Crypto Wallets are Purses for Cryptos
Let’s talk about Crypto wallets. If you are still on this journey to understanding all the jazz around cryptocurrencies, there are chances that you may have come across the word wallets being used. The chances of coming across the word “wallet” would only be second to “blockchain”
Today, I will be explaining what a cryptocurrency wallet is.
A crypto wallet is a purse that holds your cryptocurrency. With a wallet, you can send, receive and store your cryptocurrencies. Wallets generally get a good rep for being safe, and here’s why. They could do more than just take custody of your crypto assets because wallets also act as a portal to explore the limitless world of web3, they give you the access to interact with DApps (Distributed Apps), swap, trade or borrow crypto, carry out crypto transactions, you need to mint NFT’s (we’d get to that later in the series…if you stick with me).
Public and Private Keys
Typically, a crypto wallet is typically made up of 2 keys — a public key and a private key. Imagine that a Cryptocurrency wallet is like your bank account. Your public key would be your account number. It is the detail that you share with everyone which signifies that you are the account holder and also the address of your account. In this case, your private key would be the password to your account. Your private key grants you access to your wallets and will be used to authorize the transactions from your wallet. Just like you would only share your account number with people and never the password, never share your crypto wallet’s private keys with anyone. If you do, they will have access to your cryptocurrencies and I trust you know what that means?.
Both keys are simply a string of letters and numbers which look something like this — gkmngafashafafay23454dhdf5. Different blockchain networks have distinct wallet keys. This means that a bitcoin wallet key looks different from an Ethereum wallet key.
Types of Crypto wallets
There are 3 types of cryptocurrency wallets;
- Software Wallet — these are software created specifically to be used as storage for cryptocurrencies. Examples of software wallets are cryptocurrency exchanges like Binance and Coinbase. When you create an account with them, you get a wallet, and your keys are stored on their server. While software wallets are cool, they are risky as they can be hacked. Read about the Crocodile of Wall Street here.
- Hardware wallets: These are hardware devices used to store your public and private keys. They are like pen drives and can be connected and removed from your computer. The downside to using a hardware wallet is that you may require some seed phrases or secret codes to be able to access the wallet, if you lose the seed phrases, there is no way to recover them. These are at least the safest and most secure of the wallets.
- Paper wallets: These are your keys written down on paper. They are safe but highly prone to damage. Also, the process of having to type out your keys every time can be frustrating.
Getting started with cryptocurrencies
Disclaimer: This is merely a suggestion and not financial advice. You don’t have to do it but read anyway.
As a crypto newbie, one way to get comfortable is to own a few coins. You can experiment with just a small amount of money that you are comfortable with losing. Yes, cryptocurrencies are very volatile, and if you are worried about a price crash, you can try holding some stable coins. Stable coins are cryptocurrencies whose values are pegged to the price of the dollar. This means that their prices will be the same price as the dollar at any given time. The value of one stable coin like the USDT is the same as one USD.
Create an account on an exchange like Binance, Metamask or Coinbase, buy some stable coins like USDT or USDC to get a sense of what a wallet is and what private and public keys are.
You can also create Ethereum ‘testnets’ such as on Rinkeby Test network(you can probably tell that it’s a ‘test’ version of Ethereum. You don’t have to worry about real money — this is the ‘staging’ area of the Ethereum network). Should you need some gas fees you would need to visit a faucet (and true to its name, it gives us droplets of test ETH, which will become the gas) to get some for our wallet.
Caveat: Faucets routinely get emptied out, which means some of these may not work when you try them, so please keep trying all of them until you find one that works for you:
- https://rinkeby-faucet.com/
- https://app.mycrypto.com/faucet
- https://faucet.rinkeby.io/
- https://ethily.io/rinkeby-faucet/
This is a wonderful guide that better explains the process https://bleeping.notion.site/Minting-a-Cool-Cat-For-Beginners-f9c07e5f5b0f494593f6f472976fb2a1
ICYMI: This is a simple intro to cryptocurrencies — Part 1 and Part 2.
