How to create a crypto wallet
In this article we will tell you how to easily create a crypto wallet, because newcomers think that getting into the market of digital assets is very difficult.
But once they understand the concept of virtual money, the procedure becomes easier. The first thing to do is to get a wallet for cryptocurrency. This is important: so users can use digital assets as a means of payment.
- How cryptocurrency wallets work
- Private keys
- Types of wallets
- Hardware
- The best hardware wallets
- Web wallets
- Mobile
- Desktop
How cryptocurrency wallets work
Investing in virtual coins and tokens requires certain tools. You need to create an electronic wallet for cryptocurrency on your computer or phone. These are programs that allow you to send and receive digital assets: bitcoin, etherium and others. The software can be used to host multiple tokens and coins at the same time. However, most cryptocurrency wallets only support a limited number of cryptocurrencies. Digital asset software is used to store private keys: long hexadecimal codes known only to the owner.
Private keys
Users do not need to understand all the technical details of encryption to secure their assets. It is important to follow one simple rule: keep private keys secret and not disclose them to anyone.
The saying “Not your keys, not your coins” is true.
Understanding how cryptocurrencies work is easy with the example of a mailbox. In a normal mail exchange system, each person has a unique address or P.O. Box number to which other people send their messages. If a person wants to send a physical letter, they need to know the exact mailing address of the recipient.
In cryptocurrencies, a similar scheme works: to send bitcoins, a cryptocurrency wallet number, called a public key, is required. The user can safely tell everyone the public address so that others can send funds to it.
When a letter is dropped into the recipient’s mailbox, it is not available to people passing by. Only the person with the key opens the lock and takes the item.
In the case of cryptocurrencies, anyone can find out the address of a cryptocurrency wallet to transfer coins. But to dispose of the assets in it, you need a private key – to decrypt the transaction. Whoever has access to the private code can unlock the cryptocurrency storage address and manage the assets.
If a user wants to check the number of coins in a cryptocurrency wallet, he won’t have to decrypt his address. Consequently, a private key is not needed. The code is necessary for cryptocurrency transactions, and it needs to be kept safe. It is safest to write down the key on a paper medium, duplicate it and hide it in different places.
A private key is a set of letters and numbers that is randomly generated at the time the crypto wallet is created. An example of what a bitcoin private code looks like:
9J7ZwJE1fMSjqSTfeBqD4cxirkkKA7xFdyHdeZffrupPBLrey
If a user loses a private key and can’t find a backup copy, they will no longer be able to send their assets.
Types of wallets
To keep cryptocurrency secure, you have to fully own the private keys. The money is online, and the codes to access it are generated and kept on file. It is important not just to create your cryptocurrency wallet and buy cryptocurrency, but to choose the right protection for the keys.
There are 2 categories of cryptocurrency wallets. Each has advantages and disadvantages.
| HOT CRYPTO WALLETS | COLD CRYPTO WALLETS |
|---|---|
| Connected to the Internet | Have a physical form and work autonomously |
| Hacked into, vulnerable | Have stronger protection |
| Have a user-friendly and clear interface, a lot of additional options | Limited functionality, less flexible in use |
| Installed on a digital device and work only when the computer or smartphone is connected to the Internet | Connect via cable or Bluetooth and can perform tasks without a network connection |
There are different types of vaults in each category. The 3 main cold types include software, hardware, and paper wallets. Each type satisfies a limited number of requirements.
Hardware
The safest option for hosting cryptocurrencies is offline use. Hardware-based cryptocurrencies contain private keys on the device, not in software. Most such cryptocurrencies work similarly to a flash drive. They can be connected to a digital device via USB or cable. Hardware wallets reduce vulnerability and exposure to cyberattacks.
Cryptocurrency wallets have a simple but secure operating system. Therefore, keys remain safe inside the device, even if it is connected to a malware-infected computer.
If the user has a secret phrase for recovery, he will easily get the crypto-assets back on the balance, even if the hardware wallet is stolen or damaged.
The private key is generated when the transaction is sent and never leaves the device again. The cryptocurrency wallet asks for transaction details and then verifies the data. Thus, the user’s private key is always in a safe place.
The best hardware wallets
Trezor and Ledger are the most reliable and popular tools. These stores are compatible with many applications and blockchains. They can work with different types of cryptocurrencies.
Although hardware wallets are more expensive than software wallets, they offer the highest security for digital assets. They are especially recommended for those who keep large amounts of cryptocurrencies for a long time. The most reliable are considered to be:
- Trezor is the world’s first hardware cryptocurrency wallet for bitcoins.
- Ledger is another popular vault. Like Trezor, Ledger helps protect secret digital keys and allows you to manage and control funds on one small device. You need to manually press 2 buttons on the crypto wallet to sign and confirm a transaction. This makes it almost impossible for a hacker to gain access.
Where to buy
Hardware cryptocurrencies are purchased only from the manufacturer or an authorized vendor. That said, most reliable devices have a built-in mechanism that alerts you if your computer or smartphone has been hacked.
Hardware crypto-purses should be sealed with a holographic sticker showing that the device has never been tampered with.
The secret phrase is generated by the users themselves when they start the device. The manufacturer is not authorized to give out codes or passwords.
Online wallets
Most cryptocurrency software vaults are categorized as hot because they are connected to the internet. There are many types of software to protect digital assets, but the most common online wallets are considered desktop and mobile.
Web wallets
This type of storage can be accessed through any browser. There is no need to download specialized software to your computer or phone. A user can open a crypto wallet and manage assets from anywhere, as long as they have a password.
Most often, the owner does not apply a private key, because the site stores the code, and therefore has full access to the cryptocurrency. Accordingly, the investor has less control over the assets.
Some sites offer multi-signature cryptocurrency wallets that have 2 keys. One is held by the developers and the other by the user. This gives more options for securing digital currencies.
Since the keys are at least partially owned by the cryptocurrency wallet provider, it is important to examine the security of the chosen site, since the funds are actually entrusted to the company that owns the service.
There is a more secure kind of web wallet that works as an extension for Chrome, Firefox and Brave browsers. These are MetaMask, TronLink, and Binance Chain. Most often, these wallets are set up to work with a specific blockchain (Ethereum, BSC or Tron) and act as a bridge between a regular browser and the blockchain.
Best web wallets
Popular cryptocurrency vaults for any browser:
- MyEtherWallet
- Magnum
- Blockchain
- Robinhood
How to create
Simple steps to use an online wallet:
- Go to the official website. Enter the domain in the address bar and make sure there is a small lock symbol next to the URL, showing that the link is safe and starts with https.
- View notifications that explain how the site works (if provided).
- Enter your email and password.
- Download a file with private keys (if provided) and write down the secret phrase. For example, MyEtherWallet gives access to private codes. Save this data on a USB stick, print it out and put it in a safe place.
- Confirm the registration from the mail.
- Set up a PIN code, if required.
A Google Chrome browser extension called EAL can be installed to provide phishing protection for Ethereum blockchain participants. This app will warn if a user accidentally visits a fake site.
Mobile
Cryptocurrencies for smartphones work pretty much the same way as the desktop versions. The main difference is that the vault is a mobile application on the phone. Such a service gives more flexibility in use. The owner can open a cryptocurrency wallet and dispose of their funds at any time, provided they have access to the Internet. Mobile wallets often come with QR codes to make it easier to buy and sell cryptocurrency.
At the same time, smartphone apps require additional security measures. Mobile cryptocurrency wallets should not be exposed to viruses. Losing your phone could also have a negative impact on the safety of digital assets.
The best mobile wallets
Here are some of the popular mobile apps available for both iOS and Android devices:
- Exodus.
- MyCelium.
- Copay.
- Trust Wallet.
How to create
Mobile cryptocurrency wallet works as an application on your phone. Sequential setup steps are given when you first start the program. It is important to write down a secret phrase and enable two-factor authentication. Many of these apps sync with hardware vaults.
Desktop
This kind of wallet requires a download to the computer. The desktop version creates a data file with the private keys. You will also need to create a password to access your private codes.
One of the advantages of the desktop crypto wallet is that the user remains the sole holder of the private key. However, you need to make sure that there are no viruses or malware on your computer. It is important to keep the password in a safe place.
If the user installs the desktop version, he should export the private key file and back it up in a safe place. This way he can access the funds if something happens to his computer.
The best desktop wallets
Here are some of the most popular tools available on Linux, Windows and macOS:
- Electrum.
- Exodus.
- Bitcoin Core.
- Armory.
How to create
Desktop storage is accessed through special software that is installed on your computer. Installation steps:
- Check if the cryptocurrency wallet supports the coin the user plans to store.
- Download the software from the coin’s official website.
- Install the software and run it.
- To decrypt the crypto-wallet, you must copy and paste your private key into the software or securely save the private code offered during installation.
What is the best wallet for cryptocurrency to create
For those who store large amounts of cryptocurrency, a combination of cold and hot wallets will do. A hybrid approach will help maximize the level of protection, increasing the flexibility of use.
It is important to protect private keys by strictly following security rules.
Crypto-enthusiasts are comfortable using a hot wallet (software) for trading on exchanges and hardware storage for long-term HODLing investments.
