A Brief Crypto Wallet Guide: From a Beginner to Beginners

You are on the line if you should buy some Bitcoin, and the following news hit your Twitter timeline like a truck 🚚.

In June 2021, 3.6 billion USD in BTC disappeared with South Africa's largest cryptocurrency exchange's founders. Nov 2021 - The world's largest crypto exchange, Binance, suspended all crypto withdrawals for 2 hours.

Perhaps you have seen this phrase - "Not your key, not your coin" but have no idea what they really mean. If you have not given up on buying some cryptocurrency after all of the negative news, then you have landed in the right place. I will show you how to get your own crypto wallet to protect your own fund.

Crypto Wallet and why do we need one?

Let's start with a light question — what is a crypto wallet? A crypto wallet could be a software program or physical device that allows you to transfer and store cryptocurrency. A basic crypto wallet has 2 key pairs:

• Private keys
• Public keys

But how does it work?

For somebody to send you a letter, you need 3 mediums - your mailbox, the letter, and the key to unlock your mailbox. Similarly, you need these 3 things to receive a “letter” in the crypto world - with the public key being your mailbox, the letter being the crypto someone sends you, and ultimately the private key is the key to unlock your crypto mailbox.

Sounds pretty simple, isn't it? And it doesn't differ much from how a normal wire transfer works? Yes, it is similar but the key difference here is that only you hold the private key. Not your bank, not your crypto exchange. Only you — if you are using a non-custodial/self-custodial wallet.

Types of Crypto Wallet

Broadly speaking, you can break crypto wallet down into 2 main categories:

• Hot Wallet
• Cold Wallet

So, is it like a wallet is fresh out of the oven and the other we have to store the other one in the fridge? Well, not really. In fact, hot wallets are connected/available online whereas cold wallets are in offline mode.

Desktop and mobile wallets are examples of hot wallets because you can access them as long as you have an internet connection, regardless of wherever you are in the world. But that also means that your wallets have a higher risk of being hacked compared to cold wallets since they are online. So, a little tip here to you, my friend — make sure that you are using a secure internet connection. The one thing you can stop doing is not to connect to a public network if you are using a hot wallet.

A hardware wallet or a piece of paper at your desk are examples of cold wallets, as they are in offline mode. For crypto users, hardware wallets are considered to be the strongest shield against online attacks. To date, there has been no known incident of funds getting stolen from a hardware wallet. To send funds from your hardware wallet, you just have to plug your device into a device connected to the Internet and the rest of the steps are similar to those in hot wallets. As for a paper wallet, it is simply referring to a piece of paper that contains your public and private key addresses.

After learning the types of crypto wallets, let's have a look at some of the most common questions for a crypto beginner.

Is it possible to reverse a transaction?

When you send funds over your crypto wallet, it is all similar to the normal banking transaction, apart from one key difference - it is irreversible. As the transaction is performed on the blockchain, it is simply not possible to undo the action. So, simply do yourself a favor by double-checking the recipient's wallet address. To save yourself the headache, ask the recipient for a QR code of their public address to prevent any error from happening at all.

Is it safe to leave my crypto on exchange?

Short answer, no.

If you leave your crypto on an exchange, you are essentially leaving the private key to your coins on the exchange too. If the exchange gets hacked, it means that your private key falls into the wrong hand too. But if you move your coin into your own wallet, you are taking the full responsibility of keeping your coins secured.

Short phrase to remember by heart: "Not your key, not your coin". 

One Last Tip

As your crypto funds grow, it is important to separate your funds into different wallets to mitigate the risk of your funds being stolen. Also, always backup the seed phrase to your wallet and expose it to no one else. You will normally be instructed to keep a copy of your seed phrase upon creating a crypto wallet. Last but not least, do not store your private keys on your computer on the cloud (or anything online for that matter).

When it comes to crypto wallets, trust no one but only yourself. That being said, you should only choose a self-custodial wallet.

Here is a couple of self-custodial wallets that you can get started with

• Muun - Muun is a self-custodial wallet for bitcoin and lightning.
• Metamask - Metamask is a crypto wallet & gateway to blockchain apps.
• Exodus - Exodus enables you to send, receive & exchange Bitcoin and 100+ cryptocurrencies with ease on the world's leading desktop, mobile, and hardware crypto wallets

Disclaimer: I am not affiliated with any of these wallets. And I get no financial return if you sign up with them. I personally have been using these wallets for at least a year and I really like their ease of use, security, and user interface that is why I am recommending them.