Types of Crypto Wallets

As you probably already know. Crypto has to be stored on wallets. There are different type of wallets with their own level of securities. Basically you can split them into 3 types.

1. Custodial wallets

   • These are wallets that you do not control. For example a wallet that is given to you by exchanges or other services that hold your crypto. You can not use these to interact with DEFI protocols or any smart contract. Never submit those wallets to receive airdrops or whitelist addresses.

2. Software wallets

   • These are one of the most common wallets. Software wallets can be browser wallets like Metamask or desktop wallets or even mobile wallets. You control these wallets yourself and need to keep the seedphrase very SAFE to never lose your assets.

3. Hardware wallets

   • Hardware wallets are considered the safest wallet to use. These are physical devices which require the user to interact with them. This adds an extra layer of security compared to online software wallets. Again, you hold the private keys, so never ever lose your seedphrase or your crypto will be forever unrecoverable. Most famous hardware wallets are from Ledger and Trezor.

Personally I like to use software wallet Metamask to interact with most defi protocols. Since its easy and fast without you needing to connecting a hardware wallet and pressing it for every transaction. But limit the funds on it in case you do get compromised. Hard earned profits I then transfer to my hardware wallet.

This video explains how you can use your ledger with Metamask. In the video they don’t actually use the Metamask provided wallets. But it works with your existing Metamask.