Hardware wallet doubts grow: 5 other ways to hold Bitcoin and what each one costs you

21 Oct 2026

21 Oct 2026, 16:05 UTC+02:00

Hardware wallets have long been the default answer to “how do I store my Bitcoin safely?” A new Cointelegraph Magazine piece argues that the answer is less clear cut than it used to be. According to the report, more than $200 million worth of crypto was stolen in recent months from tampered Ledger devices and from Coldcards where the generated seed was not truly random.

The article also points to rising physical “wrench attacks”, citing one in France every 2.5 days this year. Its conclusion is not that hardware wallets are dead, but that every storage method has trade-offs and that splitting holdings across methods limits the damage if one fails.

Crypto ETFs

An exchange-traded fund is not really a way to store crypto. You hold shares with a claim on the fund’s net asset value, while a custodian holds the coins. That removes seed phrase and backup worries, but adds reliance on a centralized provider, fees and possible gaps between share price and market price. Ophelia Snyder, co-founder of 21Shares, told the magazine that exchange-traded products make sense “for most people most of the time”, with the trade-off being no onchain use. Analyst PlanB, who moved his BTC into ETFs in 2025, said after the Ledger and Coldcard incidents: “Zero regrets of my ETF decision.”

Passkey-based wallets

Passkey wallets, such as Coinbase’s Smart Wallet, Clave and Infinex, replace the seed phrase with a credential stored on a phone and protected by a fingerprint, face scan or PIN. They are smoother to use, but losing the device can still cause trouble, and recovery may depend on a third party. Blockstream CEO Adam Back has previously called Coinbase’s version “basically a hosted wallet with a better sales pitch.”

Multisig wallets

Multisignature setups, typically 2-of-3, require several keys to approve a transfer, so one lost or stolen key is not fatal. Services like Casa combine a hardware wallet, a phone and a company-held key, while many Ethereum projects use Safe. The downsides are coordination delays, smart contract risk and the fact that an attacker who compromises enough signers can still move funds.

Centralized exchanges

Leaving coins on an exchange hands key management to a company. It is convenient for active traders, and many platforms now publish proof-of-reserves reports. The article notes, however, that proof of reserves does not prove a firm’s full financial health, and that tax reporting rules such as the OECD’s Crypto-Asset Reporting Framework mean identity checks, with possible withdrawal restrictions if users do not comply.

Paper wallets

A printed address and private key keeps everything offline, but generating one safely is hard, paper is easy to lose or damage, and importing the key into an online wallet to spend weakens security.

What it means for traders

No storage method is risk free, so the practical takeaway is to match custody to how you use your coins. Funds you trade often are usually kept on an exchange, which makes the platform’s security record, proof-of-reserves practice and withdrawal rules worth checking before you deposit. Long-term savings are better spread across more than one method, for example self-custody plus a smaller exchange balance, so a single failure does not wipe you out. If you do keep a hardware wallet, buy it only from the official manufacturer and verify the device on first setup.

To see how exchanges compare on security, fees and features, use our exchange comparison, or read our reviews of Binance, Coinbase and Kraken. Our how we test page explains our scoring. This is not financial advice.

Related reviews

• Binance review
• Coinbase review
• Kraken review

Sources

• Cointelegraph Magazine: 5 alternatives to Ledger to store your Bitcoin

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