How To Open a Cryptocurrency Wallet
Since the invention of Bitcoin in 2009, cryptocurrency has been on the rise. There are hundreds if not thousands of different types of cryptocurrencies. According to a survey conducted by Finbold in 2021, 10.2% of the world’s population that uses the internet owns at least one type of cryptocurrency.
Owning cryptocurrency entails a few things like storage and transactions. A cryptocurrency wallet helps you store your cryptocurrency and aids you in the transaction process, especially when you want to pay for a Race at Road America ticket.
This article will guide you on how to own a cryptocurrency wallet.
Types of Wallets
Determining the type of wallet you need is the first step in setting up one. There are three types of cryptocurrency wallets to choose from; hardware wallets, non-custodial wallets, and custodial wallets. We will discuss how to open a wallet with each type.
1. Hardware Cryptocurrency Wallet
From the name hardware, it is a physical object. A hardware wallet is in the form of a physical device like a flash drive. It will cost you between USD 100-200 to acquire this device.
Setting Up a Hardware Wallet
The first step is to buy the hardware of your choice. Ledger Nano, Trezor Model, SafePal S1, and D’cent Biometric are some of the hardware cryptocurrency wallets available in the market.
The next step is to install the software for storing cryptocurrency. Every platform has specific software used to store different types of cryptocurrencies.
You should understand the software supported by the hardware before you buy it. You should download the software from the official company website to avoid scammers.
After you install the software, you connect the hardware to the computer and write down the private keys.
You can then transfer cryptocurrency to your wallet.
It is impossible to buy cryptocurrency with a hardware wallet using traditional currency. You have to transfer funds from a different wallet that already has crypto.
2. Non-Custodial Wallets
Also known as self-custody wallets. Just like a hardware wallet, there is no third party to secure your funds. You have full responsibility for keeping your private keys safe.
If you lose or forget your private keys, you lose access to the cryptocurrency in your wallet. The difference is non-custodial wallets are online while hardware wallets are offline.
Setting Up a Non-Custodial Wallet
The first step is to download and install the software of choice on your device. Coinbase, Electrum, Mycelium, and Exodus, just to name a few, are some examples of software that help you store your crypto.
The next step is to create your account. You don’t need personal information to create a self-custody wallet. You are the one in control here anyway.
You must write down the private key that comes as a random 12-word phrase and store it in a safe place. Remember there is no one to call in case you lose or forget this key.
Your wallet is set, and you can deposit funds in it.
You cannot buy cryptocurrency directly with a non-custodial wallet, just like hardware wallets. You have to send in some from a different wallet.
3. Custodial Cryptocurrency Wallet
It is also called a hosted wallet. It operates just like a bank (your money is kept in a savings or checking account) where your cryptocurrency is stored for you. However, you are still in control of your funds as you can transfer them anytime you want.
Setting Up a Custodial Wallet
Decide which platform you are going to use. Most common platforms include Binance, Coinbase, Blockchain.com, Bitgo, and BitMex. The security and simplicity of a platform should be the factors to consider when choosing a platform of your choice.
Then you create your account. You just follow the instructions and fill in your details. You can do this on a browser or install the app on your device and create your account from there.
Your wallet is ready to use. You can deposit funds and start transacting.
You can buy cryptocurrency directly into a hosted wallet using traditional currencies like dollars and euros.
With traditional currency, you have many ways to store your money. You can store it under your bed or in a bank. If you decide to save your money with a bank, you have many banks to choose from with different factors.
Likewise, you have a list of platforms to choose from when intending to own and store cryptocurrency. There are factors to consider, including the nature of activities you intend to do with the wallet.
DisclaimerThe writer’s views are expressed as a personal opinion and are for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
Bitcoin is the most prominent cryptocurrency with a 40 percent share of the total coins and tokens market capitalization...
If you’re a novice with cryptocurrencies and this whole cryptocurrencies’ wallet business still sounds strange to yo...