A Beginner’s Guide to Crypto Wallets

A Beginner’s Guide to Crypto Wallets

You’ve got your first cryptocurrency, that you’ve bought from over on an exchange, but now you’ve heard you shouldn’t keep it there because it’s not safe, so where do you store it now? The following post gives you a beginner’s guide to the crypto wallet types to safely and securely storing your cryptocurrency assets. As well as provide important information you need factor in when making your choice.

What are Private Keys?

what are cryptocurrency private keys

First up though let’s talk about what your private keys are, as this is an important part of the story here. A private key is a sophisticated form of cryptography that allows you to access your cryptocurrency. It’s an integral aspect of Bitcoin and Altcoins and helps you to protect yourself from theft and unauthorized access to funds. Essentially, when you have access to the private key you have access to the funds.

Some wallets let you control your private keys, however, some are custodial, and don’t. If you are keeping your crypto assets over on an exchange they are custodial, therefore you are entrusting a third party with these private keys and mandating them to serve as a safeguard. Owning and having access to your private keys gives you much more power and control. But you’ll also need to take care of their security and ensure that you keep these keys somewhere really safe, offline and away from any potential harm.

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What is a Cryptocurrency Wallet?

Best Crypto wallet should I use

In order to use cryptocurrency, you’ll need to use a cryptocurrency wallet. A wallet is a secure digital wallet used to store, send, and receive digital currency like Bitcoin.  Although I mention “store” cryptocurrency itself is not actually “stored” in a wallet, it is stored on a coin’s blockchain. Your wallet is just the software designed to interact with the blockchain. 

Instead, your wallet stores address´, not the actual crypto tokens. Bitcoin wallets interact with the Bitcoin blockchain, allowing Bitcoins to be moved between addresses by the owners of those addresses, and allowing users to see the balances associated with an address.

A blockchain address is similar to an email address and is used to receive and send funds on the blockchain network. Similar to how you would use your email address to send and receive messages and it represents a destination for a cryptocurrency payment.

what crypto wallet should I use

Each blockchain address contains a string of numbers and letters, but can also be shown as a scannable QR code. These addresses may have specific identifiers depending on the type of cryptocurrency. Different types of cryptocurrency will have different types of addresses and cannot accept other forms of cryptocurrency. This is an important factor to remember. For example, you cannot send Bitcoin to an Ethereum address and if you were to do so, the transaction is non returnable and you will lose your funds.

There are 4 different types of wallets you could use to manage your assets; Hardware, Online, Software and Paper Wallets.

Hardware Wallets

hardware crypto wallet ledger trezor

Hardware wallets are considered the most secure way to store your crypto. And they are offline storage options for private keys. They are physical, dedicated hardware that is specifically built to hold cryptocurrency and keep it secure. These devices can go online to make transactions and get data and then can be taken offline for transportation and security.

They also store your private keys offline and on your device. Plus you can also use the device to verify transactions too so that funds never leave your wallet without your confirmation. With your hardware wallet stored offline, it is kept away from any potential hackers, who would need to physically hold the device (and know the pin) to be able to steal your funds. 

Ledger Nano X - The secure hardware wallet

There are a few different hardware wallets available, which are Ledger, Trezor, and KeepKey and these are all purchasable devices but range from $59 to $180. The two devices I personally use are the Ledger and the Trezor. I don’t have a clear preferred device as they both have their advantages and disadvantages. Please ensure that you always purchase these new and sealed (so that they haven’t been tampered with) and from reputable sources.

Online Wallets

what is an online wallet

Online wallets are online services that enable you to access your crypto assets from any browser that’s connected to the internet.  With an online wallet you don’t download an app, but rather data is hosted on a real or virtual server.

Some wallets let you control your private keys and some are custodial where you don’t. When you leave your crypto assets on a cryptocurrency exchange platform, you’re actually using the platform’s online wallet and most exchange wallets are custodial wallets.

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Recommended (and non-custodial) Online wallets include the likes of Blockchain.com and MyEtherWallet. Custodial online wallets (where you don’t control your private keys directly) include the likes of the Coinbase or Binance Exchanges although these are not an advisable place to store your funds.

The biggest advantage of online wallets is that they are easily accessible from any computer or other device with an internet connection and they’re mostly free. However, this is also their biggest disadvantage as they can become targets for hackers.

Software Wallets

Best Software Wallets

Software wallets are applications for managing cryptocurrencies that can be installed on your computer or smartphone. You remain in control of your private keys which are not shared to nor controlled by a third-party.

There are many types of software wallets available, desktop wallets will include the likes of Exodus or Atomic Wallet. There are browser extensions such as Metamask and Mobile apps might include Crypto.com, Trust, Digifox, and Coinbase also have their own mobile wallet app too which is separate from the exchange.

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Phones are a great way to access your crypto on the go, but as a software wallet is installed on your PC or smartphone, it is still connected to the internet which could potentially expose your private keys to hackers. Also as phones are regularly taken outside the home they could potentially be lost.

Exodus Desktop and Mobile Wallets

Paper Wallets

Bitcoin Paper Wallet

Next up we have our paper wallets, which is another offline option for storing your crypto assets. As the name suggests the process involves printing the private keys and its corresponding public address onto a piece of sheet and storing

This is a nice and simple way to store your cryptocurrency keys offline. But it will require you to pay a lot of attention and care to this paper. If your paper wallet gets lost or destroyed, you will permanently lose access to your crypto assets. Also, processing a transaction with a paper wallet can be long-winded and possibly unsafe.

In this method, you will need to manually enter your keys in a transaction tool, typically by using your computer’s internet browser which could expose the keys to a cyber attack.

How to create a Bitcoin Paper wallet

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How to Create a Bitcoin Paper Wallet

How to Create a Bitcoin Paper Wallet

Creating a Bitcoin Paper wallet is considered one of the safest ways to store your Bitcoin. With a paper wallet, your funds are stored offline and therefore one step away from online threats such as hackers. By printing a paper wallet, it puts you in control of your funds and you can store them safely away to minimize exposure.

What is a Bitcoin Paper Wallet?

A paper wallet is exactly what it says on the tin. A cryptocurrency wallet that is printed and made of paper. Although, technically it can be made of other materials! The paper wallet will display your public Bitcoin address on the left-hand side with a QR code. This is for loading and verifying. On the right-hand side of the wallet is your private key for spending. You can also write down the amount of Bitcoin that you have on your wallet, to help you track the amount.

How to make a paper wallet for Bitcoin and altcoins

What is Bitcoin Cold Storage?

Cold storage is where your cryptocurrency’s private keys are stored offline, away from the internet. This comes in the forms of paper and hardware wallets such as Ledger Nano or Trezor, where your private keys are stored on your hardware device.

Ledger Nano X - The secure hardware wallet

How to Create a Bitcoin Paper Wallet

Creating paper wallets is pretty simple to do. Although it does include some extra security steps to ensure the safety of your newly created wallet. To start creating your paper wallet you will need access to a printer.

How to Use the Bitcoin Wallet Generator

To begin, open a browser and navigate to; https://bitaddress.org/.

How to make a Bitcoin paper wallet with bitaddress.org

Before you start creating your paper wallet it is important that you take a security step!

When creating your Bitcoin Paper Wallet, you need to ensure that you are doing so OFFLINE. This is so that you’re creating this safely and securely. Just in case you have viruses or malware, which may compromise your wallet.

To create this offline, go to your browser menu bar and select File>Save Page As. Then save your web page to your required location.

Next, you can shut down your browser and disconnect from your WIFI or internet connection. Once you have removed your self from the internet you can open the newly created BitAddress.org webpage.

Generate a Bitcoin Paper Wallet with bitaddress.org

Start to generate your Bitcoin Paper wallet by moving your cursor around the screen until it reaches 100%.

If you want to create just a simple wallet you can click onto Print to create your wallet. Alternatively, if you would like a design you can click onto Paper Wallet to create single or multiple paper wallet addresses in a gold artwork design.

For extra security, you can also password protect your Bitcoin wallet by ticking the BIP38 Encrypt checkbox. You will then need to enter a Passphrase.

Secure a Bitcoin Paper wallet with a passphrase and BIP38 Encryption

You can then select Print. It may be worth printing multiple copies of the wallet, in case of damage. Also, make sure that you keep it somewhere really safe and away from harm or potential damage.

Your Bitcoin paper wallet is now ready!

Tip: Before you print, make sure that your printer is not connected to the internet and that you connect directly to your printer.

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How to Send Bitcoin to Your Paper Wallet

You should only send Bitcoin to your paper wallet once you have created and printed your paper wallet. It is important that you don’t save your funds on an exchange as you don’t have access to your private keys and therefore no control over your funds, also an exchange is far more likely to get hacked. So it is recommended that you send your funds to a wallet. So, in this example, I will be sending funds from Coinbase and onto my Bitcoin Paper wallet.

To start, log into Coinbase, select your Bitcoin Wallet and click onto Send

Sending bitcoin to a paper wallet

Enter your Bitcoin paper wallet public address into the BTC address field. Alternatively, if you are using a mobile device you can simply scan the QR code to save you some time.

You then need to enter the amount of Bitcoin that you would like to send across and click onto Continue.

Funds will now send across to your paper wallet and you can write down the amount on your paper wallet if you wish.

How to Check your Paper Wallet Balance

The method of checking your balance or withdrawing the Bitcoin from your paper wallet will depend on the software wallet you are using. In this example, I will show you how to check the balance of your paper wallet within Blockchain.com.

To begin, log into your Blockchain.com wallet and click onto Settings on the far right-hand corner.

Choose Wallets & Addresses and click onto Import Bitcoin Address.

Import existing bitcoin address

Select “Existing address generated outside this wallet“.

depositing from Bitcoin wallet to Blockchain.com

Enter your bitcoin address or private key into this section or use the QR code.

Your balance will then appear beside your imported address.

How to Check Your Paper Wallet Balance
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How to Withdraw from a Paper Wallet

The method of checking your balance or withdrawing the Bitcoin from your paper wallet, will depend on where you wish to withdraw it to. In this example, I will show you how to withdraw your Bitcoin to a Blockchain.com wallet so that you could then (for example) sell to FIAT.

To begin, log into your Blockchain.com wallet and click onto Settings on the far right-hand corner.

Choose Wallets & Addresses and click onto Import Bitcoin Address.

Import existing bitcoin address

Select “Existing address generated outside this wallet“.

depositing from Bitcoin wallet to Blockchain.com

If you enter your public Bitcoin address, you will be prompted to input your private key later, when sending funds, etc. You can also enter a label to help describe your imported address i.e. Bitcoin Paper Wallet.

enter private key for paper wallet

Click Send and your imported Bitcoin paper wallet address will then show in the dropdown as well as any associated balance.

Send BTC from Paper Wallet

You can then send funds from your paper wallet over to an exchange like Blockchain Exchange and to withdraw to FIAT or to another recipient address.

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Alt-Coin Paper Wallets

Creating an Alt-Coin Paper Wallet is performed in a very similar way to creating a Bitcoin Paper Wallet. However, you will need to find a relevant and trusted website for your alt-coin. In the below tutorial, I show you how to create these for Litecoin, Ethereum, Dash & Monero.

Paper Wallet Alternatives

There are many ways to store your cryptocurrencies. The safest way to do this is by Cold Storage, alternatives to a paper wallet will include hardware devices like the Trezor or Ledger Nano where your private keys are stored on the device. The other choices are software/online/mobile wallets. There is an array of choices depending on the tokens you are storing such as Blockchain.com, Exodus, MEW, etc. Please note that it is not recommended that you store your crypto on an exchange which is far more likely to get hacked and where you don’t have access to your private keys.

How to Use Ledger Nano S Hardware Wallet

How to Use Ledger Nano S Hardware Wallet

The Ledger Nano S is the ultimate device for investors serious about cryptocurrency. It’s widely recommended storing your digital assets in a hardware wallet where your digital assets are stored offline. The most common and trusted hardware wallets are the Ledger Nano S, Trezor and KeyKeep.

Unfortunately, these devices don’t come free, like the Exodus software wallet or the Jaxx wallet. However, spending around $100 for a hardware wallet could be one of your best investments, so you can safely secure your crypto. Don’t be fooled, hardware wallets will never be 100% secure and it’s down to the individual to protect their information. So just be careful with the information you share online and store your recovery seed safely, offline.

Ledger Nano S hardware wallet tutorial and unboxing. In this video tutorial, I explain the process of setting up your Ledger Nano S device. I show the Bitcoin wallet, send and receive options and how to add and remove wallets from the hardware device using the Ledger Manager tool.

I have created this tutorial for your benefit and show you my passcode and recovery seed. However, when setting up your device, Do Not share your information online and store your recovery seed safely, offline. Exposing your information to others may cause you to lose your crypto assets and these may not be able to be recovered.

What is a Hardware Wallet?

A Hardware wallet is a small physical device much like a USB drive, that can store your cryptocurrency assets offline. It’s a type of cold storage, meaning your crypto is stored offline, similar to a paper wallet. Unlike a paper wallet, your private key is stored safely on the device and you don’t have to enter a long-phrase of characters to send your crypto.

Of course, hardware wallets can be lost, stolen or damaged, but with your passcode and private keys, your crypto assets will be completely safe.

What’s in the Box

Very similar to what you would expect from an Apple product, the Ledger Hardware wallet comes neatly packaged and includes;

  • Ledger Nano S Hardware Wallet
  • Micro USB
  • x3 Recovery sheets
  • Get Started Card
  • Anti Tampering Card
  • Keyring & Chain
Whats is the ledger nano box

Ledger Nano S Supported Tokens

The Ledger Nano S hardware wallet supports the largest number of cryptocurrencies compared to its main competitors; Trezor and KeepKey. Within the list are the likes of Bitcoin, Ethereum, Litecoin, and the only hardware wallet to support Ripple XRP. One of its biggest benefits is its connectivity with MyEtherWallet. By connecting your Nano S to MyEtherWallet you can store your ERC20 tokens. For more information, check out MyEtherWallet tutorial.

Supported tokens for the Ledger Nano

Ledger vs Trezor

The Ledger and Trezor are both great hardware wallet devices, however, the main difference is the design of these. The Ledger Nano S uses secure elements/chips, whereas the Trezor is like a mini-computer.

You’ll also see a difference in the price of the 2 devices. With the Trezor costing you around $99, and the Ledger S costing around $59. The Trezor does have an advanced recovery feature too that the Nano S doesn’t. With this recovery feature, your Trezor recovery phrase won’t be exposed to the computer when recovered.

Ledger Nano X

Ledger Live Manager

Ledger Live is an all in one application that lets you set up and manage your Ledger device. It supports the Ledger Nano X, Ledger Nano S and Ledger Blue via USB. Available for desktop on Linux, Windows and Mac they also have a mobile app available from the AppStore or GooglePlay.

How to use Ledger Manager Live Update 2.0

Where to Buy A Ledger Nano S?

If you’re looking to purchase a Ledger product or any other hardware wallet, I’d highly recommend buying through a recommended retailer.

I purchased my first Ledger product via the LedgerWallet.com website and have since purchased a Nano S via Amazon.

Ledger Nano S - The secure hardware wallet

Please Note: Do Not buy a hardware wallet from websites like eBay, as you run the risk of losing your crypto

How to Connect a Ledger Nano S to MyEtherWallet (MEW)

In this video tutorial, I show how to connect MyEtherWallet (MEW) with your Ledger Nano S device for a secure way of sending Ethereum and ERC20 tokens. This process is one of the safest ways to send these types of transactions, as the private keys are stored in your Ledger device and not exposed to online.