You can study web3, crypto, blockchains and NFTs all you want but in order to participate you have to have a crypto wallet.
The main function of a crypto wallet is exactly what you’d think – holding crypto coins that can be held or transferred to another wallet. That’s the general idea but t can get pretty complex, as well.
There are many security considerations and strategic considerations for crypto wallets, as well as different types of wallets.
Secret and Safe
The bottom line with regard to the security of your wallet is to keep your secret phrase secret. This key can be used to transfer coins out of the wallet without having to know anything else. I recommend that you use Dashlane or Lastpass to keep the phrases easily accessible but also secure. This solution costs a bit of money every year but well worth it in the long run. Tight on cash? Write it down on a piece of paper and store it in a vault or safe.
What I love about crypto is the flexibility and creativity it gives currency. You can set up and organize wallets based on what you want to do with the coins inside the wallet(s). Setting up several wallets is relatively quick and free. For example, I can have a wallet to purchase NFTs with, while another is used to stake crypto. I could have one wallet specific to a play-to-earn crypto game, one for a specific Metaverse, and another wallet that collects coins from all my other wallets.
Hot and Cold
It’s important to understand the difference between a Hold and Cold Wallet. A Hot Wallet is accessible online and is how most transactions occur on any given blockchain. The biggest risk in using Hot Wallets is that you have to trust whatever exchange (centralized or decentralized) you are using. Centralized exchanges are prime targets for cyber attacks. On the other hand, a Cold Wallet, is also known as a Hardware Wallet because it is a physical device that you store your coins on. You connect this wallet to a computer via USB only when you want to transfer your coins from your hot wallet. So for maximum flexibility and security, it is recommended you have both types of wallets.
A final consideration – there are many different blockchain. But there aren’t just one-size-fits-all wallets. Some coins only trade on certain decentralized exchanges (Pancakeswap and Sushiswap, for example) to then get later support from a centralized exchange.
I will soon be providing a guide on how I set up my wallets and and give you framework to copy, build upon, or edit in any way that makes sense to you.