While less secure, hot wallets allow investors to store, send, receive, and trade cryptocurrencies with ease. Options include apps, desktop software, browser extensions, and standard web wallets.
In this guide, we compare the 10 best hot wallets for security, features, convenience, and more. Read on to discover the safest hot wallets for 2023.
Table of Contents
What is a Hot Wallet?
Cryptocurrencies can be stored in hot or cold wallets. Hot wallets are always connected to the internet and can be accessed via smartphones and desktop devices. Cold wallets, on the other hand, are always offline.
Hot wallets come with both pros and cons. The benefits of using a hot wallet include increased convenience and usability. For example, the best cold wallets not only store cryptocurrencies but allow users to buy and sell them. Many hot wallets also provide access to decentralized exchanges, staking tools, and other interest-bearing products.
But this does come at a cost. By always being connected to the internet, hot wallets invite enhanced risk. This is because hot wallets are always vulnerable to hacking attempts. If successful, the hot wallet will be compromised, and the cryptocurrencies stolen. In this instance, there is little recourse for the user to take, considering the anonymous and irreversible nature of cryptocurrency transactions.
That said, hot wallets still come with security features. For example, ‘custodial’ hot wallets like eToro, Binance, and Coinbase offer two-factor authentication. These custodial wallet providers also keep the majority of client-owned cryptocurrencies in cold storage. Crucially, it is the custodian’s responsibility to safeguard the crypto wallet and private keys.
‘Non-custodial’ wallets allow users to take control of their private keys – usually via a backup passphrase. The non-custodial wallet will not have access to the private keys, so it’s the user’s responsibility to keep them secure. Non-custodial hot wallets are usually secured by a password or PIN.
Best Hot Storage Crypto Wallets Reviewed
Still not sure which hot wallet crypto provider is best? Read on to explore our comprehensive reviews of the 10 best hot wallets for 2023.
1. eToro – Overall Best Hot Wallet 2023
eToro is the overall best hot wallet for beginners. In fact, we found that the eToro wallet offers the perfect balance between usability and security. Regarding the latter, the eToro wallet is backed by a regulated brokerage. It holds licenses with various financial bodies, including ASIC, FINRA, CySEC, and FCA.
This is in contrast to most hot wallet providers, which do not have any regulatory licenses at all. What’s more, we like that investors can protect their wallets via two-factor authentication. Behind the scenes, eToro keeps most clients’ digital assets in cold storage. While this doesn’t hinder transaction times, it ensures that the cryptocurrencies remain safe and away from hackers.
The eToro wallet is available in two different formats. First, there is the eToro crypto wallet app for Android and iOS. This user-friendly app comes with ‘unlosable’ private keys. This means that eToro can help investors recover their wallet funds if their password is forgotten. The other option is the eToro web wallet. This connects directly to the eToro exchange.
As such, not only can investors store their cryptocurrencies on eToro but also trade them. More than 90 cryptocurrencies are supported, ranging from Bitcoin, Shiba Inu, and Aave to BNB, XRP, and Cardano. As soon as a cryptocurrency purchase is made, the tokens are instantly transferred to the eToro web wallet. From within the eToro wallet, users can sell their cryptocurrencies for cash at any time.
eToro supports multiple currencies when depositing and withdrawing funds. This includes fee-free USD deposits on debit/credit cards and e-wallets. These payment methods also support other currencies but at a 0.5% deposit fee. We also like that the eToro wallet supports copy trading and smart portfolios. The former allows users to copy their favorite crypto traders like-for-like.
For example, suppose the trader buys Ethereum and Solana. The same position will be mirrored in the user’s portfolio at a proportionate amount. eToro smart portfolios also support passive trading. But instead of copying another trader, smart portfolios are managed by the eToro team. Each tracks a niche from the cryptocurrency markets, such as decentralized finance.
Another popular feature offered by the eToro hot wallet is crypto staking. Currently, the platform supports staking coins like Ethereum, Tron, and Cardano. But more will be added in the near future. Up to 90% of the staking rewards are distributed to users, although this depends on the account tier.
In terms of fees, the eToro wallet is free to use when storing cryptocurrencies. Fees are only payable when making transactions, such as sending cryptocurrencies to another wallet address. Trading commissions of 1% are charged when swapping tokens. Finally, eToro is also one of the best hot wallets for customer service. Users can speak with an agent via live chat 24 hours per day, five days per week.
Cryptoassets are a highly volatile unregulated investment product.
2. Trust Wallet – Non-Custodial Wallet Supporting Bitcoin and 70 Other Networks
Trust Wallet is one of the best non-custodial wallets in the market. Not only in terms of fees and user-friendliness but supported networks and features. For example, Trust Wallet comes with in-built staking tools that support various cryptocurrencies. APYs of up to 84% are available.
Trust Wallet also supports an in-built token swap feature. This allows users to swap tokens across multiple blockchains without leaving the wallet interface. Both staking and token swaps on Trust Wallet are fee-free. Trust Wallet also supports hundreds of decentralized applications (dApps). This includes everything from OpenSea and Yearn.finance to Algorand and UniSwap.
Trust Wallet is one of the best hot wallets for diversified portfolios. It supports Bitcoin and over 70 other networks, including Ethereum, Binance Smart Chain, Cardano and Solana making it one of the best ADA wallets on the market. There are no fees to store or receive cryptocurrencies. GAS fees are charged without markups when transferring cryptocurrencies to another wallet.
Trust Wallet is available as a mobile app, supported by iOS and Android. Some users opt for the Chrome extension, which is the ideal hot wallet for desktop devices. Both options connect to the same wallet, but this requires users to import their private keys. Trust Wallet provides private keys as a 12-word passphrase. This allows users to recover the wallet if the password is forgotten.
Here’s our comprehensive Trust Wallet review.
3. MetaMask – Free Hot Wallet for Web Browsers With Over 30 Million Users
MetaMask is a hot wallet provider that supports smartphones and browser extensions. The latter will appeal to users that want to seamlessly store cryptocurrencies on their laptop or PC. In doing so, this makes it simple to access dApps, exchanges, and NFT marketplaces.
After all, most cryptocurrency platforms directly support MetaMask, so it takes just seconds to connect. MetaMask is mainly used to store tokens on the Ethereum and Binance Smart Chain networks. That said, it also supports Arbitrum, Optimism, Polygon, and Avalanche. These networks, in addition to Binance Smart Chain, must be added to MetaMask manually.
Moreover, MetaMask does not support Bitcoin. Nevertheless, MetaMask is also popular for its in-built staking tools. This allows investors to earn an APY of over 4% on Ethereum. No other cryptocurrencies are supported, however. The workaround here is to connect MetaMask to a dApp like SushiSwap or PancakewSwap.
We also like that MeatMask is user-friendly, and it takes seconds to set up a new wallet. MetaMask provides users with their backup passphrase, represented by 12 words. This is required when recovering the MetaMask wallet remotely. Wallets are protected by a password, and transactions are only authorized once confirmed by the owner.
Here’s our more comprehensive MetaMask review.
4. Binance – Custodial Web Wallet Connecting to the Binance Ecosystem
Those placing convenience at the heart of everything might consider Binance the best hot wallet for crypto. Binance offers a web wallet that connects to its cryptocurrency ecosystem. Through one platform, users can access the Binance exchange, NFT marketplace, and yield services.
There is no requirement to leave the Binance web wallets to access any of these tools. For example, those holding cryptocurrencies in the Binance wallet can directly earn interest via staking and yield farming. Wallet users can also access hundreds of cryptocurrency trading markets, with commissions starting at just 0.1%.
The Binance web wallet also supports fiat money deposits and withdrawals. Supported payment methods vary depending on the country of residence. But they usually include debit/credit cards and e-wallets. Moreover, we found that the Binance web wallet offers plenty of security features.
This is a hot custodial wallet, so Binance looks after the user’s private keys. Accounts are secured by IP address whitelisting and two-factor authentication. Most client digital assets are kept offline, adding an extra layer of security. Although Binance is a custodial wallet provider, we found that outgoing transfers are usually honored within minutes.
This allows users to seamlessly transfer funds in and out of their web wallet. In terms of fees, Binance does not charge users for storing or receiving cryptocurrencies. The main drawback is that withdrawals are based on a flat fee for each supported token. This means that users will often pay more than the blockchain mining fee. For example, Bitcoin withdrawals cost 0.0001 BTC.
5. Electrum – Combine Hot and Cold Storage via a Secure Desktop Wallet
Electrum is one of the best hot wallets for storing Bitcoin. Users can download the Electrum wallet to their preferred desktop device, with the provider supporting Windows, Mac, and Linux. Although this is a hot wallet, Electrum allows users to keep their private keys in cold storage.
This means that outgoing transactions cannot be made until the private keys are manually brought back online. In the meantime, users can store their Bitcoin tokens in ‘view only’ mode. Electrum also offers multi-sig permissions, which is a great security feature when large balances are involved.
This requires authorization from two or more wallet addresses before transactions are approved. Unlike Binance, Electrum does not make any money from outgoing transfers. Instead, fees are paid directly to Bitcoin miners at the real-time rate. In addition to its desktop software, Electrum also offers a mobile app.
However, this is only supported for Android devices. Another drawback is that Electrum is a Bitcoin-only wallet. Those looking to store Ethereum, BNB, and other altcoins will need to look elsewhere. In terms of reputation, Electrum has been in the market since 2011. It never stores user data, and wallets are managed anonymously.
6. Coinbase – Custodial Web Wallet With Institutional Grade Security
Coinbase proves that custodial hot wallets can be both secure and convenient. This is a web wallet that can be accessed via the user’s email address and password. Before gaining access to the wallet, users must complete two-factor authentication. This sends an SMS to the user’s smartphone, which needs to be entered.
The Coinbase web wallet is also protected by device whitelisting. For example, if the user logs in from a new laptop, Coinbase will implement an additional security step. Moreover, Coinbase is a regulated wallet provider and is now publicly listed on the NASDAQ exchange. We also like that users can add a time lock on withdrawals.
This requires at least 24 hours to pass before the withdrawal is approved. This will appeal to investors with large balances, as unauthorized payments can be stopped during the grace period. In terms of features, the wallet connects directly to the Coinbase exchange. This allows users to buy and sell cryptocurrencies directly from their wallets. Coinbase also offers staking rewards on various cryptocurrencies.
7. OKX Wallet – Self-Custody Hot Wallet Connecting to Over 200 dApps
OKX is one of the best self-custody wallets for hot storage. It supports thousands of cryptocurrencies across 15 networks. While this doesn’t include Bitcoin, OKX does support Ethereum, Polygon, Binance Smart Chain, and Arbitrum. OKX is accessible via the native mobile app for iOS and Android.
There is no browser extension, but users can connect the OKX wallet app to its desktop website. There is no requirement to open an account or provide any personal information. The best feature of this hot wallet is its ‘bridge aggregator’ tool. This connects to over 200 dApps and allows users to seamlessly swap tokens and earn interest.
What’s more, the bridge aggregator finds the best rates and APYs. There is no requirement to complete the transaction outside of the OKX wallet. Instead, swaps, staking, yield farming, and other features can be accessed directly from this leading MPC wallet interface. OKX charges fees when its bridge aggregator tool is used. This varies depending on network conditions but is clearly displayed before confirming transactions.
8. MyEtherWallet – Hot Wallet App for Storing Ethereum and ERC20 Tokens
MyEtherWallet is a popular hot wallet that offers an iOS and Android app. This is a non-custodial wallet, so only the owner of the cryptocurrencies has control of the private keys. These are encrypted onto the user’s mobile device and represented by a 12, 15, 18, or 21-word passphrase.
MyEtherWallet directly supports the Ethereum network. Through one wallet address, this is compatible with all ERC20 tokens. There is no support for Bitcoin or any other network, unless the user installs an Enkrypt extension. Nonetheless, MyEtherWallet offers an in-built staking tool for Ethereum 2.0.
The wallet also connects with selected dApps, including Aave and ENS Manager. MyEtherWallet is also working on support for SafeSend transactions, MakerDAO, and LEND Migrator. We also found that MyEtherWallet allows users to buy cryptocurrencies with a debit/credit card. Depending on the user’s location, this service is provided by Changelly, Bity, or Simplex.
9. Coinomi – Multi-Chain Hot Wallet for Desktops and Smartphones
Coinomi was launched in 2014 and supports thousands of cryptocurrencies. Over 125 blockchain standards are supported, ranging from Tron and Bitcoin to Ethereum, XRP, and ZCash. Coinomi is supported by both desktops and smartphones. Compatible operating systems include Windows, Mac, iOS, and Android.
Coinomi is a non-custodial wallet, so users control their private keys. The private keys are encrypted and never stored by Coinomi. Nor is there a requirement to register an account or provide any personal information. We like that Coinomi supports third-party dApps, allowing users to trade and earn interest.
We also like that the only fees payable are when making transactions. No markups are charged, with fees quoted by miners. Moreover, Coinomi supports Native SegWit, meaning Bitcoin transactions are faster and more efficient. Coinomi is also popular for storing NFTs on the ERC721 standard.
10. Exodus – Non-Custodial Wallet Storage Across Desktops, Mobiles, and Web Browsers
Exodus is a popular hot wallet that was launched in 2015. Our Exodus wallet review found that it supports over 260 cryptocurrencies and is compatible with all device types. This includes desktop software for Windows and Mac, as well as a browser extension for Chrome. There is also an Exodus app for iOS and Android.
We like that Exodus updates its wallet software every two weeks, ensuring a top-notch user experience. That said, Exodus is a non-custodial hot wallet, so users are responsible for safeguarding their backup passphrases. This is a 12-word passphrase that is provided when setting Exodus up.
Exodus also comes with a portfolio management tool. This displays statistics and real-time pricing on all cryptocurrencies stored. What’s more, users can stake cryptocurrencies without leaving the Exodus wallet. Yields are competitive, with Solana and Ontology currently paying APYs of 7.9% and 15%, respectively.
Why Use a Hot Crypto Wallet? Benefits Explained
Now let’s explore some of the key benefits that hot wallets offer.
Frictionless Transactions
Hot wallets make it seamless to send and receive cryptocurrencies.
- For example, consider a mobile wallet app that currently stores Bitcoin.
- The user wants to transfer Bitcoin to a crypto exchange so they can cash out to fiat money.
- After opening the wallet app, the user scans the exchange’s public address via a QR code.
- The user confirms the transaction instantly, and the Bitcoin arrives in their exchange account in 10 minutes.
The above example is also applicable to other hot wallets. This includes browser extensions, desktop software, and web wallets.
However, instead of scanning a QR code, these hot wallets require users to paste the public address. Nonetheless, the process is still fast and convenient.
In comparison, sending cryptocurrencies from a cold wallet is cumbersome. Take a hardware wallet like Trezor as a prime example. To transfer funds, users need to enter a PIN on the physical device. If the user is on the move and does not have the device with them, the transaction cannot be approved.
Easily Buy and Sell Crypto
Many investors use hot wallets to invest in new cryptocurrencies. For example, swapping Bitcoin or Ethereum for a newly launched ERC20 token.
Using a hot wallet for buying and selling cryptocurrencies makes the process very convenient.
- For example, users can easily connect MetaMask or Trust Wallet to access dApps like Uniswap.
- The user can then swap tokens without leaving the wallet interface.
- After completing the swap, the new tokens will appear in the user’s wallet.
That said, eToro offers an even more convenient way of using a wallet to trade crypto. This is because the wallet connects to the regulated eToro exchange, supporting over 90 digital assets with low fees.
Invest in Crypto ICOs
Hot wallets are a core requirement for investing in crypto ICOs.
In most cases, the newly launched cryptocurrency project will host its ICO on its own website. Investors need to connect their hot wallets to the ICO website to complete their investments.
Earn Interest on Idle Crypto Tokens
Hot wallets also make it convenient to earn interest on idle cryptocurrencies. There are various ways to achieve this goal.
For example, the eToro hot wallet has an in-built staking tool. This supports some of the best staking coins, including Tron, Cardano, and Ethereum.
Trust Wallet connects to dApps like Uniswap and Aave, which support staking, yield farming, and crypto savings accounts.
OKX is also popular for earning passive income, as its decentralized crypto wallet bridges with over 200 dApps.
How we Ranked the Best Hot Wallets
The vast majority of crypto wallets offer hot storage. So knowing which option to go with can be challenging.
To help clear the mist, we will now discuss what factors to look for when choosing the best hot wallet.
Custodianship
The first consideration to make is whether to opt for a custodial or non-custodial hot wallet. The decision should be based on the user’s objectives.
For example, those looking to actively buy, sell, and store cryptocurrencies under one regulated roof might consider eToro. This licensed provider takes care of the user’s cryptocurrencies and private keys, making eToro a safe and convenient option.
However, those that do not feel comfortable giving away control of their private keys might be suited for a non-custodial hot wallet. MetaMask, for example, provides users with a 12-word backup passphrase when creating a new wallet. This secures the wallet, but users must take responsibility for its safety.
Security
After choosing between a custodial or non-custodial hot wallet, the next step is to assess what security features are included. This will vary widely depending on the custodian.
For example, those opting for a custodial wallet should look for:
- IP address whitelisting
- Device whitelisting
- Two-factor authentication
- Majority of client cryptocurrencies kept offline
- Regulation from tier-one bodies like FINRA
- 24/7 risk management teams
Those opting for a non-custodial wallet should look for:
- Multi-sig permissions
- Password, PIN, or fingerprint ID
- Backup passphrase
- Encrypted private keys
Just remember, the choice between a custodian or non-custodial hot wallet is based on ‘responsibility’. In other words, it’s like keeping large amounts of cash at home (non-custodial) or keeping the money in a regulated bank account (custodial).
Compatible Networks
Hot wallets will support a specific number and type of blockchain network.
For example, MetaMask supports Ethereum, Arbitrum, Optimism, Polygon, and Binance Smart Chain. But it doesn’t support Bitcoin, Solana, or Cardano.
Electrum supports Bitcoin, but no other cryptocurrencies. eToro supports 90 different cryptocurrencies, including many of the best utility tokens. This includes everything from the Sandbox and Aave to Uniswap and Algorand.
Ultimately, check what networks and cryptocurrencies are supported before choosing a hot wallet.
Interest-Earning and Trading Features
Leaving cryptocurrencies to sit idle in a hot wallet can result in opportunity costs. Instead, many investors like to earn interest on the cryptocurrencies stored in their wallets.
For example, eToro offers an in-built staking tool. This shares up to 90% of the staking rewards. Binance offers everything from staking and dual investments to yield farming and interest accounts.
In addition to interest-earning products, the best hot crypto wallets support trading. eToro supports trading on its regulated exchange, while Trust Wallet connects to dApps like SushiSwap and UniSwap.
Hot Wallet vs Cold Wallet
Hot and cold wallets both enable users to store, send, and receive cryptocurrencies. However, they differ in how the wallet stores the private keys.
For example, cold wallets store private keys offline at all times. The wallet is never connected to the internet. This means that the wallet cannot be hacked remotely. Cold wallets are usually secured by a hardware device.
The two leading providers in this space are Ledger Nano and Trezor. That said, cold wallets can also be stored on paper. The user simply needs to print the wallet address and private keys and store the paper somewhere safe and private.
Hot wallets are always connected to the internet. This makes hot wallets more convenient but also less secure. This is because hot wallets are vulnerable to hacking attempts.
In light of this risk, beginners will often use a custodial hot wallet offered by a regulated provider. Hot wallets are supported across various devices. This includes desktops, smartphones, and even web browsers.
How Many Cryptos Can You Store in a Hot Wallet?
There are no limits to the number of cryptocurrencies that can be stored in a hot wallet. But the wallet must support the respective cryptocurrency network. For example, it isn’t possible to store Ethereum in Electrum or Bitcoin in OKX.
Within each hot wallet, users can usually create an unlimited number of addresses. For example, some investors will create a new wallet address after completing a transaction. This helps increase privacy, as wallet addresses allow anyone to view its contents.
It is also possible to create multiple wallets within the same wallet. For example, Trust Wallet allows users to create up to 15 separate wallets within the same app. On MetaMask, there are no limits.
That said, beginners should avoid creating too many wallets. In fact, it’s best to just stick with one wallet address per cryptocurrency. This makes it easier to manage cryptocurrency investments and avoid making mistakes.
Conclusion
In summary, hot wallets offer increased convenience when interacting with the blockchain market. Whether that’s to store, trade, or stake cryptocurrencies – hot wallet transactions take just seconds to execute.
We found that the overall best crypto hot wallet for beginners is eToro. This user-friendly wallet is regulated by various bodies and comes backed with lots of security controls.
This includes two-factor authentication and ‘Unloseable’ private keys. We also like that the eToro wallet supports crypto swaps and staking, as well as smart portfolios and copy trading.
This allows investors to meet all their cryptocurrency needs in one safe, licensed place. What’s more, the eToro wallet – available via an app and web browsers, supports over 90 cryptocurrencies. This makes eToro the perfect hot wallet for diversified portfolios.
Cryptoassets are a highly volatile unregulated investment product.
References
https://coinmarketcap.com/rankings/exchanges/dex/
https://coinmarketcap.com/alexandria/article/what-is-yield-farming
https://www.sec.gov/securities-topics/ICO
https://www.finra.org/
https://www.swift.com/your-needs/financial-crime-cyber-security/know-your-customer-kyc/kyc-process
https://www.binance.com/en/fee/cryptoFee
https://www.reuters.com/technology/hackers-steal-around-100-million-cryptocurrency-binance-linked-blockchain-2022-10-07/
https://www.cnbc.com/quotes/COIN
https://ethereum.org/en/developers/docs/standards/tokens/erc-20/
https://eips.ethereum.org/EIPS/eip-721
https://www.etoro.com/customer-service/regulation-license/
https://www.etoro.com/customer-service/help/1306618852/where-are-my-cryptoassets-held/
