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Ask CryptoVantage: Do Different Crypto Coins Need Different Wallets?
Hardware wallets, software wallets, custodial, non-custodial, hot and cold. It would be an understatement to say there are a ton of different phrases and words when discussing cryptocurrency wallets.
This can be especially confusing if you are new to the space and do not really understand the difference between something like MetaMask, a Ledger Nano S, and an exchange wallet. The confusion can be compounded further when you realize that a lot of different cryptocurrencies need different wallets, but not all of them do.
In this edition of Ask CryptoVantage we will take a look at whether different cryptocurrencies need different wallets, and what exactly that means for you as a user.
Do Different Cryptocurrencies Need Different Wallets?
Technically yes. You need different a different wallet for different cryptocurrences. Bitcoin wallet for your BTC, an Ethereum wallet for your ETH, and a Cardano wallet for your ADA.
You cannot store BTC in a Cardano wallet (or even send it there), and vice versa. For something like Ethereum, your Ethereum wallet can store any ERC-20 token, so you do not need a new wallet for Uniswap (UNI), Polygon (MATIC), or Synthetix (SNX) tokens, as they are compatible with any Ethereum wallet such as MetaMask or My Ether Wallet. The same is true of a Binance Smart Chain wallet and any BEP-20 asset such as PancakeSwap (CAKE).
There are, however, as multi-asset wallets like Exodus, Trust Wallet, Ledger, Trezor have the ability to have many different wallets on one device or piece of software.
How Many Wallets Will I Need?
Wallets through exchanges like Crypto.com Exchange and Binance contain wallets for every asset you own, and when you deposit a new asset a new wallet address is created for that asset. In other words, they are multi-asset wallets. What this means is that if you are comfortable using a custodial wallet service (most exchanges are custodial, meaning you do not own the keys), then you do not need to worry at all about having different wallets, as the exchange will take care of all of that for you.
While not as much of an issue nowadays, keeping your assets on an exchange means potentially leaving them in “hot” wallets, which are wallets that are active and potentially a target for hacks, as exchanges pool user funds. Most exchanges now try and keep 90% or more of users’ assets in cold wallets.
Software and Hardware Wallets Made Easy
The reality is that with most non-custodial software and hardware wallets you will not need more than one piece of software or hardware despite needing different wallets for each different cryptocurrency asset. This is because the majority of them are multi-asset wallets, meaning you can have lots of different addresses for different crypto assets tied to the same wallet, you just have to select the asset you wish to deposit and send it to the address the wallet provides. Something like the Exodus software wallet allows you to store Bitcoin, Ethereum, Cardano, Cosmos, Binance Coin and many more. One piece of software will likely cover all your wallet needs.
Meanwhile, with hardware wallets like the Ledger Nano X, you simply have to install the wallet app for whichever asset you want to store using your Ledger and then send the asset to the address provided. There are hundreds of supported cryptocurrencies on most hardware wallets, whether Ledger or Trezor, meaning that you can essentially buy one hardware wallet that holds every cryptocurrency you may be interested in.
In summary most modern cryptocurrency wallets are multi-asset wallets but it’s important to understand they technically hold a variety of different wallets for each cryptocurrency. The key takeway is that you should never try and send Bitcoin to an Ethereum address or vise versa as you risk losing your coins.
Below is a quick list of the best wallets to get you started:
Best for Beginners: Coinbase Wallet
To get started in cryptocurrency you’re going to need crypto. One of the best on-ramps for new crypto investors is Coinbase Exchange thanks to its intuitive UI and easy set-up. The site also offers a non-custodial DeFi wallet, which is a great place to start if you want to try self-custody.
- Non-custodial wallet developed by Coinbase team
- Easy to swap assets between Coinbase wallet and Coinbase exchange
- Support for over 100 crypto assets including Bitcoin, Ethereum and USDC
- One of the most secure software-based wallets
- Ability to store NFT assets
Best for Desktop: Exodus
Exodus is a great wallet on desktop as it supports nearly every major cryptocurrency (BTC, ETH, SOL etc) and has a great UI. It’s completely free and can be secured with a Trezor wallet for extra piece of mind.
- Free to download for desktop & mobile
- Supports multiple hardware wallets
- Supports over 100 cryptocurrencies
- Great customer support
Best for Bitcoin: Ledger Nano S
If you’re serious about Bitcoin than you are probably going to want to invest in a hardware wallet. The Ledger Nano S is a great hardware wallet that doesn’t offer much support for altcoins (you can only have three crypto apps installed) but it’s perfect for Bitcoin purists. It also only costs $60.
- Excellent value at price point
- Easy to use
- Supports 1000+ digital assets
- Very secure
Frequently Asked Questions About Crypto Wallets
This is a point of contention among crypto users. Most crypto purists prefer withdrawing their coins to their own wallet so they can guarantee security. In other words, if a crypto exchange is hacked, they don’t have to worry about it.
On the other hand there are plenty of crypto users who don’t trust themselves with crypto and prefer the security of a highly regulated exchange to hold their crypto.
The choice is ultimately up to you.
There are plenty of crypto wallets that hold huge amounts of different cryptocurrencies including Exodus, Ledger, Trezor, Trust Wallet and Coinbase Wallet. There isn’t really one industry leader in this category.
Absolutely. You can have as many wallets as you want. You could theoretically have a thousand Bitcoin wallets with $.50 on each one.
No. While technically each cryptocurrency does live in its own wallet, there are plenty of multi-asset wallets that actually offer many different wallets in one interface.
