Every article about crypto wallets needs to start with the most important saying in the crypto industry: not your keys, not your coins. The notion, one of the first ones to be adopted by crypto natives, has returned to the spotlight following the bankruptcy of the second-largest centralized crypto exchange, FTX.
The downfall of the once-mighty FTX, together with dozens of other crypto entities that have blown up this year, has cost billions of dollars to venture capital firms, institutions, and everyday customers.
But there is one simple thing that could’ve prevented all of the suffering: self-custody of one’s assets. It sounds exotic and complex, but it’s really not.
In the first of two articles, we’ll look at the best and most reliable Ethereum self-custody wallets. We’ll start with hot wallets – those that are accessible online.
If you’ve been in crypto for at least one day, you already know what MetaMask is. It’s free, open-source software that can store any token built on Ethereum.
Developed by ConsenSys, one of the leading Ethereum software development companies, MetaMask is available both on desktop and mobile. It’s the most widely used Ethereum wallet that integrates with virtually all decentralized applications, be they NFT marketplaces, staking services, or exchanges.
On top of that, MetaMask offers an in-wallet token swap feature, allowing users to exchange any token without the need of connecting to an exchange. Users can also buy tokens directly from the wallet, send and receive them, import external accounts, and connect their hardware wallets.
It’s important to note that MetaMask is an externally owned account (EOA), which means that it’s controlled by a private key in the form of a 12-word (sometimes 24-word) seed phrase and has no code associated with it. Your private key and the mnemonic phrase you get when you create a new wallet are what give you access to your wallet.
This is in contrast to smart contract-based wallets, which depend on social recovery rather than seed phrases. We’ll discuss smart contract wallets later.
With MetaMask, you can be sure you own your assets. This means, of course, that you must have access to your mnemonic phrase in case you forget your wallet password and want to recover it. So be sure to safely store your phrase!
2. MyEtherWallet (MEW)
For those that want an Ethereum wallet that has stood the test of time, MyEtherWallet (MEW) is an excellent choice.
MEW is open-source, permissionless, and offers its users everything – and more – they need to navigate the Web 3.0 world. Users can buy, swap, send, receive, and store ERC-20 tokens, as well as connect to hardware wallets and decentralized applications directly from the mobile app or through the web.
MEW, like MetaMask, is also an EOA wallet. It encrypts users’ private keys multiple times and then gives a unique 24-word phrase that’s used to access and recover accounts. In fact, MEW offers no ability for users to even see their private keys – that’s how confident they are about their level of security.
MEW offers both a mobile app and a desktop version of its wallet. The desktop browser extension is called Enkrypt, a new iteration of its predecessor MEW CX, which is no longer being developed by the MEW team. Enkrypt supports multiple blockchains like BNB Smart Chain, Polkadot, and Ethereum Layer-2 scaling solutions Optimism and Polygon. It also features an in-built NFT manager.
The MEW mobile app is available on both iOS and Android, while Enkrypt is available for all major browsers.
3. Loopring Smart Wallet
Loopring Smart Wallet is one of the most interesting Ethereum wallets on the market. Built by the team that developed the Loopring zero-knowledge roll-up scaling technology, it’s the first Ethereum smart contract-based wallet app.
In contrast to EOA wallets like MetaMask, wallets built as smart contracts rely on a security mechanism called social recovery instead of mnemonic phrases. Social recovery, a concept that Ethereum’s co-founder Vitalik Buterin believes is necessary for the blockchain to scale, allows users to set guardians who, in case of emergency, can help them recover their wallet.
For example, if you lose your phone, you’ll be able to recover your wallet on the new phone with the help of your guardians. They can be the other wallets that you own, hardware wallets, and even institutions. The number of guardians is unlimited, though one caveat is that setting guardians is a Layer-1 action, which means users need to pay gas fees.
As for transactions, Loopring Smart Wallet allows users to set daily limits or quotas. They can also whitelist certain addresses, which are exempt from daily limits or quotas. If a hacker gains access to your wallet, they’d be able to transfer only a small amount of funds to a non-whitelisted account.
On top of that, hackers and other bad actors wouldn’t be able to easily change the whitelisted addresses or daily limits. Doing so would require confirmation from the guardians.
Available both on iOS and Android, Loopring Smart Wallet Loopring’s wallet is built on its Layer-2 zero-knowledge roll-up. This means that transaction fees for almost all actions, like trading on its decentralized exchange, accessing ETH staking services, or sending funds to other Loopring addresses are close to nothing.
Argent is another smart contract-based mobile wallet app. Built on the Ethereum Layer-2 scaling solution zkSync, it eliminates high gas fees by using zero-knowledge roll-up technology and offers trading, swapping, and sending for mere cents.
Just like Loopring Smart Wallet, Argent allows its users to set up multiple guardians, who act as an additional safety net in case of emergency. Guardians can be your other wallets, hardware wallets, people you trust, or Argent’s two-factor option, which uses two-factor authentication via phone and email. Your Argent guardians can authorize transactions, help you recover the wallet, and lock or unlock it.
Setting guardians are gas fee-intensive, which is why Argent has built another recovery feature that involves encrypting your private keys and storing them on iCloud or Google Drive. On top of that, Argent users can set trusted contacts and auto-block transactions.
Argent is also known for its ease of use, simple and cheap trading, and investment options built within the app. For example, users can swap tokens on the ZigZag exchange within seconds and for pennies, or choose one of a few investment products that include leveraged ETH staking and earning yield on stablecoins.
Users can also access Layer-1 through Argent Vault, which acts as an Ethereum mainnet account. They can go back and forth between the two layers at any time.
Argent is available both on iOS and Android and is completely free to use.
Hot wallets are the most popular choice for those that want to participate in the crypto world daily. Wallets like MetaMask, MyEtherWallet, Loopring Smart Wallet, and Argent offer users easy ways to send, receive, buy, and trade crypto, as well as connect to various decentralized applications.
On top of that, social recovery and other state-of-the-art security mechanisms ensure that even if one loses their phone or access to their wallet, they still can recover them in a few taps.
In part two of this article, we’ll look at cold wallets – those that keep your crypto offline for enhanced security.