Solana is an open-source and permissionless blockchain that is quickly gaining mass adoption. Solana is a Layer 1 blockchain that supports smart contracts and decentralized applications (DApps). The Solana project was founded in 2017 by Anatoly Yakovenko, a former Qualcomm executive.
Solana desires to be an incredibly fast and scalable blockchain with low fees. Solana is currently the eighth largest blockchain by market cap and the fourth by Total Value Locked.
Best Cryptocurrency Wallets for Solana
Cryptocurrency wallets are tools that enable users to send, receive and store cryptocurrencies, non-fungible tokens (NFTs) and other digital assets. The two main types of cryptocurrency wallets are hardware wallets and software wallets. A hardware wallet is a cryptocurrency wallet that stores the user's private keys on a secure device that is not connected to the internet. Hardware wallets are a form of offline storage. Hardware wallets only allow access to the stored cryptocurrencies via your private key once the hardware wallet is physically connected to your computer or device.
On the other hand, a software wallet is an application you download onto your computer or mobile device. Software wallets are connected to the internet and are often used to interact with DApps and sign transactions. These software wallets are also often referred to as hot wallets. Storing large sums of cryptocurrencies, NFTs and other digital assets on hot wallets is very risky.
Hot software wallets are more likely to be exposed to scams, hacks and leaks of your private keys because these wallets are connected to the internet and frequently interact with other wallets and smart contracts. If a large sum of digital assets is stored on your software wallet, all it takes is executing one malicious smart contract function for you to lose a significant amount of money. By storing only small amounts on your software wallet, you reduce the risk of becoming a victim of a significant scam or hack.
Users may also send, receive, and store digital assets on centralized cryptocurrency exchanges. An example of such an exchange is Coinbase Global Inc. (NASDAQ: COIN). However, a common saying in cryptocurrencies warns — “Not your keys; not your crypto.” This saying refers to the fact that if you do not know your private keys then you do not actually have any control over what happens to your cryptocurrencies and digital assets.
Furthermore, a recent statement by Coinbase stated that in the case of a bankruptcy, investors risk losing the cryptocurrencies invested onto the platform: “Because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings, and such customers could be treated as our general unsecured creditors.”
Centralized exchanges can provide intuitive user interfaces for novice cryptocurrency investors. However, the vast majority of cryptocurrency investors should strive to store their cryptocurrencies on their own wallets if they wish to have true control of their digital assets.
Best Software Wallets for Solana
Many cryptocurrency investors are familiar with MetaMask and its functionality. However, it is important to note that MetaMask does not support SOL or other Solana tokens because MetaMask is a wallet meant to support the Ethereum blockchain and its tokens. Solana is its own separate Layer 1 blockchain.
Although MetaMask supports many other blockchain networks like Avax and Matic, it does not currently support Solana. Solana is not Ethereum Virtual Machine (EVM)-compatible. Sending SOL to an Ethereum wallet will result in the loss of your cryptocurrencies.
Here are the best software wallets for Solana.
Phantom is a digital hot wallet for the Solana ecosystem. Phantom enables its users to send, receive, store, stake and swap digital assets on the Solana network. Phantom is the MetaMask equivalent for digital assets on Solana. The wallet is a browser extension that can be downloaded and used for free.
Phantom is currently compatible with all major browsers, including Chrome, Edge, Brave and Firefox. It has an intuitive user interface and makes it easy to view your cryptocurrencies and NFTs.
Another awesome feature of the Phantom wallet is that it allows you to stake your Solana cryptocurrencies on the wallet. The Phantom wallet is a relatively new wallet that was released in 2021. The wallet is considered safe and the software for the wallet was audited by a reputable software auditing company known as Kudelski Security.
One of the main advantages of using the Coinbase wallet is that it allows you to have one wallet for multiple Layer 1 blockchains. Users of Coinbase wallet may manage their SOL and SPL tokens along with tokens from other networks all on the same wallet. This practice reduces the workload and stress of having to manage multiple wallets for multiple different networks. Your Coinbase wallet is a separate entity from a Coinbase exchange account. You may also input your private keys from another wallet such as MetaMask to recreate the wallet using Coinbase wallet.
Best Hardware Wallet for Solana: Ledger Nano S
It will be a good idea to purchase a Ledger Nano S if you ever find yourself in possession of a large amount of Solana.
The Ledger Nano S is a hardware cryptocurrency wallet that stores access to your cryptocurrencies on an external device. It is a good idea to store large sums of your cryptocurrencies in external hardware wallets, and Solana is no different.
Ledger is a company based in Paris, France, which was launched in 2014 by eight experts who had backgrounds in embedded security and cryptocurrencies.
Do I Need to use a Crypto Wallet for Solana?
You do not need your own cryptocurrency wallet to invest in cryptocurrencies. If you wish to invest in cryptocurrencies without owning them yourself, you can do so by purchasing crypto from a centralized exchange that offers custody services.
Examples of such centralized exchanges are Coinbase and Gemini. However, in such cases, you will not have true control of your private keys that allow you to access your investments on the blockchain.
Furthermore, your investments held on centralized exchanges could be at risk if the company behind the exchange were to ever declare bankruptcy. An additional risk of just holding your cryptocurrencies on a centralized exchange is the risk of the exchange being hacked or attacked in some way.
Cryptocurrencies are not covered by FDIC protections. A wallet is necessary if you wish to use and connect to DApps.
Where to Earn Interest on Solana
An awesome feature of the Phantom wallet is that it allows you to earn interest on your Solana directly from the wallet itself. You can also earn interest on Solana from exchanges such as Coinbase and FTX. Various DeFi applications in the ecosystem pay interest on Solana.
Cryptocurrency Wallet Best Practices
Follow these tips if you wish to protect yourself and your cryptocurrencies from scams, hacks and attacks.
- Never share your seed phrase or post or store your seed phrase online.
- Choose a good pin code when using a hardware wallet. A good pin would be any sort of pin code that would be hard to guess.
- Always use two-factor authentication when it is available.
- Do not sign transactions from fishy websites or transactions that you do not fully understand.
- Do not brag about your cryptocurrency holdings.
- Do not store large amounts of digital assets on software wallets.
- Get yourself a hardware wallet to store investments of significant value.
Are Cryptocurrency Wallets Worth it?
Cryptocurrency wallets are an integral part of the Solana ecosystem. Cryptocurrency investors should attempt to understand how cryptocurrency wallets work and how to use them. Software cryptocurrency wallets empower individuals to use and interact with DApps on the Solana blockchain. Hardware cryptocurrency wallets provide you with security when storing your investments.
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About Sungyu Kwon
Sungyu Kwon is a student studying Computer Science and Business at Michigan State University. At MSU he serves as the VP of Spartan Blockchain Solutions. Originally from West Hartford, Connecticut, Sungyu currently resides in Ann Arbor and East Lansing, Michigan. He holds positions in Ethereum, Cardano, and a handful of DeFi projects.