Heard people talking about creating a wallet for your cryptocurrency in Web3 but don’t really know how? In this blog we will simply explain how to do it.
A Simple Way To Create A Wallet
First, it’s important to understand there are many different types of wallets. The quickest and easiest way to create one is to opt for a hosted wallet on a crypto platform or exchange like Binance or Coinbase. You’ll simply need to create an account and then buy crypto with your bank account or credit card. But for greater security, especially when dealing with large sums of cryptocurrency on the blockchain, it is recommended to use hardware or “cold wallet”.
Custodial And Non-Custodial Wallets
Crypto wallets come with varying degrees of security. As a general rule, a greater level of accessibility and convenience usually comes at the cost of the safety of your crypto. Custodial and non-custodial wallets are characterized by who is in possession of your private keys, you or an exchange.
Custodial (or hosted) wallets – these are controlled by a third party provider or exchange which keeps possession of your private keys.
Non-custodial (or self-custody) wallets – you remain in possession of your private keys at all times.
Hot And Cold Wallets
Wallets (or storage) can also be divided into hot or cold which is defined by whether or not they are connected to the internet.
Hot wallets – online crypto platforms or exchanges, hence your private keys are always connected to the internet. These hot wallets can be accessed via the web, your mobile device or via software installed on your desktop.
Cold wallets – these keep your private keys offline at all times and normally involve buying hardware similar to a USB device. A paper wallet is a reasonable alternative without the expense, provided you can keep it in a safe place and guard against it being damaged, lost or stolen.
A mixture of all of the above is also possible.
Custodial hot wallet – a popular account available on an exchange platform.
Non-custodial hot wallet – a mobile or desktop app that stores your private keys.
Custodial cold wallet – a third party like a crypto exchange that keeps your keys offline.
Non-custodial cold wallet – typically a hardware device and the safest method of storage.
Creating A Custodial Hot Wallet
This is the most popular and simplest way of creating a wallet. Its biggest advantage is that if you forget your password, you won’t lose your funds. But as long as someone else holds your private keys, you are never really in control of your cryptocurrency.
Select a platform – you should be looking for one that offers 2-step verification, is easy to use and complies with all government regulations.
Create an account – follow the prompts, entering your details and choosing a password.
Buy crypto – Most exchanges will allow you to buy with a credit card or from a bank account. They will then automatically store your crypto in your new “wallet”.
Creating A Non-Custodial Hot Wallet
These put you in more control of your cryptocurrency because only you have your private keys. But if you lose your keys, you lose your money.
Download a wallet app – MetaMask, Coinbase, Trust and MyEtherWallet are among the most popular ones.
Create an account – Unlike a custodial wallet, you do not need to share any personal details, not even an email address.
Write down your private key – This is a random 12-word phrase you will need to hide in a secure place. If you lose it, you will not be able to recover your crypto.
Transfer crypto to your wallet – you’ll normally need to buy your crypto on an exchange and then transfer it to your wallet so it is secure.
Creating A Hardware Cold Wallet
This is a device similar to a USB which plugs into your desktop, laptop or phone. It’s a longer process but if you are dealing in a lot of crypto, it is essential to keep your funds safe.
Buy the device – Ledger and Trezor are the two leading brands on the market.
Install software – You’ll need to download the software from their official website, then follow the instructions provided. Online videos provide additional help if you are unsure.
Transfer your crypto – Like the non-custodial hot wallet, you’ll need to buy your crypto on an exchange and then transfer it to your wallet. You won’t be able to use fiat currencies directly with your cold wallet.
Creating A Paper Wallet
A paper wallet is another type of cold wallet that merely keeps your private keys on paper.
Search for a wallet generator – go to a wallet generator website and save it as an archive.
Generate key – go offline and generate the private key. This process avoids the risk of being compromised by malware.
Print – print the key not using a printer that is on a public network.
Want To Know More About How To Create A Wallet For Your Crypto?
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