In the previous post on tools, I wrote about what you will need to get into cryptocurrency. In this series, we are exploring in easy steps to cut into the fascinating world of blockchain, DApps, cryptocurrency, web3, nfts, and metaverse. This is a beginner's series, and in the third episode, I am going to write about "wallets".
Wallets are "places" where you hold money for transactions.
In cryptospeak, "wallets" are those that allow you to hold cryptocurrency "passwords" and phrases, not so much as "money", that allow you to receive funds and share or give out funds. So, while in real world, you should guard your wallets closely, here, as long as you guard your "private key" carefully, you are safe. You can share your "public key" widely with the world.
In my next episode, I will discuss "tokens", which are decentralised "currency", but for now, think of wallets in cryptospeak as those that are "linked" with the "tokens" that are traded.
- If you are on Brave browser, they have a wallet already built in that you can use.
- Otherwise, and even if you use Brave browser, download the Metamask browser based coin wallet from https://metamask.io/
- Depending on your browser or your device, you can download from here: https://metamask.io/download/
- Once you have downloaded metamask, before you can use it, you will need to set a password and the app will show you a "key phrase", these are a set of words. Write down those words on a pen and paper (avoid copy paste if you can). Then it will ask you to repeat the the phrases or words and if you can successfully type the words, the app will be set up. Next time onwards, you will need to log on with your keyword alone. That's it.
- Next time, when you log on to Metamask, you will see something like as follows:
Note a couple of things:
- Metamask is on the Ethereum Mainnet (there are other networks it can connect to, we will revisit this topic later); this is labelled as 1
- Metamask is "not connected" to any network at this time, but if it is present on a website where the site allows for Metamask to be connected, it will show a "connected" status. More on this when we will discuss web3
- Below "Account 2" (you can rename this), you see a "hashed" address that starts with "0x12b...". This is the address where you will RECEIVE funds in the form of cryptocurrency (here, ETH or ethereum). You can freely give this address to wherever you expect your funds to come from, :-)
Metamask also generates a secret keyphrase for you, and if you want, you can view it as well. I am not going to cover it in this episode but _that_ secret phase really needs to be kept secret and you should not give it out to anyone because if you have funds on your local machine or browser where you have Metamask installed, anyone with an access to the secret code can siphon funds away. For the same reason, avoid using Metamask on a public internet kiosk.
The topic of wallets can grow quite long and detailed. If you use a mobile phone, you may want to download Metamask there as well, or you may want to use a mobile based wallet, known as MyEtherWallet,
Go through similar process in creating wallets on this App to send and receive ETH based cryptocurrency.
There are other wallets, such as Coinbase Wallet
Hot versus cold wallets
These are "hot wallets", as these are connected to the web all times.
Ideally, your wallets need to be with you and "disconnected" from the web and be only connected when needed to transfer funds. You need to do this in order to not allow other people get access to your funds, :-)
Hardware wallets allow you to disconnect your wallet from the web and locally store your key passphrases for transaction. Hardware wallets can be expensive and we will cover hardware wallets later in this series, but I'd like to keep things really simple ("atomic"), so perhaps one thing at a time.
An inexpensive but useful secure wallet can be made with paper and a printer.
Here is a tutorial:
Here are the links to the walletgenerator and bitaddress sites:
Once you set up a wallet, you may want to get some "tokens" of cryptocurrency. In the next episode, we will look at cryptocurrency tokens.