What is a crypto wallet?
A crypto wallet is a software program or hardware device that enables you to securely store your cryptoassets. Wallets help protect your assets by adding an extra layer of security. With a crypto wallet, you can send and receive crypto to and from other wallets and often convert one asset into another.
There are two main types of crypto wallets:
- Hot wallets
- Cold wallets
Hot Cryptocurrency Wallets
Hot wallets are connected to the internet and usually come in the form of mobile or desktop apps. Examples include Coinbase Wallet, MetaMask, and Trust Wallet.
Pros:
- Convenient for quick access and frequent trading
- Often free to set up and use
Cons:
- More vulnerable to hacking or phishing attacks
- Typically reliant on third-party infrastructure
Some platforms now offer multi-factor authentication (MFA) and multi-party computation (MPC) to reduce single points of failure, but risks still exist.
Cold Cryptocurrency Wallets
Cold wallets are offline devices used to store crypto securely. Popular models in 2025 include Ledger Nano X, Ledger Stax, and Trezor Safe 3.
Pros:
- Better protection from online threats
- Secure long-term storage
Cons:
- Less convenient for frequent transactions
- Can be expensive (ranging from $80 to over $250)
Using a cold wallet typically requires connecting it to an online device to authorise transactions. Some now have Bluetooth or touchscreen features for ease of use.
Should You Move Crypto Off an Exchange?
If you buy crypto on a centralised exchange like Coinbase, Binance, or Kraken, it’s generally safer to transfer it to your personal wallet, especially for large or long-term holdings. This protects you if the exchange is hacked or experiences downtime. In 2022, FTX’s collapse highlighted the risks of leaving assets on exchanges.
How Do Cryptocurrency Wallets Work?
When you create a wallet, you receive:
- A public key: This acts like your wallet address for receiving crypto.
- A private key or seed phrase: This gives full access to your wallet.
Keep your private key or seed phrase secure and offline. Losing this information can mean losing access to your crypto permanently. Many wallets now offer encrypted backup or social recovery options, but the risks remain.
How Much Do Crypto Wallets Cost in 2025?
- Hot wallets: Usually free, though sending crypto from an exchange to an external wallet may incur a fee (e.g., eToro charges 0.5%, capped at $50).
- Cold wallets: Range from $75 to $250 depending on features like touchscreen, Bluetooth, or recovery options.
Other costs may include:
- Network fees (for example, Ethereum gas fees)
- Conversion fees for swapping one crypto to another within the wallet
- Withdrawal fees from exchanges to wallets
Always check the full fee schedule of your wallet provider or exchange.
Are Crypto Wallets Safe?
Crypto wallets offer better protection than leaving funds on exchanges—but they are not risk-free:
- Cold wallets are generally safest due to being offline.
- Hot wallets are at higher risk of cyberattacks.
- Wallets are not regulated in the UK or most jurisdictions, so if you lose your assets due to theft or user error, there is typically no recourse.
For added security:
- Use wallets with strong encryption and biometric login options.
- Consider hardware wallets for storing large balances.
Wallet vs. Exchange: What’s the Difference?
- Crypto Exchange: A platform for buying, selling, and trading cryptocurrencies (e.g., Binance, Coinbase, Kraken).
- Crypto Wallet: A secure place to store cryptoassets, either on your own device or through a third party.
Most serious investors use both: an exchange for buying/selling and a wallet for secure storage.
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as The Sunday Times, BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
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