There is no denying that cryptocurrency and traditional tender have major differences. Crypto is completely virtual, exists on a blockchain, is hugely unregulated and can be very difficult to understand. But one commonality that crypto and physical currencies share is that they should both be kept in a wallet. All cryptocurrencies need wallets, including Bitcoin, but how do you sign up and what should you pay attention to when choosing a cryptocurrency wallet?
Hardware vs. Software Wallets
In the crypto realm, you get both hardware and software wallets. Software wallets are completely virtual while hardware wallets are physical devices. You need one of these two types of wallets to store your Bitcoin private keys.
Many people opt for software over hardware wallets, as most software wallets are completely free to sign up for, while hardware wallets sometimes cost more than $100. Financially, the math is simple. But when it comes to security, things get a little more complicated.
This is because software wallets rely on an internet connection, exposing them to external threats. Hardware wallets, on the other hand, do not rely on an internet connection and store your crypto private keys offline. This reduces the chances of remote attacks and means that a malicious actor would have to physically have your hardware wallet to even have a chance to hack it.
Software wallets are cheap and convenient, but hardware wallets are undeniably more secure. But this is not to say that software wallets are totally insecure. Many reputable software wallet providers offer multiple security features, such as seed phrases, 24/7 customer support, one-time passwords, and two-factor authentication.
There are also custodial and non-custodial crypto wallets. Custodial crypto wallets hold your private key(s) for you, while non-custodial wallets give you full control and access to your private keys. People gravitate towards one of these two types of wallets, although many believe that non-custodial wallets are a safer bet.
So now that we are aware of the different types of crypto wallets, let’s take a look at how to set up your own wallet.
Set up a software Bitcoin wallet
Setting up a software Bitcoin wallet can be quite simple depending on the provider you choose. For example, Exodus is great for beginners, while Mycelium is geared more towards experienced and professional traders (and is only available as a mobile app).
Normally, before signing up for a Bitcoin wallet, you need to decide which version of the wallet to download. For most users, the desktop version is the best option. Sometimes you have the option to download the desktop version directly from the wallet provider or download the desktop app from your operating system’s own app store.
Many software wallet providers also provide a smartphone app for their users so that you can access and monitor your crypto wallet even when you are not at home. So, if you want this kind of added convenience, consider downloading the smartphone app version of your chosen software wallet (if the company offers it). The steps and examples in this part of the article use the Exodus software wallet and you can use the download links below if you want to follow.
To get started, we recommend downloading the desktop or browser extension version of the wallet so that you can easily view and customize the interface.
You must download the software version designed for your specific operating system.
2. Sign in
After you download and open the wallet version you want to use, you need to create a new wallet. This is a very important step as you will be given some very sensitive information related to your wallet. The process from here will differ depending on the wallet you use, but it’s important nonetheless.
For example, on Exodus, you must first set an account password, as shown below. Make sure to choose a complex password that you don’t use for other online accounts.
You need to write down the seed phrase you get. Your seed phrase is incredibly important and backup your crypto wallet for emergencies. Some choose to save their seed phrase to a hard drive, while others just use a piece of paper. You can even buy safe capsules to store your seed phrase, such as Ledger’s CryptoSteel. But it is important here that everything that contains your seed phrase is kept in a safe place.
You may also need to set up a wallet PIN for an extra layer of security. Make sure to also record this piece of information and store it securely.
From here, you may or may not get your private key depending on whether you are using a custodial or non-custodial crypto wallet. For example, because Exodus is a non-custodial wallet, you have full control of your private keys and can access them whenever you want within your account via the Wallet tab. From here, navigate to the item you’re concerned about and then click on the three dots next to the item. This will then show an option called View private keys.
Getting a Hardware Bitcoin Wallet
Setting up a hardware Bitcoin wallet takes longer as you have to wait for the device to arrive first. The two giants of the hardware wallet market are Ledger and Trezor. Both providers have different models, such as the Ledger Nano S and Trezor Model One, that suit you in terms of appearance, price or features.
Once your desired hardware wallet has arrived, the next step is installation. This process will be slightly different depending on the type of hardware wallet you have. However, the general process involves connecting your wallet to your PC or laptop via a USB cable. Now an internet connection is required to set up your hardware wallet, but don’t worry. Your money is kept in a cold store. After all, that is the purpose of hardware wallets.
Again, the next step in this process will depend on the wallet you are using.
For example, Ledger has an application called Ledger Live, which you will use first during the installation. Trezor, on the other hand, has an application known as Trezor Suite. No matter what hardware wallet you use, chances are you will need to download an application to set it up.
As is the case with software wallets, you also need to set a PIN and securely store the seed phrase you get. Make sure not to disconnect your wallet from your PC or laptop during this process.
After doing this, your wallet should be ready to use. Some carriers have additional steps, such as choosing a name for your wallet. But you can skip this step and keep the original name.
A secure Bitcoin wallet is vital
Wallets are integral elements of the crypto world as they allow you to store your keys and access your funds securely. So if you want to set up a Bitcoin wallet then follow the steps above and pay attention to the mentioned considerations. Good luck!