Exodus is a closed source cryptocurrency wallet that was built to be user-friendly and to trade between multiple cryptocurrencies. One of Exodus’ best features is that it allows to trade between over 70 different cryptocurrencies, including Ethereum’s ERC20 tokens.
The wallet was created by JP Richardson and Daniel Castagnoli. Before creating Exodus, Castagnoli worked in design for large companies, which includes Apple, BMW, and Nike. While Richardson’s roots are in writing cryptocurrency code.
Most reviewers’ comments rave about the usability of its interface and the fact that the wallet works with many cryptocurrencies. While critics raise issues with certain security limitations, the fact that it is uses a “closed source” code raises issues for certain users, as well as the limitations of advanced trading options.
User Friendly: 3 in 1
Exodus is a portfolio, digital wallet, and cryptocurrency exchange all in one. Its multi-functions and straightforward interface make it a popular choice, particularly for new traders. It is also praised because it works as an offline wallet on your phone, desktop, and also offers a hardware bridge with Trezor.
One of the reasons that Exodus is hailed for its usability is that it is a closed source wallet. Most digital applications we use are closed sourced. It simply means that the code is closed and cannot be changed by users.
The reason this raises some eyebrows is that closed source apps go against the transparency of the cryptocurrency ethos. Bitcoin and Ethereum operate with open-source code, which means that the code is accessible to all users.
The Open v. closed is going to mean more to some than to others. The important facts to bear are that a closed source wallet might affect usability, and more importantly, security.
Closed source software is encrypted and is not disclosed to its users. That means that users are not (easily) able to change the code or copy it without experiencing the consequences, some of which may be legal. As a consequence of closed code, any changes are done by Exodus internally.
This raises security concerns for many cryptocurrency users, as it violates the transparency that many DeFi (decentralized finance) projects aim to offer. Moreover, it means that Exodus is in charge of managing users’ data, as well as their money.
Open-source software allows all users to see the code so that they might make changes to it when needed. For blockchain, this requires mass consensus, one node cannot change the code that runs Bitcoin, it requires about 51% approval.
On the other hand, one drawback of open-source software is that relies on the mass collaboration of users and nodes to remain active. As such, when an item is unpopular it can potentially become dormant, which proves a challenge for new projects. It also means that the community of users can collaborate to make improvements and updates.
However, as mentioned, Exodus is aimed at those new to using cryptocurrency. And it remains the case that there are many interested in much of what cryptocurrency has to offer, but they do not want to participate in the deeply technical aspects of it. In this case, closed source software offers many users the ability to use a zero-fuss wallet. And to be able to contact customer support directly when they need assistance.
Essentially, there are security pros and cons to each method of code. And where you land is going to depend on your knowledge of the technology and exactly how you plan to use it.
Exodus clearly separates the user’s transactions by received, sent, and exchanged. This makes using the wallet a lot like online banking or trading. It is also a litewallet, as such, users do not need to download an entire blockchain onto their computer. Therefore, the wallet is fast and convenient.
Digital wallets do not actually store coins. Cryptocurrencies are tied to blockchain platforms, which means that to access your cryptocurrency you need a password and an address. This is a lot like your email account. You do not have real, physical copies of your messages, nevertheless, they are all there in your account, and accessible from the network that runs your email.
One crucial difference between email and cryptocurrency is that the encryption used on blockchains is much more secure than your email is.
As such, a digital wallet, like Exodus, holds three important pieces of secure information, which are three codes: your primary keys, public addresses, and seed phrase.
Because Exodus is a multi-asset wallet, it also provides clear charts of all of a user’s activities, as well as how the assets are behaving. That means users can quickly see all of their assets and how they are performing, all in one place. Like a typical portfolio, it also gives users a breakdown of the associated fiat value.
The portfolio also allows users to track the movement of a cryptocurrency, which makes it easier to make informed investments.
ShapeShift is a quality cryptocurrency exchange that has been integrated into the functionality of the wallet. Because Exodus has integrated the exchange into the wallet, users can trade cryptocurrencies directly from their wallets.
In-wallet exchange is possible because of an API integration with ShapeShift. Users just click on the exchange tab and can immediately exchange any cryptocurrency they hold.
This exchange has been in operation since 2015, and in 2021 is transitioning to a decentralized exchange (DEX). This move to a DEX is an effort to protect the privacy and security of users as global policies around cryptocurrency shift to require more AML (anti-money laundering) regulations, which require strict KYC (know your customer) measures.
Finally, it is possible to use other exchanges with this wallet. However, if that is the case, transactions will not be as seamless, as the user must interface with another platform.
Exodus does not charge users fees to access the wallet. The only fees that users incur are transaction fees, which are paid to the network. Unlike exchange platforms, Exodus does not keep the transaction fees charged for withdrawing cryptocurrencies.
Exodus generates an income from the spread, which is the difference between two prices of the assets exchanged. The spread is around 2% – 4%.
However, users are still subject to ShapeShift’s trading fees, and likewise the trading prices set by the exchange.
Exchanges set the price of their cryptocurrencies; this is not atypical. However, if a trader relies on ShapeShift alone, they might not be getting the best price on the market. This fee structure is standard, as all exchanges charge commission or transaction fees. But if users only use ShapeShift as an exchange, then they will be restricted by their prices.
For many investors, this will not mean much. When trading in small volumes, getting the best exchange rate is not as important. But when trading high volumes, this can mean the difference of hundreds or even thousands of dollars. Again, this is a standard practice, however, it is something that some users might see as a limitation of the Exodus wallet.
Currently, there is no downloadable app for smartphones.
Overall, Exodus is a secure wallet. But products like Exodus hold money, as such, there are always security limitations.
Critics of Exodus’ security insist that they do not offer enough protection against attackers and malware. This requires that Exodus beef up its current wallet with increased security features.
One such issue is that the wallet does not use two-factor authentication. This means that only one password is required to access the wallet. As such, it is hypothetically more susceptible to theft.
The reason the wallet does not use 2FA is that the wallet creates, encrypts, and stores all information on a local system. This means that if the wallet used a 2FA it would be entirely dependent on the function of that device for a user to gain access.
However, the wallet does not keep personal information, and it offers two ways to restore accounts that are lost or damaged. And, to implement a 2FA, users should use and store the majority of their cryptocurrency on a hardware wallet. Exodus is designed to work with Trezor hardware wallets.
Each asset has its own private key.
To access each private key for a specific asset, do the following:
Wallet users do not need to share personal identification information. That means that Exodus does not hold any personal data. They are exclusively interested in your cryptocurrency. As ShapeShift moves towards DEX, it possible that this will remain the case for the foreseeable future.
Moreover, the software is designed for users to manage their personal information, so that Exodus is not primarily responsible for it. Private keys are made public so that traders can transact with one another on the blockchain. This is the case for most cryptocurrency wallets, where transaction details are available for all those with access to the blockchain. This also means that Exodus does not make an effort to disguise the location of traders or transaction details.
There are two ways to restore an Exodus wallet in the event of damage or loss.
Users are given and 12-word passphrase when an account is opened. The best practice is to write the passphrase down on a physical piece of paper, as soon as you get it. Store this paper in a secure place, such as a safety deposit box. If the passphrase is lost, it cannot be recovered.
The other option is email restore. This link is also given to you when the account is created. You must also save this link somewhere secure. By clicking on the link, and entering your password, your account can be restored.
A basic security measure for all cryptocurrency holders is to store their funds on a hardware wallet, rather than keep the majority online in (hot-storage) in a wallet or in on an exchange. Exodus’ dedicated hardware wallet is Trezor, and users can install a Trezor Bridge. With a hardware wallet, you’re your cryptocurrency is very safe, as it is not online.
One of the greatest strengths of the wallet is the hundreds of cryptocurrencies that it supports. Exodus even supports ERC20 tokens, which are used to access Ethereum’s blockchain apps and cryptocurrencies.
However, to use ERC20 tokens, users must them to the Ethereum Exodus address, where it is stored with that Ethereum Address. While this is an easy way to access Ethereum, it means that ERC20 tokens do not appear on the wallet’s balance or profile. Users can view their balances for these tokens with an Ethereum blockchain explorer.
Exodus is a closed source wallet that functions with a (mostly) DEX, ShapeShift. It is a straightforward application that does not require a tech-savvy user. And, because it supports a plethora of cryptocurrencies, for many it is the only digital wallet that they will need.
It has a clear portfolio interface that keeps track of the user’s cryptocurrencies, as well as charts the movement of each asset. As such, it is easy to see how well each asset is performing.
Fees are only charged on the exchange, which means that users are not paying for the wallet. However, it does mean that traders may not be getting the best market value for all of their trades.
Finally, the wallet is quite secure, and it is possible to restore a wallet that has been lost or damaged. But, as with all browser based digital wallets, users need to use a hardware wallet for cold storage. Exodus has partnered with Trezor hardware wallets for the easiest compatibility.
For those who are looking for a streamlined system to buy, sell and hold cryptocurrency, Exodus has done a good job. But for those traders who want more individual features, this wallet might be a limiting piece of software.