How to Create and Manage a Crypto Wallet?
We are witnessing the huge growth of the cryptocurrency market, which is becoming equally attractive both for individuals and businesses. Since the number of people having access to the crypto ecosystem has increased significantly, the demand for secure and trustworthy solutions to store crypto assets has also increased. This solution is a crypto wallet- a reliable digital tool to help you store, send, and securely receive cryptocurrencies. The crypto wallet market is predicted to reach 686 million in 6 years.
What is a crypto wallet?
A crypto wallet refers to a digital tool, such as an application or service to help you store, send and receive cryptocurrencies. Your crypto wallet isn’t directly associated with the storage of your assets, but it just offers you access to your cryptocurrencies that are on the blockchain.
To put it simply, you can think of your crypto wallet as a digital bank account for your cryptocurrencies. However, the biggest advantage of crypto wallets over traditional financial systems is the users’ complete control and ownership of their digital assets. You can install your crypto wallet on your smartphone or desktop. Moreover, it can be a browser extension, as well as have a physical form.
The crypto wallet transactions are made through public and private keys. The public key is like your bank account number. It’s your crypto wallet’s address and you should share it with other users, as they need it to send you crypto assets.
The private key is confidential and you shouldn’t disclose it to anyone to prevent any hacks or fraudulent activities. So, it’s like your PIN code in the banking context- a secret code enabling you to have access to and manage your crypto assets.
Types of crypto wallets
Let’s explore the main types of crypto wallets in detail:
Hot versus cold wallets
Crypto wallets can be hot or cold in terms of Internet connectivity. A hot wallet is connected to the Internet and has user-friendly features, whereas a cold wallet is an offline option and no Internet is needed. When it comes to security, cold wallets offer a higher level of security, while hot wallets may cause more risks. A popular example of a cold wallet is the Ledger.
In general, hot wallets are commonly used for transactions that users make on a daily basis. Among the benefits of hot wallets is that the setup process is quite easy and you can quickly access to your funds.
Usually, cold wallets are more suitable for long-term holdings and can help prevent any possible hacks or fraudulent actions.
Ledger Wallets
A ledger wallet hardware wallet is a hardware device that handles individually both public addresses and keys. This is similar to USB having an OLED screen, as well as side buttons. You can connect it to your computer. These wallets are battery-less devices and can be accessed by native desktop applications. If compared with a hot wallet, a hardware wallet is a more secure option than a paper wallet. However, beginners find it hard to use hard wallets.
Paper Wallets
A paper wallet refers to a physically printed QR-coded form. With certain paper wallets, you can download the code and start generating new addresses offline. Though a paper wallet is a hack-resistant variant, it comes with flaws making it dangerous.
The main flaw is that you won’t be able to send partial funds using paper wallets. Therefore, reusing isn’t possible.
Desktop Wallets
A desktop wallet is a software pack that is available for operating systems. If you want to use a desktop wallet, you should have an anti-virus. These wallets are connected to the Internet, posing serious security concerns. The popular desktop wallets in the crypto market include MetaMask, Trust Wallet, Trezor, and Exodus.
Mobile Wallets
A mobile wallet is similar to a desktop wallet but made for a smartphone. This crypto wallet is a convenient option, utilizing QR codes to initiate transactions. You can use it for your daily operations, but you should keep in mind that mobile wallets may have vulnerabilities when it comes to malware infections.
Web Wallets
A web wallet can be accessed by the Internet browser. It can be hosted or non-hosted. A non-hosted web wallet can be more suitable, as your funds are always in control. Web wallets are popular among small investments, as they offer rapid transactions. However, these wallets don’t provide increased security.
How to create a crypto wallet? Step-by-step guide
If you want to trade and manage your cryptocurrency assets successfully, you should know how to make a wallet for cryptocurrency. Follow these steps to create a software crypto wallet and start your cryptocurrency journey:
Step 1: Choosing a reliable software wallet application
A crucial decision is selecting a trustworthy wallet provider, as there are a lot of crypto wallet options available in the crypto market. Take into account their unique features and security-related aspects to make a choice. Thus, conduct in-depth research to find the most accountable crypto wallet providers. Among the reliable examples are software wallets provided by MetaMask and Trust Wallet.
MetaMask is a well-known cryptocurrency wallet browser extension, that allows you to interact with Ethereum-based decentralized apps (or dApps) directly from your web browser, whereas Trust Wallet is a mobile crypto wallet supporting various cryptocurrencies and tokens.
Step 2: Downloading the wallet app to your smartphone or PC
After making a final decision regarding your preferred software crypto wallet, just download it on your smartphone or computer. When you install the wallet app, you can have access to your crypto assets whenever you want. It’s recommended to download the wallet app from the official app store or the provider’s official website. In this way, you can prevent any security-related issues, which may occur if you download a malicious software wallet.
Step 3: Creating an account
Fill in basic information, (such as name, surname, etc) to create an account. Different wallet providers may have different requirements associated with the identity verification procedure.
Step 4: Transfering your assets
After creating your software crypto wallet and setting up your account, it’s time to transfer your assets into your newly created wallet. You can transfer assets in several ways:
- Deposit funds from your bank account
- Exchange cryptocurrencies
- Receive funds from a different wallet.
For funding your wallet, you should get the wallet address and utilize it to send assets to your wallet. There are some crypto wallets supporting QR codes, which are scanned, facilitating the transfer process.
How to protect crypto wallets? Crypto wallet security tips
You already know how to create a crypto wallet, and the next step is making sure that your crypto wallet is secure by following these essential tips:
- Increase the security of your wallet and prevent unauthorized access by using Two-Factor Authentication (2FA). In this case, you need to provide both your password and a unique code from your mobile to log into your wallet.
- Consider using multi-sig wallets, which require multiple private keys for authorizing transactions, minimizing the single point of failure risks.
- Select a strong password for your crypto wallet to reduce attempts related to unauthorized access.
- Don’t forget about the importance of your seed phrase (it’s your recovery key). You should store it offline.
- Store your crypto assets in cold wallets, if you prefer offline options to reduce fraudulent online attacks.
- Utilize Virtual Private Network or VPN when you access your crypto wallet, as it offers increased protection.
- Diversify your crypto assets across different wallets to minimize any possible losses. If one of your wallets has security-related issues, others will be secure.
- Conduct research and choose reputable crypto wallet providers or official sources. Don’t turn to third-party sellers.
- Don’t click on suspicious links and avoid installing any unknown applications to make your wallet environment secure.
- If you prefer offline and physical devices to store your private keys, hardware wallets can be a suitable option for you.
What are the best practices to create and store a seed phrase?
It’s very important to take into account the following best practices for creating and storing seed phrases (or recovery phrases) to improve the security of your crypto assets.
- Create your seed phrase utilizing a reliable wallet. Avoid choosing options that don’t let you be in control of your private keys.
- Write down your seed phrase on a piece of paper. Then, keep it in a safe location.
- It’s not recommended to store your seed phrase in a digital format. Also, avoid taking a picture of it using your smartphone. You should keep in mind that physical copies of seed phrases are prone to hacking and other risks.
- Generate several copies of your recovery phrase and store them in different locations. If one of the copies is lost, others remain safe.
- It’s not a good idea to create too many copies of your seed phrase, as these copies may fall into the wrong hands.
Wrapping up
Now you already know how to make a wallet for cryptocurrency and you can navigate the cryptocurrency world efficiently.
Choosing the most suitable crypto wallet and taking all the measures to ensure that your digital assets are secure are also vital steps. However, the choice of crypto wallet is always subjective depending on your unique needs and your desired level of security.