All You Need To Know About Crypto Wallet For Beginners.

I tried withdrawing my earnings for the first time, and was asked for a crypto wallet address. I was confused, all my life have never seen a wallet with an address. I felt it was some error from the programmers, am sure some newbies are as confused as I was.
On researching, I found out, unlike our fiat money which are stored in bags, purses and wallets, our digital currencies are not stored in like manner, since they don't exist in their physical form. All digital transactions, account balances all exist on the blockchain.

Most of us are conversant with the traditional wallet, which holds our cash,credit cards and other valuables, cryptocurrency wallets on the other hand contains software that stores your public and private keys, which allows for security, monitors all digital transactions which involves the storing,  sending and receiving of cryptocurrency.  The digital wallet serves as a key to unlock our online treasures, in view of providing maximum protection,  security measures placed by companies providing this services are always tight.

What is a cryptocurrency wallet ?

It is a wallet, where cryptocurrency are stored. To me, it is a bank for keeping my earnings. It could be be an online or offline wallet.

Why do I need an online Wallet?

1) Accessibility: Just like I asked myself, why do we really need to have an online wallet, can't this crypto be sent to my bank account, without going through the stress of creating one ?
It could be sent, but then you will need a wallet to get it.
When we want to deposit money, we don't just stay at home, and place the money anywhere for it to be deposited, we have to go to the bank. The online wallet serves as our journey to the bank, while the bank still serves as the bank.
We have a lot of cryptocurrency out there, which could only be found using online wallets.

2) Cryptocurrency Banned Countries: some countries have ban the use of cryptocurrency, which makes it illegal for people in such countries to withdraw or have anything to do with their Coins so for people in such countries, they will require an online wallet, where they could store their coins, and then initiate Peer-peer exchange of their coins for money, or invest for other purposes.

3) Security : Top notch securities are offer by some online wallets to its users, which makes it difficult for them to lose their coins to hackers, though at times this security are also compromised, but not in all cases. The introduction of authenticators, seed phrases and other safety measures have help put loses to a minimal.

How does the cryptocurrency wallet work ?

While pondering how the cryptocurrency wallet works, my mind went to our traditional online banking applications.  Having considered the local bank as the block chain, the account number as the public key, the crypto wallet is the online banking application while the online login details serves as the private key. While the bank tracks all the daily activities going on, Is the same way, the block chain  keep records of all the activities emanating from my public key. The public key serves as the account number from which users can confidently send cryptocurrency to us.
Now if we use our banking app, we could check our account details, send and receive money. This action is replicated by our crypto wallet, which allows us monitor all transactions, send, stores and receive cryptocurrency.  Our banking details (username and password ) serves the same purpose as our private keys. Without providing them correctly, we will not have access into our account for transaction.

Alot of things about our traditional banking also happens in our digital wallet. Same way you can't send a dollar into Chinese account number without first converting it, also happens with our crypto wallet. Sending inappropriate crypto into a particular public address will lead to the lose of it. For instance, you can't use your etheruem wallet address to receive bitcoin Cash, it is totally unacceptable. This could be avoided with our traditional banks but not on our digital wallets, as you are incharge of your actions.

Types of crypto wallets

A lot of crypto wallets are found online, all providing the same function of storing, sending, receiving and keeping tracks of our transactions on the block chain.
Crypto wallets are divided into hot and cold wallet with each having its own pros and cons.

i) Hot wallets : It creates and stores private keys online. Examples include desktop and mobile softwares which are linked to the internet. The main  feature of such wallet is that, private keys are generated and stored using the internet,  making it vulnerable to hackers. This is the least recommended secured ways to store long term investments in cryptocurrency as they are connected online and tends to be a huge target for hackers.

ii) Cold Wallets : This type of wallet creates and stores private keys without using the internet.  They are also known as hardware wallets. This wallet provides more protection by its Choky security steps, all in bid of making it less vulnerable to hacks. Therefore private keys created and stored using hardware wallets are free hacks and other troubles encountered by the hot wallet, making it the most secured and easiest way to manage cryptocurrency. Examples of hardware wallets include  Trezor hardware wallet, Nano hardware wallet, Keevo wallet etc. It is always recommended to get your hardware wallet from the original manufacturer and not from individual, this is to prevent hacks.

How to set up your own wallet

Firstly, we will look at how to set up a hot wallet before we proceed to a cold wallet. Our center of focus is the coinbase mobile wallet, using the following steps;

i) search the word "coinbase wallet" on either your app store or your google play store.
ii) Install the one with a blue icon with a white circle.
iii) On completion of the download, launch the app.
iv) Click on create new wallet.
v) Review and accept terms of service by clicking on the 'Accept'
vi) Create a username, which serves as a means for other users to carry out transaction with you or they could use the Qr code technique.
vii) Tap 'Done' and select your security preferences.
Selecting the 'public' option allows other coinbase users to search for you and send you Cryptos .  while selecting the 'private' options makes you anonymous to other users.
Selecting any of the options, click on next, to set up your next layer of security to secure your wallet.
Depending on the type of phone you are using, you could set up a face ID, 6 layers of passwords and  fingerprint for maximum protection.
viii) After the security set up, it's time to back up the wallet. Since the wallet is connected to the internet, the private key is created online in form of a seed phrase. The seed phrase is the only recovery way to the wallet,  offering maximum protection in hacks or theft scenarios.
After setting it up and copying the seed phrase to keep in a safe place, click on the acknowledgement part of the coinbase wallet.
ix) Click on back up seed phrase and the 12 seed words  will be shown to you, which serves as a private key in accessing your cryptocurrency.
It is advisable you use a pen and paper to write down your seed phrases and storing somewhere not easily found, though it is crude and mundane, but it offers better security to our hot waller,  never back up your seed phrase on any cloud network, since it could be hacked at anytime.
X) After backing up the seed phrase, you will need to confirm it accurately following the arrangements and spelling of words. This is inbid to know, you are the rightful owner of the account, as failure to reproduce this seed phrase leads to the lose of your account. After selecting the words in their rightful order, click on done and phew! You have successful created a new digital wallet.

How to transfer Send or Receive Cryptocurrency

After setting up your wallet, and you want to send or receive crypto, I will advice you start with a smaller amount first. This is to confirm if your account has been properly set up. So we will follow this steps inorder to send or receive cryptocurrency ;

i) Open your coinbase app and select the particular crypto, you'll be sending . let's assume, you want to send bitcoin cash, open it on the app.
ii) Make sure the public key, you are sending the crypto too, is also a bitcoin cash address.
iii) Copy the 'Receive public key' from the receiving account.
iv) Paste it in the send option in the sending account, this could be made easier using Qr Scans.
v) Click on your send option, and phew! Your crypto Will be sent after you insert your password, which serves as a means of securing your account from thefts.

The hot wallet makes it easier sending and receiving funds but its safety is not 100% guaranteed, as theft and hacks are are quite easily encountered with this type of wallet.

Lead image : internet