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The cryptocurrency market has grown exponentially over the last few years. People are finding this market the perfect opportunity to discover new ways to invest. Crypto traders have been earning strong profits, and, despite the recent deceleration, it looks like this trend is going to be around for a long time.
Considering all that, it is a great time to start investing in this market. But first things first. Before investing in cryptos, you need a wallet to store all your crypto tokens.
There are several ways to quickly and easily set up a crypto wallet. Here’s what you need to know about how to set up a crypto wallet and how to use one to store and protect your digital assets.
What is a crypto wallet?
A cryptocurrency wallet is a software or application that stores cryptocurrencies and other cryptographic items. They can be virtual, accessible from the Internet, or from a mobile application. And they can also be stored on a physical device similar to a pendrive.
They enable the execution of crypto-asset admission and remittance operations through the blockchain network of each one of them.
In addition, they are instruments of great importance in the cryptocurrency and blockchain technology sector, since their use is essential to operate cryptocurrencies. However, depending on the exchange platform used, they may include certain additional functions.
There are several types of cryptocurrency wallets, but the most popular are hosted wallets, non-custodial wallets, and hardware wallets.
Things to consider before choosing a crypto wallet
It is very important to know how to choose a cryptocurrency wallet and understand how it works to avoid possible loss of funds. There are five basic steps to follow when using a cryptocurrency wallet for the first time:
- Determine what type of wallet you want to use (Hardware, desktop, or mobile).
- Purchase or download your wallet
- Install the software
- Set up the account and security features
- Deposit your cryptocurrency
When these five steps are followed correctly, it is much easier to ensure that you will use the cryptocurrency securely.
Hosted wallets
The most popular and easiest cryptocurrency wallet to set up is a hosted wallet. It is known as hosted because it is a third party who holds the cryptocurrencies for you, just like a bank holds your money in a checking or savings account.
The main benefit of keeping cryptocurrencies in a hosted wallet is that even if you don't remember the password, you won't lose your assets. On the other hand, a disadvantage of this type of wallet is that it does not allow you to access all the advantages that cryptocurrencies offer. However, this may change in the future, as hosted wallets support more and more features.
How to set up a hosted wallet:
- Choose a trusted platform. The main features you should consider are security, ease of use, and compliance with government and financial regulations.
- Create an account. Enter your details and choose a secure password. In addition, it is recommended to use two-step verification (which is also known as 2FA) to add additional protection.
- Buy or transfer cryptocurrencies. Most platforms and exchanges that work with cryptocurrencies allow you to buy assets with your bank account or credit card. If you already have cryptocurrencies, you can transfer them to your newly hosted wallet to keep them safe.
Self-custody wallets
A self-custodial wallet gives you full control of your cryptocurrencies. These types of wallets do not rely on third parties (or "custodians") to secure your cryptocurrencies. While they do provide you with the necessary cryptocurrency storage software, you are responsible for remembering and protecting your password. If you lose it or do not remember it (usually this type of password is known as a "private key" or "initialization value"), you will have no way to access your cryptocurrencies. Moreover, if someone discovers your private key, they will be able to gain unrestricted access to your assets.
Its main advantage, besides offering full control over the security of your cryptocurrencies, is that you can perform more advanced actions related to these assets, such as earning returns, participating, lending, and much more. However, if all you are interested in is buying, selling, sending, and receiving cryptocurrencies, the simplest solution is to open a hosted wallet.
How to set up a non-custodial wallet:
- Download a wallet app. There are several options.
- Create an account. Unlike hosted wallets, you don't need to share personal information to set up a non-custodial wallet, not even an email address.
- Be sure to write down your private key. You'll see it as a sequence of 12 random words. Keep it in a safe place. Remember that if you lose or forget this 12-word sequence, you won't be able to access your cryptocurrencies.
- Transfer cryptocurrencies to your wallet. With a non-custodial wallet, you can't always buy cryptocurrencies using traditional currencies (such as US dollars or euros), so you'll need to transfer cryptocurrencies to your non-custodial wallet from another location.
Hardware wallets
A hardware wallet is a physical device, about the size of a USB stick, that you can use to store offline the private keys to your cryptocurrencies. Most people do not use this type of wallet due to its high cost and complexity, although they do offer some benefits: for example, they can secure your cryptocurrencies even if your computer is hacked. However, because they have a complex security system, they are difficult to use compared to a software wallet, and, in addition, they can cost up to $100+.
How to set up a hardware wallet:
- Buy the hardware. The two most popular brands are Ledger and Trezor.
- Install the software. Each brand has its software that must be installed to set up the wallet. Download it from the company's official website and follow the instructions to set up your wallet.
- Transfer cryptocurrencies to your wallet. As with non-custodial wallets, hardware wallets generally do not allow you to buy cryptocurrencies using traditional currencies (such as US dollars or euros), so you will need to transfer cryptocurrencies to your wallet.
Conclusions
Just as there are many ways to store cash (such as a bank account, safe, or mattress), there are also different ways to store cryptocurrencies. If you opt for a hosted wallet, you can simplify the whole process; if you choose a non-custodial wallet, you can have full control of your cryptocurrencies, or if you prefer to have an additional level of security, a hardware wallet is preferable. You can also have different types of wallets: in the world of cryptocurrencies, the choice is yours.
With Rizeapp, you receive a hosted wallet to store your cryptos, and you can get in on the crypto action from only €1. Buy, sell and hold digital coins at the touch of a button, with no hidden fees. Welcome to an easy and convenient way to access the crypto world.
