So you want to learn about wallets? Pull up a chair and listen to Papa. You are in for a long story.
First thing first. What’s a wallet in cryptocurrencies?
A cryptocurrency wallet is a program that enables you to track, send and receive coins through the blockchain like a bank account. Every wallet consists of 2 types of keys. Private and Public. Public key acts as an address (think of email or phone number) and the other one holds the key or the password to your account. With that key you can open the doors inside your wallet.
If you hold the crypto on centralized exchanges (such as Coinbase, Binance, Kraken, KuCoin, Bitstamp, Crypto.com and many others), you don’t actually own those coins, because you don’t have the keys to the related wallet. You gain access to those ‘wallets’ by logging into these exchanges, but your account can – theoretically – be deleted in the blink of an eye, or the exchange can get hacked, attacked, etc. And with it, your funds can disappear forever. Mt.Gox hack is the most infamous hack in crypto but it’s far from the last one. Just a few days ago BitMart had a massive hack which drained over 196 million USD from the users.
So you already know that you need to own your keys in order to own your coins.
But what are these keys
Your public key is what identifies your account on the network. Think of it as your email address, because when someone wants to send you cryptocurrency, they will send it to this address.
Your private key is a string of 64 characters that can be generated from a 12-word seed phrase. It basically serves as the password of your account. It is used to sign transactions and to prove that you own the related public key.
See, it’s not that complicated, is it?
There are 4 types of wallets that you should be using. Ideally, you can pick the one that fits your crypto habits the most. You should avoid using Web wallets. As always, if you can, please pick the safest wallet type in order to minimize the risk of losing your cryptos.
Hardware / Offline / Cold Wallet– an offline storage device (e.g. hard disk, USB stick). You might’ve heard the names Ledger or Trezor, these are the 2 biggest brands at the moment. The ledger supports over 1200 cryptocurrencies, while Trezor supports over a thousand. It is also the most secure way to store your cryptocurrencies.
Mobile Wallet– applications that are installable on your mobile phone. Beware that even though an app can hold crypto, it doesn’t mean it is NOT custodial. (e.g. Coinbase has a mobile app, but it is custodial, meaning that they control your coins.) Exodus or Atomic mobile apps are recommended if you decide to create a mobile wallet.
Desktop Wallet– wallets that are installable on different desktops and are compatible with Windows, Mac, and Linux. Your keys are stored on your computer, and you can use this wallet even when you’re offline. Note: Desktop wallets tend to be more advanced than mobile wallets, and usually come with more technically complicated features that can increase privacy or allow for more flexibility when it comes to signing transactions.
Paper wallet– a paper wallet is essentially a piece of paper including your public and private key, or a QR code (so that you can quickly scan them and add the keys to a software wallet to make a transaction). It’s a really safe way to store your cryptos because your keys are not connected to any servers. The only way someone can steal your cryptos is if they steal this paper. Or if dog chews on it, your mom throws it away, your significant other misplaces it and so on. Not a good way to securing your money.
If you are tight on the budget like myself, I really recommend storing crypto this way:
Buy the cheapest dremel tool in a hardware store (10-15$)
Buy a metal plate, usually sold in sheets (1-2$)
Use a black sharpie to write your keys on the metal sheet
Put your gloves and safety glasses on and start etching the keys over the sharpie writings
Grab a beer cause you are a gentleman and scholar and also very skilled with power tools OPTIONALLY
Have your mom/gf/wife wipe the blood of your hands and apply bandages
Ledger Nano (S and X)– The most popular hardware wallet brand in the world, currently sells 2 different sticks. The S is the cheaper alternative, but if you handle transactions between multiple cryptocurrencies frequently, the larger storage of the Nano X should be more convenient. The Nano X also has Bluetooth 5.0 support. You can read more about Ledgers on their website.
! ! ! WARNING ! ! ! If you choose to go the hardware wallet way, take extreme caution where you purchase your wallet. Don’t purchase second hand wallets and don’t use Ebay , Amazon or god forbid Alibaba to purchase hardware wallets. Alway buy directly from the manufacturers site. Even if you bought directly, always check for tampering signs such as damaged box, removed plastic wrap or anything similar. Before use, always restore the device to factory settings if possible.
If you ever receive ‘replacements’ of your device out of the sudden for some unknown reason, DO NOT USE THEM!
Be aware that Ledger was targeted by a cyberattack that led to a data breach** in July 2020. A larger subset of detailed information has been leaked, approximately 272,000 detailed information such as postal address, last name, first name, and telephone number of our customers. However, not a single coin was stolen as hackers didn’t gain access to private keys. Please keep this in mind when making your decision. In July 2021 there have been reports of malicious tempered Ledgers being sent around to several users with a target to scam those users. If you get one do not use it. Always buy from official sites, I personally would avoid sites such as Amazon or others.
Trezor (One and Model T)– Trezor is the other popular hardware wallet brand. The Trezor One is the cheaper alternative ($59), while the Model T is more expensive but comes with extended functionality and additionally supports cryptocurrencies such as ADA, XMR, XTZ, etc.
Despite the security of hardware devices themselves, **the weakest link is always the people using them.** If possible, avoid buying used hardware wallets, even though both Trezor and Ledger have security measures to avoid the attempt of installing malwares.
DO NOT BUY USED HARDWARE WALLETS or from sites such as EBAY, ALIEXPRESS etc. Even Amazon can be considered as dangerous!
Always check the hardware wallet for any signs of tampering before using!!!
Exodus– a very user-friendly and easy to understand, reliable wallet. As of now, it is probably the most popular desktop wallet. Available on Windows, Mac and Linux as well.
Atomic– it is also a user-friendly and reliable wallet. Atomic supports 500+ assets and allows staking various cryptocurrencies. Available on Windows, Mac and Linux.
Metamask– arguably the best browser based wallet with the best support. Works best with Chrome and even Brave (as its a Chromium based browser).
Of course, there are several other reliable desktop wallets, but these two proved to be the most user-friendly and easy to use wallets so far. As always, please DYOR!
Exodus and Atomic wallet – are great also on mobile
Trust Wallet– Trust has been getting very popular and I particularly like it because of a solid browser integrated in app and the ability to seamlessly store tons of different crypto.
Jaxx Liberty-Weird ass name but a very solid multicoin app. Be careful NOT to use the in-app exchange option as they exchange very very poorly. Trust me.
Coinbase Wallet– Great wallet for saving both NFTs and several different crypto coins. Good support and always up to date with security issues
Phantom– Solana network wallet which is really user friendly and makes storing SOL native assets a breeze and joy!
Yoroi– A superb wallet for ADA based crypto with a easy to use staking right out of the wallet!
Fearless wallet– Polkadot network wallet that allows you easy crowdloan participation and staking directly from the app. Super easy to use
Terra Station– LUNA and Terra network based assets are a breeze to use on this wallet. Good UI and built with ease of use in mind.
Natrium– My go to choice for NANO wallets. The best UI I’ve had the pleasure to use and the speed of it is similar to the lightning like speed of NANO.
Monero GUI– For those who want more privacy with Monero, this wallet is a must.
Electrum– In my opinion the go-to wallet for Bitcoin. Superb
Note: many coins have their specific wallets such as Algo, ADA, VET and others. Those wallets sometimes have perks such as staking, delegating and such. Staking means that you lock or soft lock your coins and you get rewards in either more of the same coin or getting airdrops such as VeThor in case of staking VET. If you intend to hold PoS crypto, use staking to your advantage.
Last piece of advice: always be cautious and double-check everything. Keep your devices malware-free, and don’t click on anything suspicious (such as emails from ‘Binnance’, crazy bonus links from ‘Coimbase’, etc.). If exchange supports anti phishing code (Binance, Kucoin and others do) be sure to check it!
Do I really need to use a wallet?
Well..yes and no. Leaving your Bitcoin at the exchange or brokerage you bought it from is generally (trying not to think about Mt.Gox) a very secure option. When moving funds to a wallet you NEED to consider fees. There is always someone who tried to transfer 20$ of BTC just to find that half of that amount was needed to cover the gas fees. Also wallet security depends on you and how much you did to keep it secure.
What about security?
Keeping your investment secure is an essential skill of a true HODLER. Everyone knows by now that “not your keys not your coin” is true and also exchanges are not 100% safe. Sure, most well known exchanges nowadays are safer than the “mt.gox” back in the day but still they are a big target for hackers and eventually it can come to a breach that could result in your assets being stolen. But of course, your wallet is only as secure as you make it!
Where can I fuck up when making a wallet?
Biggest fuckups you can do are screenshotting the seed-phrase, copypasting it in a .txt file or similar, sending it on a messaging app like WhatsApp or even Email and similar. Don’t do that under any circumstances. If anyone ever asks you for a seed phrase, you tell them to sniff your ass. Noone ever needs your seed phrase and noone except your most trusted people should need to know it. I do recommend though, that you (if you have people who you trust 1000%) teach your trustees how to used it in case you aren’t around anymore. I am planning on teaching my two little ones about crypto once they can understand more, so that they have the knowledge when the time comes when I wont be around anymore.
Daddy, what’s the best way to store crypto in your opinion?
I think by far the best cost effective way to store your seed phrase are metal plate engravings.
Grab a cheapo 10$ dremel tool, a sheet of metal, pair of safety glasses and gloves and a sharpie. Write the seed phrase with sharpie on the plate and go over that with dremel tool etching in the phrases. In 15 minutes you’ll have a cool wallet ready to be stored in a safe place.
There are of course pricier more refined ways like a Steely, or a Cryptosteel. But Im broke as fuck so I prefer to do it ghetto style and in the end it performs all the same. You won’t be showing it off to people anyway will you?
Golden rules of securing your seed phrase for future are:
Backup offsite (putting your seed phrase on a sticky note on the pc display isnt optimal)
Backup securely in a private environment
And ALWAYS test your recovery by deleting the wallet and reimporting (this is what many forget!)
Never give out your seed phrase. There is no such thing as verification of wallets or upgrades or whatever. Those are all scams that are trying to get your hard earned money.
Be vigilant. Be safe. And have a great day
This post was written by u/anakanin and I post with his permission and updated further by me.