The best crypto wallet is a secure crypto wallet
If you’re just starting your crypto journey, crypto wallets may be new to you. Why do you need a crypto wallet, and how can you get started?
In this article, we’ll walk you through the steps of setting up a crypto wallet. We’ll also help you understand why you need one, the different types you can choose from, and how to manage your wallet once you start using it.
What’s a Crypto Wallet?
Before we start, it’s important to clear up a common misconception regarding cryptocurrencies: they don’t actually get stored in a crypto wallet. But a critical component of how they function does: a crypto’s private key.
Essentially, cryptocurrencies consist of digital, cryptographically protected entries in a distributed online database ledger known as a blockchain. A private key links each entry and its corresponding value to the key’s owner, who can authorize transactions related to that value.
As with a password, you could write it down. But that can be cumbersome and risky. If you lose that record of your private key, you’re stuck. There’s no retrieving it.
So where can you store your private key safely? A digital wallet, also known as a crypto wallet.
Storing a private key in your digital wallet essentially equates to storing your crypto funds there. No one — including you — can access or use those funds without the key.
Now that we’re clear on what a crypto wallet is and isn’t, your next step is to choose the right wallet for your goals.
Choosing a Crypto Wallet
Technically, you can buy and hold crypto without choosing a crypto wallet. But, in essence, what you’re doing is letting the payment service or platform you use hold your private keys. And you may be limited in what you can do with your crypto.
So what are your choices? To keep it simple, there are two main types of wallets: software and hardware. And they’re pretty much exactly as they sound.
A software wallet is a software application that does the work of storing your crypto’s private keys and managing transactions you make with your crypto. A hardware wallet does the same but is a dedicated physical device. It might look like a USB drive or hard drive.
The primary difference is how each deals with security. A software wallet lives on your computer’s hard drive or somewhere on the cloud, depending on which type and service you choose. Therefore, hackers can attempt to gain control of it.
A hardware wallet, on the other hand, can be disconnected from the internet. While disconnected, it’s out of a hacker’s reach. But you’ll pay for that extra peace of mind: Hardware wallets tend to be more expensive than software wallets.
In fact, some software wallets are free. And because they are software-based, they can be more flexible and come in different kinds: desktop, mobile, or even from the crypto exchange you use.
This leads us to a quick discussion of custodial versus non-custodial crypto wallets.
Custodial Vs. Non-Custodial Wallets
In the case of crypto wallets, custody is about who’s on the hook for securing your private keys. In a custodial wallet, you entrust your keys to a third party.
A non-custodial wallet means you are entirely responsible for the security of your crypto, but you get to hang on to your keys. One slight nuance: If you forget your password to a custodial wallet, you can often reset it.
With a non-custodial wallet, you may not be able to regain access to your crypto’s keys. No keys, no crypto. So consider carefully which type of wallet best fits your crypto needs and security preferences.
Now that you know a bit more about your digital wallet options, let’s discuss how to set one up. How to Set Up a Custodial Wallet
Setting up a custodial or hosted wallet is straightforward. The most important part is finding a trusted exchange; just make sure to check if there are any restrictions on your crypto from the wallet provided by the platform. You don’t want to be limited in what you can do.
In a nutshell:
- Choose a trusted platform.
- Open an account by providing your personal information and creating a secure password.
Technically, that’s it. But to actually begin buying crypto, you’ll have to fund your account.
Most platforms will let you do that by allowing you to link to a bank account or debit card.
How to Set Up a Mobile Wallet
Mobile wallets are also pretty easy to set up. You can choose one as you’d choose any app for your phone. And, of course, do your research to make sure it’s a trusted, secure, and reputable app.
Here are the basic steps:
- Download the crypto wallet app from your device’s app store.
- Follow its setup instructions, including providing personal and funding information.
- Follow the app’s backup instructions so you can recover your password or access your crypto if something happens to your device.
- Transfer crypto to your wallet. Some non-custodial wallets don’t allow you to use traditional currency to buy crypto, so you may have to purchase crypto on the crypto platform you use and then have it sent to your wallet.
How to Set Up a Desktop Wallet
Desktop wallets are similar to mobile wallets, except they reside on your computer’s hard drive and may offer more functionality. For instance, you may be able to view more charts and graphs to see what’s going on with your portfolio.
To use this type of wallet:
- Download the software for the desktop wallet app you select.
- Run the installation software as instructed.
- Provide any personal or funding information requested.
- Follow all backup or recovery instructions, including keeping a protected record of your password so you can recover it in case you forget it.
- As with the mobile wallet, you may or may not be able to buy crypto directly from your desktop wallet. If not, buy crypto from your crypto platform partner and have it sent to your trusty digital wallet.
How to Set Up a Hardware Wallet
Hardware wallets have a reputation for being more complicated to set up and use. Of course, that depends on the device you choose, but the basic steps aren’t much more complicated than what we’ve discussed for software wallets.
- Buy the hardware wallet device of your choice.
- Download the appropriate software for the device to your computer.
- Follow the instructions to install the software on your computer.
- Follow recovery instructions, including recording your recovery password somewhere very safe just in case.
- Connect the device to your computer.
Keeping Your Crypto Wallet Safe
If you follow the “three reminder taps” rule whenever going out — phone, keys, wallet — a crypto wallet is a bit simpler. It’s either always with you on your mobile device or laptop, or it stays at home on your desktop or hardware device.
But you still need to keep it safe.
If you choose a hardware wallet, then the easiest way to secure it is to disconnect it from the internet when you’re not using it.
For all wallets, basic internet safety practices apply. Always use a secure internet connection — be wary of free hotspots or unsecured or shared WiFi networks. A non-shared Ethernet connection, for example, is more secure than a WiFi network. Create a strong password (no “Crypto123”) and don’t share it. And follow all the backup methods previously mentioned.
Also, you might want to consider having two wallets: an offline wallet that holds the lion’s share of your crypto, and one for regular transactions that you keep filled with just enough crypto to do what you want. This will limit your potential for exposure.
Secure Your Crypto With the Right Platform
To set up your crypto wallet, simply follow the steps outlined in this article. But remember: Securing your crypto begins with where you buy, sell, or trade it. Choose a platform with solid security practices, such as two-factor authentication.
A good crypto partner will also offer a wide range of cryptos that you can buy and store in your wallet and make it easy to understand its fees and services. It also helps to have a partner who can keep you well-informed so you can make the best crypto decisions possible.
To get your cryptocurrency journey started today, visit Binance.US.
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