How to get started with crypto wallets
When I got started investing in cryptocurrency (crypto coins, stable coins, and tokens), I tried to read everything I could get my hands on.
Needless to say, I did many things wrong. To help you avoid that, I’m setting in writing, how I wish I would have done things in the beginning.
What is a crypto wallet? A crypto wallet allows you to store, access, and manage your crypto funds. You can send, receive, swap, or spend crypto directly from a compatible crypto wallet.
- Crypto wallets do not “actually” hold anything. They are more of an interface that allows you to interact with compatible blockchains where your crypto funds are actually held. This is great because if you lose your crypto wallet, phone, tablet, or laptop where your crypto wallet is stored, you can easily replace it with your seed phrase. More on the seed phrase below.
A crypto wallet generates public keys, private keys, and wallet addresses to allow you to interact with cryptocurrency blockchains in a user-friendly way.
Types of crypto wallets.
– Hot wallets: those that are web-based, including mobile, or exchange wallets. Easily accessible using a web browser or mobile device. Usually always online. Some of the better-known hot wallets are Coinbase wallet, Keplr, MetaMask, and Trust.
– Cold wallets: those that are hardware, offline storage, and are physical wallets. These offer better security since they will be connected online, only when you want to access it. Some of the better-known cold wallets are Ledger, and Trezor.
Not your keys, not your money.
WTF? You got it, but let me explain. If you do not own the keys to your wallet where your crypto is stored, you do not really own them. The keys, in crypto speech, is your seed phrase or mnemonic phrase. A series of 12 to 24-word recovery phrase that is generated by your cryptocurrency wallet. It is used to replace any hot, or cold crypto wallet.
Why is the Seed Phrase so important?
The seed phrase is used as a backup to your crypto wallet. If you lose your crypto wallet, or left your crypto wallet at home while on a trip, and need to access your crypto funds if you have your seed phrase you can easily have access to it. It’s like having access to your bank 24/7, and the only thing you need to access your money is a key. The bank won’t ask you for an ID, or a PIN. All you need is that 12 or 24-word phrase. Great in an emergency, not so if you lose those keys.
Never, ever, give your seed phrase to anyone. Whoever has the seed phrase, has access to your crypto wallet and can sell, trade, or swap what’s in it at any time, anywhere, from any device. But how can that be? Crypto works in wonderful ways, but as such, can also be used by nefarious characters to do away with your hard-earned money.
What Not To Do with your seed phrase:
- Don’t photograph it. Unless you’ll be using a Polaroid camera, but really, don’t!
- Don’t write down the seed phrase on your phone, computer, or USB drive. Really, don’t!
- Remember, anything that can be accessed online, or on your mobile device, can be hacked.
What To Do with your seed phrase:
- Do write it down on a piece of paper, that you will later keep in a secure place.
- Better to write it down on a ShieldFolio, a small notebook that is water, and tear-resistant.
- You can also put it down on steel, such as on a Hodlr, or Cryptosteel device that can withstand heat and fire.
- Do tell your loved one(s) where your seed phrase is, in case of emergencies. But remember, if they have access to them, they can do whatever they want with your crypto funds, from anywhere in the world, at any time.
Ok, what now?
So, now you can get started downloading, and/or ordering your crypto wallet, save your seed phrase, secure it, and start making plans to purchase crypto for your future. Soon, more blogs on what, and where to buy cryptocurrency, and start making passive, and real money in crypto in easy step-by-step tutorials.