So you’ve finally decided to get into cryptocurrency.
Congratulations!
There’s many advantages that await you — if you utilize cryptocurrency the right way, and that includes choosing the best crypto wallet for your investment needs.
That’s right, a crypto wallet!
Unlike the wallet in your back pocket or your purse right now, a crypto wallet isn’t actually tangible… it’s something you utilize digitally.
Whether you’re a crypto noob or a seasoned investor looking to move your crypto off-exchange and into cold storage, we’ve got the information you need to get around your crypto wallet easily and safely.
There’s a lot to cover, so let’s dig in!
What is a Crypto Wallet?
First thing’s first: you need to know what a crypto wallet is, and what it’s even used for, right?
Well, while it works like a traditional wallet in some aspects, it also has some functionality that is only available with cryptocurrencies and crypto tokens.
It’s a digital wallet, but it also functions as a high-tech safe where you can keep your crypto assets stored safely and long-term.
The main thing to remember is that your crypto wallet doesn’t really “store” your crypto, it keeps your digital keys safe.
Your digital keys – like your private Bitcoin key – are the unique codes that allow you to access, manage, and spend your digital currency.
Your wallet will act almost like a bridge between you and the wide world of blockchain technology.
With a crypto wallet, you aren’t simply holding your digital assets … you’re holding the power to interact with countless blockchain networks!
Hot vs Cold Wallet
There are two types of crypto wallets: hot and cold.
Hot wallets are usually the ones that people use daily or even carry with them on their phones.
They are easy and convenient to use, but with great convenience comes great risk.
Since they are always connected to the internet — hence the term hot — they are vulnerable to a wider range of cyber threats like phishing attacks.
Cold wallets, on the other hand, are more similar to a safety deposit box, or even a bank vault.
They are unbelievably secure but also relatively inconvenient for small purchases.
Since they are not online, they offer increased resistance to hacking but can be a hassle for a quick transaction.
Which one you choose is ultimately your choice, and depends significantly on your personal needs and desired functionality.
If you’ll be making frequent trades or sends, definitely get a hot wallet, but on the other hand, if you plan to do a lot of long-term HODLing, getting a cold wallet is going to be safer and more secure in the long run.
How Do You Set Up a Crypto wallet?
Setting up a crypto wallet isn’t rocket science, but it’s also not a quick task that you can do without a little preparation.
Here’s what setting one up will typically involve the following steps:
- Choosing your wallet, either hot or cold, based on your needs.
- Download & install your hot wallet, or purchase and open your cold wallet.
- Now you’ll need to create an account and pick a secure password. You may also need to verify your identity with an email or SMS message.
- The next step is securing your wallet, which will involve saving a (typically long) recovery phrase that is made up of random words. This is often your only lifeline if you forget a password, so guard it well and keep it safe!
- Next, you’ll want to deposit any crypto that you want to keep in the wallet. Some wallets will let you buy crypto on the platform, while with others you’ll need to buy crypto elsewhere and deposit it by sending it to your wallet address.
- Once you’ve deposited cryptocurrency into your wallet, and you’ve waited for it to reach full confirmation, you’re now ready to back up your wallet. Backup options may include making an encrypted copy of the wallet’s data file, linking a secure email, or creating a secondary recovery phrase.
How Do You Use a Crypto Wallet?
Now we’re getting down to business!
You’ve installed your wallet, set it up, funded it, and backed it up, so now you need to learn how to use it.
Receiving Crypto
You did this when you funded your wallet initially.
Receive funds by either sharing your address or your address’s QR code.
Sending Crypto
Just enter the recipient’s wallet address, specify the amount, and hit send.
Voilà!
Your digital coins are on their way.
Make sure you take transaction fees into account!
Check Your Balance
Most wallets will show your balance right on the dashboard.
It’s a good practice to keep an eye on it, just like you would with a traditional bank account.
Logging Transactions
Whether buying, selling, or trading, your wallet will keep a ledger of your transactions, so you have a solid historical reference.
Examples of Crypto Wallets Today
Let’s take a look at a few examples of crypto wallets — hot and cold — that you can utilize today.
Option 1: Coinbase
The default Coinbase wallet is a hot wallet go-to for countless crypto enthusiasts, particularly those just getting started.
It’s simple, has lots of features, and has built-in access to the Coinbase exchange.
Option 2: Ledger Nano X
If you’re looking for a cold wallet, the Ledger Nano X is a top pick.
It’s a hardware wallet that offers top-notch security and supports a wide range of cryptocurrencies.
Option 3: Trezor Hardware Wallets
Another well-respected cold wallet option is just about any Trezor model.
They’re known for robust security and intuitive interfaces, making them very user-friendly.
Option 4: Metamask
MetaMask is a hot wallet that’s become a staple for interacting with crypto tokens.
It can be found both as a browser extension and a mobile app and is known for its simplicity and native Ethereum compatibility.
Option 5: Exodus
Exodus is a versatile hot wallet available on desktop and mobile.
It:
- has a sleek design
- supports a wide range of cryptocurrencies
- even has a built-in exchange function
Tips For Keeping Your Crypto Wallet Safe
Alrighty, now that you’re all set with your crypto wallet, let’s talk safety.
Here are some of the best ways to keep your coins safe:
- Keep Your Private Keys Private
- Use Strong, Unique Passwords
- Always Enable 2FA
- Understand How To Recognize Phishing
- Keep Your Wallet Updated
- Keep Your Wallet Backed Up
- Don’t Manage Crypto Over Public Or Unsecured WiFi
The Bottom Line: Crypto Wallet
Well, there you have it!
Everything you need to know about a crypto wallet, along with a handful of tips to help you keep control of your coins.
So, what’s the next step?
There’s nothing left to do but jump in, try a few crypto wallets, and learn which one you vibe with the best.
Make sure you stay safe and secure, and enjoy the crypto roller coaster!
