People who hold and invest in cryptocurrency are in for a lot of gains and for a lot of attacks. Cryptocurrency is most vulnerable to hackers and cybercriminals, so it is crucial that an investor puts a security mechanism in place for his digital coins. To ensure this, he needs to choose a wallet for these digital coins. This article will discuss the many ways on how to create a coin wallet to keep cryptocurrency transactions safe.
What Is A Cryptocurrency Wallet?
A cryptocurrency wallet is a software or program through which cryptocurrency users can safely access digital coins, as well as send, receive and keep them. A cryptocurrency coin wallet also keeps track of all your cryptocurrency transactions and your available balance. Storing this history of your transaction records is possible through a blockchain network. You are given private and public keys, which you use to access the crypto funds in your coin wallet.
Types Of Coin Wallets
Learning how to create a coin wallet depends on which type of cryptocurrency wallet you choose. There are quite a number of coin wallet options available, all with varying features and functions. A coin wallet could either be considered hot storage or cold storage. Cold storages refer to cryptocurrency wallets that are programs that work offline for extra security from cyber-attacks. Meanwhile, hot storages refer to cryptocurrency wallets whose transactions are made online. The following are a few types of coin wallets.
- Desktop wallets
These cryptocurrency wallets are downloaded and installed on a single PC or laptop and can never be used on any other computers. Limiting access to just a single computer – the device where the wallet was originally downloaded and installed – is the key security feature of this type of coin wallet. However, if this particular PC or laptop suffers from a virus attack, then the desktop wallet may also be compromised. Armory and Bitcoin Knots are just some examples of desktop wallets.
- Virtual wallets
Virtual wallets rely on the cloud for storage and access of the private keys of the cryptocurrency user. These are also called online wallets because they are stored online. While these coin wallets are convenient because you won’t have to worry about storage space, they are also most prone to hacking and fraudulent activities online.
- Mobile wallets
Mobile wallets are another form of hot storage that may be downloaded as apps on a smartphone. They are very convenient to use, especially when making fund transfers online or making payments in grocery stores and supermarkets. These are ideal for small, frequent online transactions.
- Hardware wallets
Hardware wallets are under the cold storage type of cryptocurrency wallets. Hardware wallets come in the form of small, compact physical devices like a USB stick where the private and public keys of your cryptocurrency are stored. By having a hardware wallet, you won’t have to memorize your keys, nor will you worry about cyberattacks because these wallets completely operate offline. Thus, they are very secure unless someone steals the device from your drawer. Trezor, Keepkey, and Ledger Nano S are examples of hardware wallets.
- Paper wallets
Paper wallets are another type of cold storage which are also a lot more secure than hot wallets. If a hardware wallet keeps your private and public keys in a small, handheld, tangible device, a paper wallet stores your generated private and public keys on the paper that you print out the codes on. It’s like writing your password or your lock and key combination on a piece of paper and keeping a copy of it in a safe corner of your desk.
Creating A Coin Wallet
Now here are some simple steps on how to create a coin wallet:
- Download a cryptocurrency or coin wallet app, like Coinbase Wallet.
- Create your account, following the instructions on the website of your app of choice.
- Keep a copy of your private key by writing it down and securing it wherever it’s safe. The private key is a long random, unintelligible phrase or series of characters. This is called a seed phrase. Take care not to lose this. Otherwise, you’d also lose your access to your cryptocurrency.
- Fund your new wallet with your existing cryptocurrency.
You may notice that when creating a coin wallet in Coinbase, you can either have a hosted wallet or a non-custodial wallet. Simply put, a hosted wallet involves a third party to hold your cryptocurrency, while a non-custodial wallet gives you full control of your digital assets. If your transactions are as simple as sending, receiving, storing, and paying cryptocurrency, then a hosted wallet would be enough. However, if you are into staking, lending, and other more sophisticated crypto activities, then a non-custodial wallet would be ideal for you.
Creating A Hardware Wallet
This time, let’s see the steps on how to create a coin wallet, specifically a hardware wallet. Firstly, of course, you need to purchase the device, which may be a bit steep, but in the long run, it will prove to be more cost-efficient and secure. Once you have your device ready, follow these:
- Install the software by going to the official company website of your hardware wallet’s brand. Download the software from there and install it on your computer.
- Follow the instructions given by the official company website.
- Fund your wallet with your existing cryptocurrency.
Creating A Paper Wallet
To create a paper wallet, the cold wallet alternative that’s way cheaper than a hardware wallet, just follow the steps below. However, a preliminary task is to check that your PC or laptop is free of malicious software.
- Go to a website that generates private and public keys for you.
- Follow the instructions on the home page of the website. It will ask you to download the program on your PC or laptop.
- Turn off the Internet so that you will work on the program offline, an important security feature of making a paper wallet.
- Locally open the ‘index.htm’ file downloaded from the website.
- Generate the private and public keys by hovering your mouse over the random characters you see on the screen until the timer stops.
- Print a copy of the page where your private and public keys are found.
- Keep your printout in a safe place and delete the program from your computer.
These are just some of the options you have on hand when you want to know how to create a coin wallet. Be sure to identify what you need a cryptocurrency wallet for depending on your use of your digital assets. If you are planning on keeping them for a longer time period, then you can pore over getting hardware wallets or paper wallets which you can revisit from time to time. If you foresee frequent transactions involving small amounts of crypto, then the hosted or mobile wallets, all under hot storage, could be your best bet. Learn more about coin wallet here!