A crypto wallet is a place you can safely maintain your cryptography. There are many different types of crypto wallets, but host wallets, non-custodial wallets, and hardware wallets are the most popular.
What is suitable for you depends on what you want to do with your cryptograph and what type of safety net you want.
Hosted wallets
A hosted wallet is one of the the most popular and easy-to-set crypto wallets. If you buy crypto with an app like Coinbase, your crypto is kept in a hosted wallet. It is called host because a third party holds your cryptograph for you, like how a bank saves your money on a check or savings account. You may know that people are “losing their keys” or “losing their USB wallet,” but you don’t have to worry about anything with the hosted wallet.
The main advantage of keeping your crypto in a hosted wallet is that you will not lose your cryptography if you forget your password. A disadvantage to a hosted wallet is that you cannot access all of the crypto offerings. This may, however, change as the wallets hosted begin to support more features.
How to set up a hosted wallet:
- Select a platform that you trust. Safety, ease of use, and compliance with government and financial regulations should be your foremost considerations.
- Build your account. Enter your personal information and select a secure password. It is also recommended that a 2-step (also called 2FA) verification be used for an additional security layer.
Crypto buy or transfer. Most crypto platforms and exchanges enable you to purchase cryptography using a credit or bank account. You can also transfer it to your newly hosted wallet for safekeeping if you have a cryptograph already.
Non-custodial wallets
You are entirely controlled by a non-custodial wallet, such as the Coinbase Wallet or the MetaMask. Non-custodial wallets are not dependent on a third party – or “custodian” – to safeguard your cryptography. While they provide the software needed to store your crypto, it is entirely up to you to remember and protect your password. There’s no way to access your crypt if you lose or forget your password — often referred to as a “private key” or “seed phrase.” And if another person discovers your private key, they can have full access to your assets.
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Why do you have a non-custodial bag? In addition to fully controlling the safety of your cryptography, you can access advanced crypto activities such as yield agriculture, staking, loaning, borrowing, and more. But if you only want to buy, sell, send and get cryptographs, it is the easiest way to get a hosted wallet.
How to set up a non-custodial wallet:
- Download the application wallet. Coinbase Wallet and MetaMask are popular options.
- Build your account. Contrary to a hosted wallet, to create a non-custodial wallet, you do not need to share any personal information. Not a single email address.
- Make sure your private key is written down. It is presented as a 12-word random sentence. Would you please keep it in a safe place? You won’t be able to access your cryptograph if you lose or forget this 12-word phrase.
- Transfer your wallet to crypto. It is not always possible to buy crypto with a non-custodial wallet with traditional currencies (such as US dollars or Euros), so you must have cryptography transferred from elsewhere to your non-custodial wallet.
If you are a customer of Coinbase, you have the right wallet or wallet to choose from. The Coinbase app is a hosted wallet where you buy and sell crypto. The independent Coinbase Wallet app can also be downloaded to benefit from the benefits of a non-custodial wallet. Some of our customers both have cryptography with traditional currency and take part in advanced cryptographic activities. Either wallet is free to set up.
Hardware wallets
A hardware wallet is a physical device about a thumb drive that saves your crypt’s private keys offline. Because of their increasing complexity and cost, most people do not use hardware wallets, yet they do have some benefits — for example, they can keep your crypto secure even when your computer is hacked. This advanced security makes it uncomfortable to use compared to a software wallet and can cost up to $100 for purchase.
How to set up a hardware wallet:
- Purchase hardware. Ledger and Trezor are the two most famous brands.
- Software installation. Each brand has its software to set up its wallet. Download the software from the official website of the company and follow your wallet instructions.
- Transfer your wallet crypto. Like a non-custodial wallet, you typically cannot buy cryptography using traditional monetary currencies (such as US dollars or Euros), so you have to transfer cryptography to your wallet.
Just as you can store your cash in many ways (in a bank account, in a safe, under the bed), so you can store your crypto. With a hosted wallet, you can keep things easy, have complete control over your crypto with a non-custodial wallet, take extra measures with a hardware wallet, or even multiple types of wallets — you can choose cryptography.
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