If you decide to buy cryptocurrency or need a safe place to store BTC, you need to create a crypto wallet. In our article you will learn detailed instructions on how to create it.
Private and Public Keys
Probably the most important thing to understand about crypto wallets is that they are a type of software for storing cryptocurrency using public and private keys. The private and public keys are a sequence of letters and numbers. They are used to create a code and decrypt it, as well as conduct transactions. Public keys are used to conduct transactions and identify wallet addresses. Private keys are used to confirm transactions and provide direct access to funds. That is why they must be stored in a safe place. No one should have access to your private key, which serves as your secret information to access your crypto wallet.
One way to store this information in a safe place is to create a “paper” wallet. A paper wallet is a type of offline wallet (also known as cold storage wallets, which we will describe below). Essentially, you print your alphanumeric code onto a piece of paper. You can also store your private keys on your PC or mobile phone, but the risks are higher. Computers and smartphones are not protected from malware.
Now you know that every cryptocurrency wallet includes a public and private key, which should be kept securely and properly. Let's move from theory to practice.
How to create a crypto wallet
There is no single universal instruction on how to create a crypto wallet. This varies from wallet to wallet, but generally there are a few steps to follow:
- Choose the wallet type that best suits your needs (Review of ETH wallets and BTC wallets).
- Register.
- Create a password.
- Get public and private keys.
Fortunately, on every resource There are instructions for setting up a new wallet, which makes it easier to create your own crypto wallet.
Each cryptocurrency usually has its own official wallet or list of recommended wallets. Once a wallet is selected, you simply need to follow its instructions, which usually start with the prompt to “create a new wallet.” The next step is to create a strong password. The password is an important component that requires storage. Some people write it down in parts and store each part in a different place. However, you can also use a password manager. This is a program that stores passwords in encrypted form. This is much safer than storing it on paper. After setting a password, you will be able to receive your private keys. Both the password and private key are important and should be kept in a secure place.
Some wallets support a mnemonic phrase option. In case there is a need to restore the address, something happens to the user’s computer or hard drive, there is a way to restore the wallet and not lose assets. A mnemonic phrase is a set of 12-24 words that are necessary to restore a wallet. Typically, wallets generate the phrase themselves and then instruct the user to write it down and store it in a safe place. This part is extremely important because anyone who has the phrase has access to the wallet. To make the recovery process even more secure, there is a two-factor mnemonic phrase. In this case, in addition to the phrase itself, there is a password.
Now you see that storing your wallet related information properly is really important. However, a secure wallet is also a necessary and very important part of keeping your coins safe. Let's look at the different types of crypto wallets and their main pros and cons.
Types of wallets
There are different types of wallets. To make your crypto wallet experience more successful, it is important to choose the type of crypto wallet that suits your personal goals.
Full Node Wallet
Any computer connected to a network and running special software (for example, the BTC network) is called a node. A full node wallet has a built-in copy of the blockchain, so it has the ability to independently verify transactions. Running a full node has a number of advantages:
- you don't have to rely on other nodes to complete the transaction;
- if something goes wrong, the node itself will stop the transaction;
- you can choose the direction during a hard fork;
- there is no third party involved in your transactions, which makes the peer-to-peer experience more complete.
It is also important to consider some disadvantages. The main problem here is that running a full node requires a lot of PC space as running a full node means that GB of information needs to be downloaded and stored monthly.
Light wallet
Some people believe that light crypto wallets are the most convenient to use. Let's take a look at some of the pros and cons of such wallets.
Advantages:
- does not download tons of information daily;
- does not require much space;
- only loads block headers necessary for validation of transactions;
- is easier to use.
Disadvantages:
- does not provide absolute independence;
- sends addresses to a trusted third party.
Most An easy-to-manage type of crypto wallet is software. It operates almost like a regular bank. They store private keys so users don't actually own them. You can access your assets whenever you want, but you don't have to constantly worry about their safety. However, it is important to understand that trusting your assets to a third party is not very safe. This means that at all times, someone else has full access to your savings. Moreover, this contradicts all the basic principles of cryptocurrency, which are the absence of third parties and anonymity. The only obvious advantage of software wallets is that users can access their savings even if they have forgotten the password and mnemonic phrase. Other wallets do not provide this option.
Depending on their working mechanisms, crypto wallets can also be defined as hot or cold wallets. Hot wallets have an internet connection, cold wallets do not.
Cold wallet
Cold storage (or offline wallet) is one of the best and most commonly used options because these wallets are not accessible online. This makes it impossible for hackers to access them. On the other hand, there is a risk of losing private keys or passwords and thereby losing access to funds.
Hardware wallets
A hardware wallet is a type of cold wallet (Ledger hardware wallet review). Considered one of the best and safest. It looks like a memory card, so it's an external device that you can take with you anywhere. Hardware wallets do not store any personal data and provide anonymity. To access savings, users must enter a password. Although please keep in mind that a hardware wallet is a physical device that can be lost. In this case, you will lose access to your wallet and thus your savings.
