The Basics of Setting Up a Cryptocurrency Wallet

It’s true that Bitcoins work a little bit like traditional online bank accounts, but the reality is that cryptocurrency protocols work very differently than PayPal or your bank’s online portal.

A cryptocurrency transaction, for example, is irreversible, so the security standards for the digital currency in a wallet are much higher.

Choosing the Right Wallet

Understanding how cryptocurrency wallets work underneath the hood is crucial to preventing a loss of funds. First-time users of cryptocurrency wallets should follow these five simple steps:

  • Choose the wallet that suits you (mobile, hardware or desktop wallet)
  • Wallets can be purchased or downloaded
  • Download and install the software
  • Creating an account and securing it
  • Cryptocurrency deposits

Using cryptocurrency in a safe and secure way is much easier when these five steps are followed. In this article, we will understand how to set up your wallets that you have chosen and small tips on keeping them safe.

Choosing the Wallet that suits your needs

You should always keep in mind why you are using cryptocurrency before choosing a crypto wallet. You should choose a wallet based on how you’ll interact with the different cryptocurrency networks, as different wallets are made for different uses. Before picking out your first wallet, ask yourself these questions:

  • Do you only use Bitcoin?
  • What amount of cryptocurrency will you store in your wallet?
  • Would you like more privacy features?

When choosing a crypto wallet, security should also be a top priority because this piece of software (and sometimes hardware) will hold your private keys. These private keys are basically the passwords to your cryptocurrency funds, which you can use to transfer them to other users. To put it another way, control over the private keys implies control over the money.

How to Set Up Hardware Wallets

The most time-consuming option is usually setting up a hardware wallet, but it is also the safest. You will achieve additional security by having your private keys stored in an offline device independent of your laptop, mobile phone, or other computers. The offline nature of these hardware wallets makes them much more secure than online wallets since malware attacks from hackers are less likely to damage your cryptocurrency holdings.

Set up your mobile wallet

It is much easier to set up a mobile wallet. From your device’s associated app store, choose a mobile cryptocurrency wallet. You can almost instantly accept cryptocurrency payments with most mobile wallets. Backup your private keys on paper during the setup process is all you need to do.

You will not be able to call a third party for help if you forget your password in a cryptocurrency setting.

Setting up the desktop wallet

Desktop wallets are set up similarly to mobile wallets. Choosing your cryptocurrency wallet software is the easiest part. Simply run the software to begin setting it up.

When setting up desktop wallet software, you may be asked to backup the passphrase associated with your private keys, much like when setting up a mobile wallet.

Cryptocurrency Wallet Security Tips

Hardware wallets are the safest option as far as cryptocurrency wallets are concerned. Despite this, a hardware wallet may not be the perfect choice for everyone.

Taking into account the value of your cryptocurrency holdings will help you decide what level of security you need. As an example, purchasing a $100 hardware wallet for the purpose of protecting $50 worth of cryptocurrency wouldn’t make sense.

You can, however, take steps to improve the security of your crypto holdings without spending a lot of money on a Trezor or Ledger. You could opt for an open-source Bitcoin wallet for that matter.

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