Cryptocurrencies have been taking off like a rocket. The new digital phenomenon quickly rose to fame, garnishing global attention and setting records not seen since the dot com bubble. Bitcoin, the world’s first known cryptocurrency, is now sitting at record highs of around $45,000, which is a long way from the ground floor it once sat on during its early discovery back in 2011.
While many have begun to jump on the bandwagon, the question that still lingers in many people’s mind is “How can I get my hands on some of this stuff?” Well, that’s what we’re going to talk about today.
In this article we will teach you how to open a cryptocurrency wallet and take your first step into the world of Cryptocurrency.
Before opening a Cryptocurrency Wallet
There are many different types of wallets in existence today. Depending on the cryptocurrency you are looking to invest in, it’s important to understand what type of wallet will be compatible with the digital asset you are purchasing.
Cryptocurrencies work on a technology called the Blockchain. Blockchain simply is a network consisting of “blocks” that are digital records of transactions. Millions of transactions take place on the blockchain every day. In order for a transaction to be processed, special dedicated machinery called Miners are utilized.
Every cryptocurrency you may be interested in operates on a specific blockchain. Bitcoin, for example, is mined on the Bitcoin network. Ethereum is mined on the Ethereum network and its tokens are referred to as ERC-20. There are also many different types of cryptocurrencies which may be classified as ERC-20 and which are all mined on the Ethereum network. There is also the Polygon network, which is an extension of the Ethereum network but is of itself, its own blockchain.
Before sending crypto to another user or location, it’s important that you understand which wallet works for each cryptocurrency you are sending. For example, since Ethereum works on the Ethereum blockchain, then sending Ethereum to a Bitcoin wallet will result in loss of Ethereum.
Only send cryptocurrency to a compatible wallet address. Bitcoin to bitcoin wallet. ERC-20 to an ERC-20 wallet.
Cryptocurrency Transfer Fees and Gas
The fees associated with transferring cryptocurrency are called “Gas”, and the gas price can fluctuate throughout different times of the day depending on how busy the network is that the assets are mined on. Ethereum tends to have the highest fees and you should pay careful attention to the gas price associated with a transaction before making the transaction to avoid the possible high-cost association that can easily burn your entire investment. Never send cryptocurrency without checking the gas price!
To not make things overcomplicated, let’s jump into how to safely store your wallet and a few wallets you can use to get you on the road to purchasing your first cryptocurrency.
Address. A cryptocurrency address is a random code that is generated by the local hardware or user device, similar to an email address, which is then used to receive cryptocurrency. This is the most important information when sending or receiving cryptocurrency.
It is very vital that this address should be 100% correct with zero errors in order to make a successful transaction. Any mistake in entering the correct address can result in permanent currency loss. It is highly important that you carefully enter this address.
Many wallets today utilize QR codes to prevent possible failure when making transactions. You do not need to write this address down, but you do need to carefully copy it when sending or receiving currency between wallets.
Private Keys or Recovery Phrase. A private key is a uniquely generated code which is used to gain access to or to recover a cryptocurrency wallet. It is of the utmost importance that you store this information away from digital devices and in a safe place to prevent theft of your digital assets!
Many people in the past have had their private keys stolen or hacked by leaving them in a vulnerable place. The most vulnerable place is on a public device that many people use, a device that has internet access, email or cloud storage. Similarly, a Recovery Phrase is a set of 16 to 26 random words that are used to recover or transfer a wallet from one device to another.
Any time a user may need to access their cryptocurrency from a different location, they must possess this unique Recovery Phrase. It is significant that each word be recorded in order & exactly as given, and that it be stored in a safe place where it will not be lost. Failure to properly record a Recovery Phrase correctly or store it in a safe place may result in permanent loss of your digital assets.
For beginners, one of the most popular ways to purchase cryptocurrency in North America is through the platform called Coinbase. Coinbase, which was founded in 2012, quickly rose to popularity for its ease of use and early access to Bitcoin and Ethereum.
Coinbase allows its users to not only purchase some of the world’s most popular cryptocurrencies, but also store and send cryptocurrencies with ease. For most people, this has been a very basic and fundamental option as it doesn’t take long to get started and learn the inner workings of its features.
Once you sign up for Coinbase and verify your account with a valid form of I.D. You can begin purchasing cryptocurrencies using Bank Transfer, Debit/Credit Card or Paypal. Before sending crypto to another location outside of Coinbase, it’s important that you understand which wallet works for each cryptocurrency you are sending off.
For example, since Ethereum works on the Ethereum blockchain, sending Ethereum to a Bitcoin wallet will result in loss of your Ethereum. Only send your cryptocurrency to compatible wallets.
Metamask, a wallet that is primarily used to store ERC-20 tokens, is also a popular choice due to its diversity and ease of use. The Metamask app can be downloaded from the Google Play Store as well as the Apple Store on your mobile device.
When getting started with Metamask, you will generate a random wallet address and be given a unique Recovery Phrase. As I said before, it is of the utmost importance that you safely write down and store your Recovery Phrase to avoid loss or theft of your digital currencies.
Metamask allows you to store and send various tokens that operate on the Ethereum (ERC-20) network. Ethereum can be sent to your Metamask wallet. In addition, Metamask has a feature that allows you to add several custom networks, including the second most popular Binance Smart Chain, which is a network consisting of thousands of alternative digital tokens that operate on the Binance blockchain.
Binance started as a cryptocurrency exchange where cryptocurrencies are traded or exchanged for other currencies. It used to be one of the most popular exchanges globally, but due to the passing of certain U.S. regulations, it is now mostly used outside of the United States.
Metamask will let you store most currencies that cannot be stored in a Bitcoin wallet.
The Trust Wallet is Binance’s official wallet that allows you to store BSC tokens, which are digital assets that operate on the Binance Chain. Most alternative currencies, which are currencies other than Bitcoin or Ethereum, operate either on the ERC-20 network or the Binance Chain. This wallet is similar to Metamask and the same principles apply. When downloading the wallet you will be given a random Recovery Phrase that you need to store in a safe place, offline from electronic devices. Only send compatible Binance Chain network tokens to this wallet.
A cold wallet is a physical hardware wallet that makes it possible to store your cryptocurrency offline, on a device that is exclusively made for holding digital assets. Most cold wallets store bitcoin, but there are some on the market that are used for various other tokens.
The benefit of a cold wallet is added security that may not be available to devices that have internet access. Many cold wallets look similar to USB thumb drives and can be plugged similarly. People often prefer cold wallets is because they cannot be accessed remotely.
Consider using a cold wallet if you may be concerned about the security of your internet or shared devices.
For most people, the first three digital wallets will allow you access to 99% of cryptocurrencies that are available to be purchased or traded. Never store your cryptocurrencies on Crypto Exchanges as they are vulnerable to security breaches. Keep your cryptocurrency recovery phrase in a safe place and remember, the future belongs to those who prepare for it today.
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