Yes, there are numerous similarities between ordinary online bank accounts and cryptocurrency accounts. But, they work quite differently, cryptocurrency account procedures are very much unique compared to a virtual online account like PayPal. The security is much higher and setting up a cryptocurrency account also not that much straightforward. This piece is all about cryptocurrency wallet types, and we will let you know how to set up a wallet with easy steps. Let’s start the article without further ado.
What is a cryptocurrency wallet?
Actually, a cryptocurrency wallet is a software tool that helps users check on the balance, past transactions, and access to a massive number of digital currencies in one place. Even you have the luxury of downloading the crypto wallet to your smartphone and use the available balance to pay bills or purchases.
How to choose the right cryptocurrency wallet?
There are different kinds of crypto wallets (We will talk this later in the article), and first and foremost, you will have to figure out the reasons behind using a cryptocurrency wallet; because each wallet sort serves different purposes. However, you will have to answer some of the common questions like whether you intend to use only Bitcoin, the amount, and the security and privacy features you expect from a crypto wallet.
In our view, the most imperative factor you have to consider is security as you are dealing with software. All the important activities get handled through your private keys; which elaborates, you have to pay special attention to the security of your wallet.
Types of Crypto wallets
Before you learn how to set up a cryptocurrency account, you must know the types of crypto wallets, and the following three are the commonly used kinds out of the lot.
- Hardware wallets
- Mobile wallets
- Desktop wallets
Hardware wallets and how to set up one?
Hardware wallets are a little bit different to the other types as they don’t store your private keys in any online platform; instead, they store those details on hardware devices like USBs. Also, setting up this type of account isn’t the easiest way you can choose, but we must say that Hardware accounts are solid in terms of security and the hassle of wallet set up is totally worth it.
This is because the valuable information related to your wallet kept in an offline device which makes your wallet and private keys less vulnerable to virus, malware and other hacking hazards. The account set up process might be slightly different from one service provider to another, but overall, it is more or less the same.
First, you have to download the relevant software of the hardware wallet to your computer. Then, Install the software and note down the recovery passphrase of the private keys. Finally, connect the hardware device to your computer to access your crypto wallet.
Mobile wallets and how to set up one?
As the name suggests by itself, you can handle these accounts via mobile devices, including smartphones. You can even use these wallets to do transactions at the supermarkets but with limited cold storage capabilities. The most advantageous element of mobile wallets is that you have the opportunity of accepting payments within a short time.
After you download the app from the device’s app store, you can set up a wallet within few minutes following the instructions. You will get a relatively long passphrase as a backup recovery option for your private keys; make sure you keep this information in a secured place other than your wallet’s device. This will keep you away from unnecessary problems if you lose your device, or such thing happened with it.
If you are new to the world of cryptocurrency, keep in mind that no one can help you if you lose access to your crypto wallet!
Desktop wallets and how to set up one?
Desktop wallets are safer than mobile wallets, and you can download the software from the service provider without much of an issue. But, you need to log in with the same computer to access the account, and it is safe as far as no virus or hacker creep inside your computer. Usually, desktop crypto wallets provide comprehensive details about your account and the transactions through graphs and charts.
The account set up process is very much similar to mobile wallets and typically asks you to back up the passphrase to use in a situation of loss of private keys.
How to keep a cryptocurrency account safe?
- Keeping your private keys is utterly important, and do not share that information with others no matter what. Because it takes only seconds to lose your hard-earned cryptocurrency, and as you most probably would know, crypto transactions are irreversible.
- Keep the passphrase written in a secured place that you can easily retrieve if you lose the private keys.
- For an added layer of security, use two-factor authentication as it will prevent anyone from accessing your wallet even when they get your private keys.
- Don’t put all eggs into one basket. Yes, don’t keep all your funds in one crypto wallet. No matter how secure your wallet is, one slightest mistake can vanish everything in a jiffy; instead, distribute the funds to several crypto wallets.
- If possible, opt for a hardware wallet. That said, it doesn’t suggest that your funds are safe as a church in a hardware wallet but better than the other options.
- Update the software of your wallet frequently to stay aligned with the newest security measurements.
Storing your crypto funds must be done vigilantly, and we hope now you can understand that it is a job that requires additional attention compared to an ordinary bank account. As we mentioned, you cannot reverse crypto transactions; hence you should identify how to store the funds appropriately. We think our article answered some critical questions and if you have more queries, please comment on them below. We are more than happy to help you. Cheers!