Decentralized wallets
People have been hearing the word cryptocurrency often, especially since the Russian invasion of the Ukraine. News outlets from almost every outlet are reporting the donations pouring into Ukraine via cryptocurrency. This aid helps with many aspects of war such as paying for ammo, food, medicine, workers and the list goes on. In a time of war, countries lockdown banks and/or put limits on withdrawals in order to salvage the country. So if banks hinder your ability to have autonomy over your own money, what options do you have? The answer is easy peasy lemon squeezy. Anybody with a connection to the internet can have access to what’s called their “decentralized wallet”. This allows for peer to peer transactions without CENTRALIZED help like a BANK.
So what is a wallet?
Crypto wallets store your private keys, keeping your crypto safe and accessible. They also allow you to send, receive, and spend cryptocurrencies like Bitcoin and Ethereum. Crypto wallets keep your private keys – the passwords that give you access to your cryptocurrencies – safe and accessible, allowing you to send and receive cryptocurrencies like Bitcoin and Ethereum. They come in many forms, from hardware wallets like a Ledger (which looks like a USB stick) to mobile apps like Coinbase Wallet, MetaMask Wallet, or Trust Wallet which makes using crypto as easy as shopping with a credit card online.
Why are crypto wallets important?
Unlike a normal wallet, which can hold actual cash, crypto wallets technically don’t store your crypto. Your holdings live on the blockchain, but can only be accessed using a private key. Your keys prove your ownership of your digital money and allow you to make transactions. If you lose your private keys, you lose access to your money. That’s why it’s important to keep your hardware wallet safe, or use a trusted wallet provider like Coinbase or Metamask for example.
How do you use a crypto wallet?
Crypto wallets range from simple-to-use apps to more complex security solutions. The main types of wallets you can choose from include:
- Paper wallets: Keys are written on a physical medium like paper and stored in a safe place. This of course makes using your crypto harder, because as digital money it can only be used on the internet.
- Hardware wallets: Keys are stored in a thumb-drive device that is kept in a safe place and only connected to a computer when you want to use your crypto. The idea is to try to balance security and convenience.
- Online wallets: Keys are stored in an app or other software – look for one that is protected by two-step encryption. This makes sending, receiving, and using your crypto as easy as using any online bank account, payment system, or brokerage.
Each type has its tradeoffs. Paper and hardware wallets are harder for malicious users to access because they are stored offline, but they are limited in function and risk being lost or destroyed. Online wallets offered by a major exchange like Coinbase, find others that are online but not directly linked to the exchanges are the simplest way to get started in crypto and offer a balance of security and easy access. (Because your private info is online, your protection against hackers is only as good as your wallet provider’s security – so make sure you look for features like two-factor verification.)
Using an app like Coinbase Wallet, Metamask, Trust Wallet or the many other trusted decentralized wallets available now, you can:
- Manage all your digital assets in one secure place
- Control your own private keys
- Send and receive cryptocurrency to and from anywhere in the world
- Interact with usernames rather than long, hexadecimal “public key” addresses
- Browse dapps (decentralized finance apps)
- Shop at stores that accept cryptocurrency
Creating your own wallet
Cool, now let’s download a wallet.
There are a few good wallets out there generally (as mentioned previously, Coinbase Wallet, MetaMask and Trust Waller). You have private keys and public keys to your digital wallets – both are important. Your private key is the lock to your wallet only YOU have no one else – MetaMask, Trust Wallet, Klever are examples of decentralized wallets can all be downloaded from the app store.
Once installed it will ask for your name, your email, and you will create a password. Then the decentralized wallets will give you what’s called a 12 word seed phrase that you will copy then put somewhere safe.
This is typically where you would store your money for a while (“HODL” as the crypto people would say).
No customer service. You are your own bank. You use your crypto how you want on DAPPS (yes dapps not apps – we’ll talk about that later), send back and forth to family, friends and shopping, and even buy you a tesla with your crypto. Times sure are changing.
If you lose those keys we talked about earlier, your crypto will be gone forever. There is no customer service to call. Why? Because you’re the boss. It’s as if you’re carrying a big bag of cash… and you lose it.
There are different ways to store these keys:
- 1 software Coinbase, Binance, FTX hold the key for you for signing up
- 2 hardware legers usb sticks you can put your key on then pull it off the internet (cold wallet)
- 3 paper a good ol piece of paper in a safe or somewhere safe but member your the boss it gets ripped wet stolen no customer service.
“Hot” and “cold” wallets are terms in the crypto space. A hot wallet is when your wallet hardware keys are actively on the internet you may be sending using this crypto or having this crypto ready to place a trade basically sitting on your EXCHANGE wallets.
Now let’s say you have now accumulated a nice amount of crypto you wanna put some aside for your kids your momma or it’s all for you so you can scream “when lambo” as the crypto people would say, is called a cold wallet. A cold wallet is put onto devices called ledgers – a usb like device that you load your keys onto. You pull it off the internet and put it away. Remember, you are in charge don’t lose it.
Case and point
- A man lost $80 million worth of Bitcoins after losing his wallet on his hard drive. You lose your wallet, say goodbye to your Bitcoin fortune because there will be no refunds.
Don’t be that guy. Don’t lose your keys.
At the time of this article the writers were actively using Coinbase, FTX, Metamask, Trust Wallet, Crypto.com, Binance, Robinhood, Webull, KuCoin, Voyager and Hotbit. They also own currencies: BTC, ETH, USDC, SOL, AVAX, ALGO, MATIC, CRO, ENS, DOT, XLM, MANA, RARI, ENJ, XRP, FIL, SAND, HNT.
