One of the most important aspects of investing in cryptocurrency is keeping your coins safe. Because cryptocurrency is not considered legal tender in Canada and crypto exchanges are not insured, you are solely responsible for protecting your crypto against loss or theft. And one of the best ways to do that is with a wallet.
If you’re seriously investing in cryptocurrency as part of your overall wealth portfolio, you need to use a hardware or software wallet to protect your investment.
A good rule of thumb is that once you have over $2,000 invested in cryptocurrency, it’s time for you to move your coins off the exchange platform and into a wallet for safekeeping. Here’s everything you need to know about finding the best crypto wallet or Bitcoin wallet in Canada.
What is a crypto or bitcoin wallet?
Every cryptocurrency coin has its own wallet, and every wallet will have a unique address. These wallets aren’t like wallets for traditional fiat money where you can put both coins and bills of different currencies into a single purse.
Instead, you should imagine storing your cryptocurrency in separate wallets based on the type of currency, so one wallet for Bitcoin, another for Ether, and so on.
When we talk about cryptocurrency hardware and software wallets, we are actually referring to platforms and applications that can hold dozens, or even hundreds, of different wallets – one for each of the cryptocurrencies they support.
Your cryptocurrency wallets are unique to the coin they support. You cannot send Bitcoin to an Ether wallet. In fact, sending your cryptocurrency to the incorrect wallet address can result in losing it forever!
The next —and possibly most confusing — aspect of understanding cryptocurrency wallets is that your cryptocurrency is actually not physically located inside your digital or hardware wallet.
We tend to speak about cryptocurrency wallets as “holding crypto,” but your cryptocurrency is actually stored on the blockchain. Your cryptocurrency wallet is software or hardware that stores access to your crypto assets, not the assets themselves.
This knowledge is reassuring: If something happened to your computer or you lost your hardware wallet, it doesn’t mean your cryptocurrency is gone. You can import your crypto into a new wallet as long as you have your seed phrase.
READ MORE: How to Start Trading Bitcoin Cryptocurrency
How to choose a Bitcoin wallet
At the end of the day, most cryptocurrency wallets do the same thing: they keep your cryptocurrency safe. But you need to find one that’s easy to operate and holds the coins you’re invested in for it to do so! You should also consider the storage type, “cold” (hardware) vs. “hot”(software), and what the security features are.
Hardware wallets, often referred to as “cold storage” for Bitcoin and crypto, are the safest way to store your cryptocurrency. These are physical devices that often look like a USB key.
Hardware wallets are considered the most secure option for storing cryptocurrency because you only connect them to the web in order to receive or send crypto. The rest of the time they remain disconnected.
Software wallets are “hot storage” for cryptocurrency. They are more secure than keeping your cryptocurrency on an exchange, but not as secure as cold storage hardware wallets.
Software wallets are programs in the cloud, on your computer, or on your mobile device that store crypto. They’re considered “hot” because the device they are on maintains a connection to the internet.
READ MORE: How to invest in Bitcoin
Best crypto wallets in Canada
There are many excellent cryptocurrency wallets to choose from, ranging in price from free to a few hundred dollars. If you’re looking for the best crypto wallet in Canada, you want to consider both digital and hardware wallets for storing your cryptocurrency.
Exodus is one of the best and easiest-to-use software wallets available. It provides a beautiful user experience and even has an exchange built-in so you can buy and sell cryptocurrency directly on the platform. Exodus was the first cryptocurrency wallet I used, and the only one I needed for many years!
- Coins supported: more than 100
- Price: Free
Armory is a great choice for a Bitcoin wallet if you’re willing to do a little leg work. For this option, you’ll need a spare computer that’s not connected to the internet. (Most people use an old laptop.) Following Armory’s instructions, you’ll set up your extra computer as a cold wallet for your cryptocurrency.
You can then make a “watching only” copy that will let you view your cryptocurrency balance, generate wallets, and monitor payments just like you would with any other wallet.
- Coins supported: Bitcoin
- Price: Free
Ledger provides two hardware wallets for cold storage of your cryptocurrency: the Ledger Nano S and the Ledger Nano X. Both devices are beautifully designed and very easy to use. They pair with mobile and desktop apps, so you can check the value of your cryptocurrency portfolio even when your Ledger is not connected to your computer.
The Nano S and Nano X differ in the number of cryptocurrency coins you can store on each. The Ledger Nano S will support 18 different cryptocurrency coins, and the Nano X will hold up to 100 at a time.
- Coins supported: over 1,500 cryptocurrencies supported
- Price: $89 to $159
- Bluetooth connectivity
Trezor Model T
The Trezor Model T wallet is one of the most popular cold storage hardware wallets for cryptocurrency investors. While not quite as affordable and easy to use as the Ledger Nano, the Trezor Model T can hold an unlimited number of cryptocurrency wallets simultaneously. It also is considered more secure than the Ledger Nano wallets because it does not have the same Bluetooth connectivity.
- Coins supported: over 1,400 cryptocurrencies supported
- Price: $200
If you’re a crypto noob, a great place to start is Wealthsimple Crypto – Canada’s first regulated crypto trading platform in Canada. Although it doesn’t offer access to a personal wallet, your crypto-assets are kept in cold storage at Gemini Trust Company – a trusted and regulated custodian that has $200M in cold storage insurance coverage.
It’s one of the safest and easiest ways to trade select cryptocurrencies, such as Bitcoin and Ethereum. Here’s an excellent reason to sign-up: those who open and fund a Wealthsimple Crypto account with at least $150 will get a $25 cash bonus. Sign-up today to take advantage of this exclusive offer.
The downside: if you want to withdraw Bitcoin or Ethereum from Wealthsimple Crypto, you must sell your coins for Canadian dollars, and then transfer your CAD to your bank account.
Visit Wealthsimple Crypto
How to keep your cryptocurrency safe
Once you have a cryptocurrency wallet, you will need to take some additional steps to protect your digital assets.
Take your cryptocurrency off the cryptocurrency exchange platform
You should consider the cryptocurrency exchange platform you use to buy and sell crypto a dangerous place to leave your digital assets. Cryptocurrency exchange platforms are vulnerable to hackers because typically all they need is your email or username and a password to access your investments.
Exchanges are also businesses that can (and do) fail, and unlike a bank, are not insured. If a cryptocurrency exchange is hacked or goes out of business and you lose your digital assets, it’s gone for good.
READ MORE: The Best Crypto Exchanges in Canada
Protect your seed phrase
Your cryptocurrency wallet has secure encryption called a seed phrase. It’s a passcode that consists of 12 or 24 randomly selected words. This seed phrase is what will allow you to recover your cryptocurrency if your wallet is lost or stolen.
When you set up your cryptocurrency wallet, make sure to write down your seed phrase on at least two paper cards and store them safely.
Whether you’re brand new to cryptocurrency or an experienced investor, choosing the right wallets to store your crypto is essential for protecting your investment. You may find, like me, that you need a combination of hot and cold storage options to manage your cryptocurrency portfolio. Whatever you choose, there’s a bright future for cryptocurrency ahead and it’s fun to be part of the excitement!
READ MORE: Should You Buy Bitcoin in Your TFSA and RRSP?