Hello, hello. So, we meet again. I am glad you are still here, I really thought I would miss you in those thousands of words in my intro – if you read that intro, of course. If you did not, be warned, this article is about specific wallets out there, it does not go into detail of how wallets work. You can read much more about crypto wallets in my intro FAQ (link below). If you know it already, skip the link!
1. So, why do I need a private wallet?
When you have purchased your funds on exchanges and would like to secure them a bit more, it is a good idea to get yourself a private sofware or hardware wallet.
As you probably know, every exchange allows you to store your funds on your account there. So, it gives you your own wallet! You can deposit your funds there or withdraw them. The main thing is, this wallet is not yours because the private keys (of cryptocurrency stored in that wallet) are not yours (you cannot display them or copy them), they belong to the exchange! If the exchange decided to take a nap, well, your funds would follow that decision.
In order to get a hold of your own private keys, you must have your own private wallet. Now, as a wallet is a software program or app, it is basically not yours either. If the software developer created a “feature” in the software to look at your private keys, you would be screwed. But, we cannot be that paranoid, otherwise we would all have to learn about software development and make our own wallets (too late!) before trying anything with crypto! So, in this article, I talk about wallet software that is quite revered and I have been using ever since I started – no problems so far.
2. Are there any fees to using wallets?
As you probably know (from FAQ), there are fees for sent transactions. This is not a fee you pay to your wallet’s creator (Exodus, Coinomi, etc.), the fee goes to the blockchain miners that confirm your transaction.
You pay a fee no matter what wallet you use, perhaps with the exception of wallets that belong to some exchanges!
3. What wallets should I choose?
When you are starting, you should probably choose just one offline wallet, do not complicate it too much. Learn and get used to it, then try different ones later.
I myself use two different software wallets – Coinomi (currently available for Android only) and Exodus (currently available for Windows/Mac/Linux). I also bought one hardware wallet – Ledger Nano S.
All of these these are multi-purpose wallets meaning they can store many different currencies and the developers continually add new ones. However, this does not mean that they can store EVERY single currency you stumble upon, so bear that in mind. If the currency is only in its ICO or development stage, there is most probably an online or downloadable wallet created by the currency’s author and, to get it, you have to follow the instructions given by the author.
Let’s get to my wallet recommendations. Firstly, I will start with Exodus as I use it most often. I will also describe it in greater detail – the principles can be applied to other wallets too.
4. Exodus wallet
This is a desktop wallet. Use the link below to get to Exodus homepage.
Firstly, a pre-installation warning!
When on homepage, navigate to Exodus’s download page, find the version for you and… What are you waiting for? Click that button, click it!
Now you probably have the Exodus installer file downloaded in your system.
Do not install yet! As I said many times already, you should be very careful when working with crypto, so it is always a good idea to make sure you are always downloading/using a verified and certified version of the software. To verify the downloaded Exodus file, use this guide HERE.
Configuring your wallet
Ok, if you verified that you are using the certified version of Exodus, you can now install your Exodus wallet using the downloaded file. After installation, Exodus automatically creates a desktop icon, so start the application. You should see something like the following screenshot.
What you see is the “Portfolio” screen, you can see your balances (funds) on all the supported blockchains here. You can then open your “Wallet” screen on the left. Here you can see your balance of each cryptocurrency individually. You can click “Send” to send funds somewhere (but you will not be able to, as your wallet is currently empty) or “Receive” to see and copy your Bitcoin address (to which you can later send some funds).
There is not much else you can do with Exodus at this point. Before you can configure it, you need to make at least one transaction! So, you have to send some funds into your own wallet.
Open the “Receive” screen, copy your wallets blockchain address (e.g. BTC’s address) and WITHDRAW a small amount of crypto (BTC) from your exchange wallet (e.g. Coinbase or GDAX) to Exodus. You do this by pasting the copied address into WITHDRAW BTC (in case of withdrawing BTC) address field of your exchange wallet. As your first deposit, do not send in anything big, send a small amount of BTC to test how this works! Just like I did. You can build your confidence later, we are just starting now. Let’s try sending 0.001 BTC. If there were large fees (Coinbase/GDAX would inform you about them beforehand) for your transfer, it would be better if, instead of BTC, you sent some Ethereum (ETH) or Litecoin (LTC) as your first Exodus deposit (much lower fees there)! If you succeded, you should see something similar to the next screenshot.
The transaction arrived a minute after withdrawal from my GDAX’s BTC wallet. It is not confirmed yet, non-confirmed transactions have that “PENDING” text with gray background on the right side. Confirmation may tak a few minutes but also longer (depends on the volume of active blockchain transactions). Fortunately, I never experienced a confirmation time longer than an hour.
Now it is time to make our wallet SECURE. Up until this point you set no password so everyone could click that Exodus desktop icon and start the wallet. What kind of security is that? We are getting there! After your first transaction, you will have to set up your wallet’s security measures. Exodus refers to these steps as seting a BACKUP of your wallet. See that big red exclamation mark on “Backup” button (Exodus’s left menu) in the screenshot above? Let’s do it. Follow instructions and set up your PASSWORD, your 12-WORD PASSPHRASE (generated for you and yes, you have to write down all 12 words IN THE RIGHT ORDER) and your BACKUP EMAIL. Follow the instructions and write every piece of security information on a piece of paper AND KEEP THEM ON A SAFE PLACE!
Once you have the password set up, every time you open Exodus, you will be required to enter it. It is your base level of protection.
To summarize, when using Exodus, you get 3 security elements and, again, you should WRITE DOWN all 3!
- Password – VERY IMPORTANT, if your password is compromised and the attacker gets access to your computer (your Exodus installation), POOF!, wallet funds gone!
- 12-word passphrase – EXTREMELY IMPORTANT, if your passphrase is compromised, the attacker does not even need access to your computer, he can recover the funds from his own Exodus installation. So, guess what? Yeah, POOF! Wallet funds gone!
- Backup email – the least important, if your email is exposed, the attacker would still need to know your password to get inside your wallet. So, not so much problem there.
If you lose your computer, have to reinstall your operating system or something similar, your Exodus installation will be removed as well. But nothing is lost, you can recover your funds again. Once you have a new system set up, you can download and install a new Exodus wallet. On the starting screen, you click “Restore from backup” and follow instructions to get your old wallet funds back. You can recover using two methods.
- You need your backup email where you click the included link and then you will be asked to enter your password.
- If you forgot your email account or you are unable to get to the backup email, you can always recover using just your 12-word passphrase.
A complete backup recovery tutorial can be found HERE.
Exodus shows you a fee prediction for every transaction you are about to make. Find more information HERE.
5. Coinomi wallet
This is a smartphone wallet. Click the link below to get to Coinomi homepage.
Not to break a tradition, time for a warning!
Coinomi’s website is straightforward, download is placed in the upper half, see the screenshot.
As this is a mobile app, I am not going to show screenshots (maybe I will add them later), I am sure you can find those elsewhere. Generally, Coinomi works very similarly to Exodus. The app will guide you.
At the time of writing (6th November 2017), Coinomi is available only for Android. Or is it? We can fool the system! You can use Android emulator. This is a program that you can install on your computer and it will behave like your smartphone – you can install Android apps into it, write messages from it, etc. According to videos and reviews that I saw, Bluestacks seems to be the most well-known and most used one, link HERE. In the older versions of Bluestacks (that I used to play with), whenever you started it, it activated an auto updater to install some unnecessary files – like games, simply something for advertising purposes. I do not know if it is still there, just be aware of that.
6. Ledger Nano S wallet
This is a hardware wallet that works as a USB drive. Click the link below to get to the product page of Ledger Nano S.
And this is how it looks.
This is simply a USB key that you plug into your computer and then you run certain piece of software that reads the contents of this USB (just like other software wallets). The thing is, the coins are not stored in the software, they are read from the hardware every time , once you unplug the key, your funds are safe!
It is a USB, so you can lose it or forget where it is! It does not matter that much because, if you remember your 24-word recovery phrase (recovery seed), you will be able to recover your lost funds. The problem arises if you lose your recovery phrase. In this case, anyone who finds it will be able to withdraw your funds! But we cannot really fight this problem, all of the wallets have it. It is there so you can recover your lost coins.
When you start working with Ledger Nano S, you will be given an option to create a PIN code. You have to enter it every time you want to activate the device. If you type in a wrong PIN multiple times, the device will wipe itself out (reset itself). This is not a problem if you still have your recovery phrase hidden, you will be able to recover all the wiped content. Another problem would be if you lost both your PIN and your USB key – whoever gets them both, well, yes, you know.
Nevertheless, this is the safest you can get!
What? No WARNING box? Ha, got you, sure there is – a WARNING STORY box.
A few more pieces of information about Ledger Nano S.
- It is operated and activated with two buttons on the USB stick. After configuration, you install a Ledger Manager application on your computer that you use to communicate with the device.
- It can also be upgraded (firmware update) to store new types of coins so it is not a one-time purchase and will probably last!
- This is an interesting point, although I did not try it myself. Ledger Nano S allows you to enter a secondary PIN. This way, it allows you to store 2 separate accounts (each with its own PIN) on your Ledger wallet. Why would you do this? You can use one PIN for an account with very few funds on it and use your primary PIN for your “real” account. If, at some point in your life, you were assaulted by John McClane shouting “Yippee Ki Yay! Give me the PIN to your Ledger Nano S!”, threatening to shoot you in the head if you do not, you could give him your secondary PIN, he would think this is all you have and leave your head alone. It may sound far-fetched, but it shows that Ledger Nano S developers really do something for Ledger’s security!
I do not use this hardware wallet as my main wallet, I mainly store a few of my “HODL” funds there. Originally, I got myself one in case some problem occurs and I quickly need to transfer funds from my software wallets.