you to take complete control of your keys. Software wallets like Electrum and hardware wallets like Ledger and Coldcard are the best examples of non-custodial bitcoin wallets.Buy and Sell Bitcoin, Ethereum, and over a dozen other cryptocurrencies with Wealthsimple. Sign up and Trade here.
The best bitcoin wallets available in Canada
The best hardware wallets
Ledger Nano X (CDN $199)
Accepts crypto payments while offline
Supports 1,800 coins and tokens, including dogecoin, ripple, ETH, etc.
Ledger’s sold over 3 million crypto wallets. Its flagship wallet, the Nano X, is Bluetooth-enabled, meaning it can connect to other devices, such as your mobile phone or laptop. But only when you want it to! Otherwise, you can keep it safely disconnected from the internet. It also lets you keep a complete transaction history of your account.
Ledger also pushes updates to its wallets frequently. That’s useful when it comes to protecting against future attacks.
Ledger Nano S (CDN $89)
Supports more than 1,000 coins
The main difference between these two wallets is that the Nano S does not feature Bluetooth capability. To connect to another device, you’ll have to use a USB cable, which is a turnoff for some people.
Trezor Model T (CDN $408.21)
Supports more than 1,000 coins
Trezor is one of Ledger’s main competitors, and its wallets are also supported in Canada. The Model T is Trezor’s premium option. It lets you input your PIN and passphrases directly on the device and it has extensive security features.
Trezor One (CDN $151.80)
Works on Windows, OS X, and Linux
The Trezor One shares many of the features of the Model T, but it needs to be connected to another device to work, and its screen is monochromatic. Even without the flash of the T, it’s still a reliable and secure wallet.
KeepKey (CDN $173.99)
Easy recovery without loss of private keys
KeepKey is one of the most secure and easy-to-use wallets available. When setting up your wallet for the first time, you’re given a 12-word recovery sentence that you have to write down. If you lose your KeepKey, you can easily recover all your bitcoins with the help of this 12-word private phrase.
KeepKey does not use an operating system, which its creators say makes it much more resilient against viruses or other malware, which are usually installed on operating systems.
The wallet even features its own exchange, so you can exchange currencies on the wallet. KeepKey works on PC, Mac, Linux, and Android, so you shouldn’t need to worry about device compatibility.
One big drawback: this wallet supports fewer assets than its competitors. It’s limited to bitcoin, bitcoin cash, DASH, dogecoin, ETH, litecoin, and ERC-20 tokens. Those are some of the most popular coins, but it can be limiting.
Coldcard (CDN $163.33)
Easy to use
Coldcard might not be the prettiest, but it is easy to use and ultra-secure. The Coldcard code that controls it is viewable, so any developer in the world can audit the code and ensure that the software is error-free and isn’t hiding any secrets. Plus, it’s Canadian-made.
You get a full-sized numeric keypad to enter your PIN, a small screen for showing the details of transactions, a microSD card slot for storing your data, and a powerful microchip to store the 24-word seed.
Unlike Ledger, however, the Coldcard wallet only supports bitcoin. If you want any other crypto, you’ll need a different wallet.
The best software wallets
Coinomi (free, although there are mining fees)
Wide coin support
This UK-based wallet is available in Canada and is completely free, although outgoing transactions are charged at a variable rate. That rate depends on the cryptocurrencies involved and is used to pay miners who verify the transactions.
Armory (free, although there are network fees)
Dedicated bitcoin “cold storage”
User retains private keys
If you plan on only holding bitcoin, Armory is a free wallet that is suited to long-term storage.
It has a host of security features, such as multi-signature transactions — this requires multiple people to sign off on a transaction at the same time — and GPU-resistant encryption. As with Coinomi, fees are variable and depend on the quantity of bitcoin in a transaction.
Trust Wallet (free, although there are network fees)
This mobile ETH wallet works on both Android and iOS. You can also use it to take part in staking. This process allows you to put up your holdings as collateral, which is then used to validate transactions, generating a small reward for you as the staker.
Bitcoin Paper Wallet
This type of wallet is neither software nor hardware. It’s actually just a slip of paper — any slip of paper — that you write your private key on. This has the advantage of, potentially, absolute security since, to get the key, someone would have to break into your house and find whatever little scrap of paper you’d decided to use.
The big risk is that you could lose the key. If that happens, you won’t be able to access your bitcoin, so make copies and keep them in places you can remember and easily access.
This is a good option if you want to buy and hold bitcoin offline and don’t want to spend money on a hardware wallet. It won’t work for crypto trading, but for long-term cold storage, it’s an excellent option.
Still confused about which bitcoin wallet to choose? The bitcoin website has a helper section that gives you a list of bitcoin wallets suited perfectly to your needs. Just fill out a short questionnaire to get started.
A few other things to remember
Make sure you’re always careful with your security information. Your software wallets may become corrupted and are at risk of data hacks, so it’s important to go with a reputable provider that offers unmatched security.
A hardware wallet will always be more secure than a software wallet; however, it’s crucial that you keep it secure and don’t lose it. A lost hardware wallet is useless, and there’s no way of getting your money back.
The market is volatile and you must be comfortable with potentially taking significant losses. Only invest what you can afford to lose.
Frequently Asked Questions
A hardware wallet is one of the safest crypto wallets for users who want to hold bitcoin and other cryptocurrencies, as they are not attached to the internet most of the time. Ledger Nano X is one of the best crypto wallets available right now due to the number of coins and high security.
Software wallets are not only completely free but are also very easy to set up and use; however, outgoing transactions for bitcoin are charged. To avoid this fee, you can use the built-in crypto wallet provided by various crypto-buying platforms, including Wealthsimple Crypto.
Moving crypto to a hot wallet or a more-secure hardware wallet can provide more security. But many crypto experts agree that if you’re using a reputable crypto-buying platform like Wealthsimple Crypto that offers secure storage for your cryptocurrencies and is fully regulated, it’s probably fine to leave your crypto on the exchange.
It depends on your requirements and usage. Good hardware wallets can cost from $100 to $300 or even more. If you’re looking for a cheaper way to store your bitcoin, software-based wallets like Electrum are a great option, as they are completely free; however, they charge outgoing transactions for bitcoin. To avoid this fee, you can use the crypto wallet provided by a reputable crypto-buying platform like Wealthsimple. For holding your bitcoins, you’ll either pay a few dollars or nothing at all.
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