17 April 2024

Setting up a Crypto Wallet for Beginners

Banking & Finance
| The European |

Setting up a Crypto Wallet for Beginners
If you’re thinking about buying cryptocurrency, then you’re going to need to store it somewhere. One way is to get a crypto wallet. Keep in mind that all wallets aren’t the same, so if you follow that route, then finding the best type is going to be priority number one. However, if you’re looking to trade crypto assets with the help of software like bitcoin prime, then you can leave your crypto in the same place you buy and trade it! Here’s the lowdown on the three wallets you can opt for.

The main wallets consist of the following:

  • Non-custodial wallets
  • Hosted wallets
  • Hardware wallets

Non-custodial Wallets
A non-custodial wallet puts you entirely in control of the crypto deposited. No third party (custodial) is present in ensuring that you’re protected. Therefore, you’ll receive the vital software that is used to hold the crypto, however, you’re completely in charge of looking after the password and protecting it.

If the worst-case scenario happens and you forget or lose the password, there’s no possible way to gain access. Furthermore, if the password is stolen and someone discovers the wallet, then they can get full control over the digital assets. Passwords for crypto wallets are typically referred to as ‘private keys’ or ‘seed phrases’.

Additional benefits of having this type of wallet compared to the others include the following:

  • Yield farming
  • Lending
  • Staking
  • Borrowing
  • And more

Individuals that are only investing in, sending, receiving, buying, or selling crypto assets are recommended to obtain a hosted wallet.

Setting up Process for Non-custodial Wallets
The setup process for this type of wallet is relatively straightforward:

  • Download a wallet app from the chosen provider
  • Sign up to make an account
  • Take a note of your private key and keep it safe
  • Put crypto inside the wallet (most will only allow you to transfer already existing crypto to the wallet rather than allowing you to use traditional currencies to buy crypto)

Hosted Wallets
Hosted wallets are commonly seen as the most popular type of crypto wallet. It works similarly to traditional banking, where a third party holds it for you. Thankfully, unlike a non-custodial wallet, if disaster strikes and you no longer remember your password there are ways of obtaining what’s inside the wallet with the help of the host.

The main drawback of using this one is that you may not have access to all crypto features. Although, as development continues, this may change.

Setting up Process for Hosted Wallets
If you’re happy to use a hosted wallet, then it’s time to set it up:

  • Find a platform you trust
  • Begin the account creation process
  • Buy crypto assets or transfer existing ones

Hardware Wallets
Unlike the other two options, hardware wallets are designed to store private keys offline. This is done with a small device that looks similar to a USB drive. Although their use is uncommon due to them being costly, they do have some extra benefits. For instance, even if your laptop gets hacked, you’re protected. But, if you lose the device, you’ll lose access to your crypto – forever!

Using Hardware Wallets
Here’s how to use hardware wallets:

  • Purchase the device
  • Download and install any necessary software
  • Transfer crypto you already have (most hardware wallets will not let you purchase crypto using normal currencies only allow the transfer of it)

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