“I threw away $7.6 Million of Bitcoin” – Campbell Simpson
This was the story of a man who bought bitcoin in 2010 and put it on a hard drive but mistakenly threw away the hard drive.
To start investing in cryptocurrencies, the first thing you would need is to set up your wallet, it is also referred to as a digital wallet. In the cryptocurrency world, the term used is “wallet”.
The wallet can be described as a bank account, which can be stored on different devices. The major difference is it is regulated by a key that only you control. The reason you need to do this is that there are numerous stories of people losing their cryptocurrencies.
Safety is paramount here – you don’t want to build up a small fortune only to end up telling people how you lost it all.
A cryptocurrency wallet is a software program that functions to store your private and public keys and interacts with various blockchains. It enables users to send and receive cryptocurrencies as well as track their balance.
A crypto wallet contains two key pairs: private keys and public keys. A public key is developed from the private key and serves as the address used to send crypto to the wallet.
There are many wallets out there for you to choose from, which are all dependent on your security needs as well as whether you wish to be an active trader or a more passive buy-and-hold investor (you can also be a mixture of the two).
Once you have set up your wallet, you can then proceed to purchase and exchange the digital currency of your choice on many platforms.
Categories Of Wallet
Some major categories of crypto wallets include
These are physical devices that can be used to store cryptos offline. It allows you to store your private key on a special USB stick and so it is off-grid. Once offline, it is almost impossible to hack.
However, if you carelessly throw it out, you lose all your investment for good. They don’t make use of a battery but can be connected to a PC and accessed by apps on the desktop.
They are also called cold wallets because private keys are held offline. They cost ranging from $60 to-160 per one, good examples include Trezor and Ledger Nano S.
As known as Hot Wallet(This is because funds are kept online). is a computer program or mobile app that holds private keys online. This is more difficult to hack and therefore safer than an exchange.
Types of Software Wallet
These are apps that ride on your smartphone to help you store and control your cryptocurrency. Mobile wallets for iOS and Android operating systems are the most convenient for face-to-face payments and the use of QR codes to make quick payments.
An example includes;
Trust Wallet: This is the official mobile wallet app of Binance. The software wallet supports above 30 blockchains, that is, it can be used to store different unusual altcoins. Among the supported standards are BEP2, BEP20, ERC-20, and ERC-721.
The app is decentralized and doesn’t collect your private information. It stores public and private keys locally to ensure ultimate safety. It has a built-in Web3 browser that gives you access to interact with DApps easily.
It can also be used to buy hundreds of thousands of tokens with a debit or credit card because of the integration with Binance DEX
The wallet is easy to use and with a very simple user interface. It is suitable for novices, advanced traders, and long-term holders
Other examples of mobile wallets include Exodus, Coinomi, and Mycelium.
These are system software that can be installed and used to store cryptos. Security depends on how secure your desktop or PC is. Anti-virus is necessary because if your PC gets a virus then people can hack it to get your private keys. E.g Electrum
It is also worth noting that cryptocurrency can be stored on exchange but it is not an advisable place to keep your coins especially if you are a long-term holder, but for traders and short-term holders, it is okay to keep them there and avoid withdrawal fees.
For maximum security ensure you use whatever extra security there, such as – Two-Factor Authentication like Google Authenticator, Phone and Email, etc.
Exchanges can be hacked, so it is wise to use exchanges that hold your coins in cold storage for you, so theoretically that sounds a little bit safer than just keeping it on an exchange that doesn’t offer that.
This is where your private key is being written and printed on a piece of paper. This is, of course, much cheaper than buying one of the above.
Make sure you keep a copy because once the paper is destroyed your private key is gone and your coins will be gone. It is currently not advisable to use it, so, it will be great if you use another type of wallet mentioned above.
How To Use A Wallet For Your Transactions?
- To receive funds, you need to retrieve a public key (also known as address) from your wallet. Find the “receive/generate address” feature in your wallet, click it, then copy the alphanumeric address or QR code and share it with the person who wants to send you crypto.
- To send funds, you need the address of the receiving wallet. Find the “send” feature in your wallet and enter the address of the wallet you plan to send coins to. Type the amount of crypto you’d like to send, and click “confirm.” Consider sending a small test transaction before sending large amounts of crypto. Note that sending coins imposes a fee that will be paid to miners in exchange for processing the transaction
With everything written about crypto wallets, here are three tips to follow;
- Always backup your wallet, no matter which ones you use.
- Keep your software up to date if using the software.
- Use whatever extra security there is available such as Two-Factor Authentication. Use Google Authenticator.
With everything being said about crypto wallets, it will be very nice if you are extra careful when it comes to safeguarding your wallet and also transacting with it.