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How To Set Up A Cryptocurrency Wallet?
Before getting one, you should know what a cryptocurrency wallet is and why it requires for purchasing or selling bitcoins. A cryptocurrency or bitcoin wallet is a device or a program that stores all the access keys to your cryptocurrency. It contains two types of keys; a public key that defines the wallet’s address and all private keys that can access the cryptocurrencies.
The key is a sort of passcode identifying a specific bitcoin’s location and comprises a string of letters and numbers. These private keys are the only way to access your bitcoins, enabling you to receive (buy) or send (sell) bitcoins. There is no other way to retrieve your bitcoins, so do not lose the key, or you’ll lose access to your bitcoins.
Types of Crypto-wallets
Crypto-wallets or bitcoin wallets are classified into two major categories:
- Cold Storage Wallets
- Hot Storage Wallets
- Custodial Wallets
- Non-Custodial Wallets
- Cold Storage Wallet
Cold storage wallets are tangible hardware devices having physical existence and connecting to the computer like a flash drive. These cold wallets are incredibly safe as you can protect them on your own, away from hacks or bankruptcy. Although, they require you to connect to the computer system whenever you want to make any bitcoin transaction.
Hot Storage Wallet
The Hot Storage Wallets have only a virtual existence as they are only a non-tangible location to store the bitcoins. These wallets keep all the private keys to access the bitcoins or other cryptocurrencies stored at a specific location. All the bitcoins belong to the person with the access key for their particular location; thus, it requires protection.
These hot wallets can install on cell phones like an app and require a functioning internet connection. Paperless Crypto Wallet is a reliable and famous mobile app that serves as a hot storage crypto wallet.
The custodial wallets (that a company owns on your behalf) and non-custodial wallets (that you own) are the two forms of hot storage wallets.
Non-Custodial Wallets
The bitcoin owners possess the Non-Custodial Wallets, so they have complete authority over their bitcoins and access keys. It is the safer version of hot storage wallets that keeps your cryptocurrencies away from the risks of theft and bankruptcy. However, the threat of hacking still exists for both hot storage wallets.
Custodial Wallets
The Custodial Wallets don’t enable you to access your bitcoins; instead, the selling authority holds the sold bitcoins for you. For instance, the bitcoin exchanges, bitcoin agents or bitcoin brokers, or payment services like PayPal, Cash App, Robinhood, and Venmo.
These custodial wallets function like a bank for your bitcoins; consequently, you do not have to worry about their security. However, it is vital to understand that these wallets can also go bankrupt, freeze your account, or even commit fraud. Therefore, you necessarily should opt for a reputable company while considering the custodial storage for keeping your digital assets safe.
A Bonus Tip!
Are you confused about which type of wallet to use for your bitcoin storage? I’ve got you covered! This bonus tip is for you. The best practice is storing small amounts of bitcoins in digital wallets and prefers cold storage to hold bulk quantities securely.
Why Do You Need a CRYPTO Wallet?
Are you wondering if a cryptocurrency wallet is essential? Oh yeah, it sure is. Do you know you cannot access digital assets without a crypto wallet? Because this crypto wallet stores your private keys to your cryptocurrency and deals with the interface to access the blockchain. Furthermore, besides keeping your keys, only hot wallets can access the blockchain, and all the other wallets can only store your keys.
How do crypto wallets access your cryptocurrency?
Cryptocurrency wallets exist as software apps on your PCs, laptops, tabs, or mobiles that use the internet to access the blockchain network. Cryptocurrencies are not tangible to be stored somewhere; they’re made up of scattered bits of data over the database. Your crypto wallet looks out for all those bits linked to your public address and adds it up in the app.
In the early days of cryptocurrency, the long private keys were typed manually to access the blockchain. Today, the crypto wallet has made the blockchain easily accessible, simplifying sending and receiving cryptocurrencies.
How To Set up your cryptocurrency wallet?
Before using a crypto wallet for the first time, it needs to be set up first. Follow these five steps enlisted below for setting it up:
- Select one of the three types of crypto-wallets.
- Buy one if you selected cold storage or download for the hot storage wallet.
- Install the specific software.
- Set up your account and security features.
- Deposit your digital asset (cryptocurrencies).
What if a crypto wallet is lost? Can you ever recover it?
Fortunately, you can; gone are the days when all the cryptocurrency loses due to damage or a lost wallet. Yes, restoring a lost or damaged cryptocurrency wallet is possible if you have your seed words generated by your wallet.
What is a SEED phrase?
A seed phrase is a twelve-word random sentence generate and linked with your private keys by your cryptocurrency wallet. These seed words are a mnemonic device to recover a lost or damaged cryptocurrency wallet. It is the primary feature of most modern wallets and is intermittently called Recovery Phrase, Backup Phrase, or Mnemonic Sentence.
Random generation is essential for seed phrases; the more words include in a seed phrase, the more random it gets. The randomness or entropy of the seed phrase keeps it safe from guesses or reverse-engineer. Moreover, securing these seed words and storing them away from the eyes of hackers and cybercriminals is significant.
Cryptocurrency DEBIT CARD
Cryptocurrency debit cards are the most practical and handy method for purchasing through cryptocurrencies. These debit cards also enable the users to withdraw a limited amount of cash from Bitcoin Automated Teller Machines (BATMs). All the major cryptocurrency exchanges provide cryptocurrency debit cards for their customers to access their virtual money easily.
How Does a crypto Debit Card Work?
A crypto debit card preloads with your digital currency, enabling it to make a purchase or withdraw cash. It acts like a prepaid traditional debit card and could be reloaded again once it gets low on balance. On swapping the card for buying, the specific amount of cryptocurrency is converted to cash and paid to the seller as fiat money.
How to Buy With Cryptocurrency?
Purchasing via cryptocurrency is not a big deal; we have crypto wallets, crypto debit cards, and even crypto mobile apps. You can get more information regarding crypto purchases in my blog; how you can buy something with cryptocurrency? Why not try it?
