How to choose a wallet?
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What are Cryptocurrencies?How to Choose a Wallet?How to Buy Cryptocurrency?What Can You Do with Cryptocurrency?
What is a Cryptocurrency Wallet?
A cryptocurrency wallet is a virtual place where you can store, send, and receive your cryptocurrencies, similar to how a bank account is used to store regular money. It consists of a unique address, similar to an account number, and a private key that you use to authorize transactions. Wallets can be online (web services), offline (programs on a computer or apps on a mobile device), or hardware (special devices). Cryptocurrency wallets provide security and access to your funds in the world of cryptocurrencies.
There are a large number of crypto wallets available. Many wallets also allow you to manage multiple Bitcoin, Ethereum accounts from one application. You can change your wallet at any time.
Wallets do not store your funds; they store the private key. They simply provide a window for you to view your assets in Bitcoin, Ethereum, or other networks.
Wallets, Accounts, Keys, and Addresses
It is important to understand the differences between some key terms.
- Address - a unique string of characters used to identify your wallet on the cryptocurrency network. This address is similar to a bank account number. You can use a cryptocurrency address to receive cryptocurrency from other users or to send cryptocurrency to others. Each cryptocurrency address is unique and cannot be changed.
- Private Key - like a key to a safe where you store your valuables. It is unique to each cryptocurrency wallet and is used to access your funds. If someone obtains your private key, they can access your cryptocurrency funds, so it is important to keep it secret and in a safe place.
- Crypto Account - a pair consisting of an address and a private key.
- Seed Phrase (or mnemonic phrase) - a set of words, usually consisting of 12 or 24 words, that serves as a recoverable basis for creating and restoring cryptocurrency wallets. This phrase is used to restore access to a wallet in case it is lost or damaged. With a seed phrase, you can access your crypto assets, so it is important to keep it in a safe place.
- To create a new crypto account, simply use any wallet.
Types of Wallets
There are several types of crypto wallets that differ in the way they interact with your crypto account:
- 💿Physical Hardware Wallets — these are devices that allow you to store cryptocurrency offline, providing high security. They resemble a USB flash drive and offer maximum protection for your assets. Examples include Ledger or SafePal.
- 📱Mobile Applications that make your funds accessible from anywhere. They are less secure as a virus or hacker could steal the key from your phone. However, they allow for quick management on the go or in stores. Examples include TrustWallet or CoinBase.
- 🌐Browser Wallets — these are web applications that allow you to interact with your account directly in the browser. They are the most vulnerable to viruses on your computer but provide the most beautiful and user-friendly interface. Examples include www.blockchain.com.
- 🌐Browser Extension Wallets — these are extensions you download that allow you to interact with your account and applications through the browser. They are useful if you want to buy or sell NFTs or invest in various income and risky tools. Examples include Metamask.
- Cryptocurrency Exchanges — you can also store cryptocurrency on a cryptocurrency exchange. This is a convenient way, requiring minimal knowledge, but it is the most risky in terms of security. If your password is stolen or the exchange faces financial problems, you could lose all your assets. Examples include Binance or CoinBase.
- 🖥️Desktop Applications if you prefer to manage your funds on MacOS, Windows, or Linux. Examples include Bitcoin Core.
Wallets We Recommend
Despite the abundance of crypto wallets, there are very few that are truly convenient and secure, which we can recommend:
- Trust Wallet - a mobile application for managing cryptocurrency assets on your smartphone. It allows users to store, send, receive, and exchange various cryptocurrencies directly from their mobile device. Trust Wallet supports many cryptocurrencies and tokens on different blockchains, including Ethereum, Bitcoin, USDT, and many others. In addition, Trust Wallet integrates with decentralized finance (DeFi) applications and decentralized exchanges (DEX), enabling users to participate in various financial operations, such as swapping, staking, farming, etc.
- Ledger - a French company specializing in the development of hardware wallets for cryptocurrencies. One of their most well-known products is the Ledger Nano S and Ledger Nano X, which are hardware wallets designed for the secure storage of cryptocurrency assets. Hardware wallets provide an additional level of security as they store private keys (secret keys for accessing cryptocurrencies) in an isolated device, away from the internet. The company also offers Ledger Live software, which provides a convenient interface for managing your cryptocurrency assets on the hardware wallet.
- Coinbase - a cryptocurrency exchange and online wallet designed for buying, selling, storing, and sending various cryptocurrencies. It allows users to easily buy and sell cryptocurrencies such as Bitcoin, Ethereum, USDT, and others, using regular money (fiat currencies) or other cryptocurrencies. Additionally, Coinbase provides various services and tools for trading cryptocurrencies, investing in them, and managing a portfolio.
How to Stay Safe
No crypto transaction can be reversed. Only if the recipient returns the funds to you, will you be able to get them back. This means that you should only do business with people and organizations you know and trust, or those with an established reputation. Organizations need to control their payment requests sent to clients.
- Write down your seed phrase. Wallets often give you a seed phrase that you should write down in a safe place. You will need it to be able to restore your wallet. If the seed phrase is stolen, a fraudster can transfer all your assets. We recommend keeping the seed phrase offline, in a secret place that only you have access to, such as a safe.
- Triple-check everything. Remember that transactions cannot be reversed and wallets cannot be easily restored, so take precautions and always act carefully. If you want to send a payment to a new counterparty, be sure to make a test payment of $10 to ensure everything works and the recipient receives your test payment.
- Take responsibility for your own funds. Try not to store your crypto assets in wallets or crypto exchanges where you do not have access to your private key and seed phrase. Centralized exchanges link your wallet to a username and password that hackers can steal. Just remember: you fully trust such an exchange to store your funds. If the exchange faces financial problems, your funds will be at risk.
- Beware of scammers. Hackers posing as support services may ask for your wallet credentials. Providers of crypto wallets or exchanges will never ask you for passwords, 2FA codes, PIN codes, or remote access to your computer.
- Beware of phishing sites. Scammers create fake sites that look like legitimate exchanges or wallets but are designed to steal account information. Double-check the web address before logging into your account or entering any credentials.
