Setting Up A Crypto Wallet

There are hundreds of decentralized and centralized crypto exchanges offering their services to anyone looking to step into the world of digital finance. All these exchanges keep the assets of the user that they buy safe in crypto wallets till the user wants to sell them for a profit. There are many different types of wallets that you can use to store your assets.

Hosted wallets, non-custodial wallets and hardware wallets are all common choices for people. The choice of wallet primarily depends on the type of cryptocurrency exchange a person uses, what they want to achieve with their crypto and the level of security they look for. Each type of wallet is set up differently and offers different types of services. 

Non-Custodial Wallets

Non-custodial wallets are the most common and liked wallets. These give you complete control over your crypto assets and therefore you don’t have to rely on third parties to keep your assets safe or grant you access to them. The absence of a ‘custodian’ also means that the software won’t be responsible for safeguarding your password or any other information related to access. 

Once a password is lost or forgotten, there is no second way to access the private key. In the event that some third party has your key, they can easily access your account without any secondary protective mechanisms. However, once set up you get full control of your assets and can do anything you wish to like staking, lending or borrowing etc. Ethereum mining wallets and so many other such wallets are all non-custodial wallets. 

It is quite simple to set up a non-custodial wallet with the following steps: 

  1. Download your desired wallet app
  2. Create your account (You won’t need to add any personal data) 
  3. Keep your private key safe (12-digit phrase, is crucial for accessing wallet) 
  4. Transfer your crypto assets (Cannot buy directly from fiat, needs to be transferred from different wallet) 

Hosted Wallets

Hosted wallets are the most commonly used and easily set up wallets. These can be accessed through apps on your phone or wallet, some of the best desktop bitcoin wallets are hosted wallets. These are called ‘hosted’ because a third party keeps our assets safe, much like how banks work.

The biggest advantage of hosted wallets is the fact that you don’t have to be scared of the risk of losing your keys. You don’t run the risk of losing your account completely unlike in non-custodial wallets, the password can always be recovered through two-step identification.

Setting up a hosted wallet is pretty basic, you just have to follow two basic steps: 

  1. Chose an exchange platform (based on your plans and what a platform has to offer) 
  2. Create an account with a two-step verification

Hardware Wallets

Hardware wallets are essentially physical device that looks like a USB drive. They store the crypto assets and keys offline. These are usually very complex to use and come at high costs therefore people are hesitant to use these. Their benefits however include the fact that these are secure from hacking. 

These are difficult to set up and give much more inconvenience, however, to set up a hardware wallet the steps are as follows: 

  1. Buy the hardware required
  2. Install the required software from the official webpage
  3. Transfer your crypto assets (you cannot buy from fiat) 

Conclusion

There are a lot of options for an aspiring user who wants to set up their crypto wallet. Like choosing a suitable bank one must make the right decision regarding the exchange after thorough research. Once you chose an exchange platform that seems well suited for your needs you can access its wallet to store your assets to sell at a later time or to buy more. 

Hosted wallets are easiest to set up while non-custodial wallets offer more control. Hardware wallets are not recommended for a new beginner right away. Once you learn the basics of running a wallet you might even set up multiple wallets, but to begin with, keep it simple.