Imagine a scenario where you carry your bank account in your pocket. When all your money is within your reach, you can not only make international transactions within seconds but also have complete control over your finances. This isn’t a distant future; it’s the reality of investing in cryptocurrencies. To access this advanced financial system, you need a crypto wallet and knowledge of how to set up a crypto wallet.
A crypto wallet is a tool for securely keeping your crypto. In today’s market, the most popular types of crypto wallets are hardware, software, and hosted wallets. This comprehensive guide provides a step-by-step process for setting up and choosing a crypto wallet.
How To Set Up A Hardware Crypto Wallet
Hardware wallets are a type of cold wallet, which are not connected to other devices or the internet. They are physical devices that hold your cryptocurrency offline. Hardware wallets are known for their highest security and protection against online threats. To set up a hardware wallet, you can follow the steps written below:
1. Select The Hardware Wallet
The first and foremost is to establish your own research around different wallets to check which one is for you and which best suits your requirements. It is best to go with reputed manufacturers with the highest security features.
Some popular hardware wallets in the industry are Ledger, Trezor, and Cypherock Wallets.
2. Purchase The Hardware
After you have decided which wallet will meet your requirements, you can buy the wallet from its official website. This is the most crucial step and requires caution because if you buy fake ones, there are chances that you will lose all your crypto funds.
3. Install Required Software
The next step is to install the required software on your device. The wallet setup wizard will guide you through the installation process. You have to follow the instructions to download and install the wallet application on your computer or mobile device.
- Once the software is installed, connect your device to your computer or mobile using a USB.
- Create a strong PIN to protect access to your wallet.
- Write down your recovery phrase (usually 12 or 24 words) on paper. This phrase is crucial for recovering your wallet if it’s lost or damaged. Store it in a safe and offline location, you can also make multiple copies as per your needs.
4. Transfer Your Cryptocurrency
After setting up your hardware wallet, it’s time to transfer your cryptocurrency to the wallet. For this, you will have to link your hardware wallet to a crypto exchange. Then, send small test amounts before large transfers to ensure everything works correctly. Now, you are good to go and can transfer your cryptocurrencies and NFTs to your hardware wallet. This will be stored offline, providing security for your crypto assets.
How To Set Up A Software Crypto Wallet
You have already learned to set up a hardware wallet; now let’s see how to set up a crypto wallet—a software one.
Software wallets are applications that you install on a computer or mobile device. They allow you to hold, manage, and transact with your cryptocurrencies. Software wallets are most convenient for easily accessing your crypto assets while maintaining reasonable security. For setting up a software crypto wallet, you can follow these steps:
1. Select A Software Wallet App
The first step is to select a reliable wallet. There are several wallet options available in the market, you can choose from them as per your investing strategy. Some of the best software wallets available in the market include Metamask, Okto, and Trust Wallet.
2. Download The Wallet App
The next step is to download wallet apps from the official website, the Apple App Store, or Google Play. Once the app is downloaded, install it on your device to access your cryptocurrencies whenever you need them.
3. Create An Account
In this step, you create your account by filling in basic information such as your name, email address, and password. After this, you can:
- Open the app and select the ‘Create New Wallet’ option.
- Set up a strong password.
- Back up your recovery phrase. As with hardware wallets, this is critical. Write your recovery phrase and store it securely.
4. Transfer Your Assets
Now that your account setup is complete, the next step is to transfer assets into your software wallet. You can test it by transferring a small amount to your newly created wallet. Once everything is good, transfer your crypto holdings, like Bitcoin, Ethereum, Solona, Dogecoin, etc., to store them safely.
To transfer the fund to your wallet, you need the wallet address and use it to send the crypto asset to your wallet. They also now support QR codes that can be scanned to transfer funds.
Looking for a safe crypto transfer? You can refer to the blog on how you can protect your crypto addresses.
How To Set Up A Hosted Crypto Wallet
Hosted wallets are cryptocurrency wallets provided by cryptocurrency exchanges or third-party service providers such as Binance. These wallets are easy-to-use for beginners. When you buy a crypto using a crypto exchange, your crypto is automatically held in a hosted wallet or exchange wallet. It is similar to your bank account, which keeps your money.
Here’s how to set one up:
1. Choose Your App
2. Create Your Account
Once you have selected your reliable exchange, create your account with your information and password. Next, you can:
- Visit the website or download their mobile app.
- Click on the ‘Sign Up’ or ‘Create Account’ option.
- Enter your email address and create a strong password.
- Complete your KYC (Know Your Customer) process.
- Create a separate PIN for transactions and two-factor authentication (2FA) or enable biometric authentication.
3. Buy Or Transfer Crypto
Once your account is verified, you can buy or transfer your cryptocurrency to your wallet. These hosted wallets usually have integrated exchange services, which allow you to buy crypto directly. Alternatively, you can also transfer funds from another wallet or exchange.
Choosing the Right Crypto Wallet For You
We have discussed how to set up a crypto wallet. To further make it easy for you and evaluate your wallet choices, here are a few factors that you can keep in mind while deciding on your wallet:
1. Security:
- Choose wallets with robust security features like two-factor authentication, multi-signature support, and regular security audits.
- Check the wallet’s history – has it ever been hacked before?
- In the software wallets, check if they’re open-source and allow the community to review the code.
- Prioritise hardware wallets over others, they offer the highest security, while hosted wallets rely on exchange security.
2. Supported Cryptocurrencies:
- Ensure the wallet supports the exchanges and cryptocurrencies you want to buy or trade.
- Some wallets are cryptocurrency-specific (like Bitcoin-only wallets), while others support a wide range of digital assets like altcoins and NFTs.
3. Cost Involved:
- Hardware wallets have great security, but they come with a price. The prices typically range from $50 to $200.
- Software wallets are usually free to download, and charge fees for transactions.
- Hosted wallets also charge fees for buying, selling, or transferring crypto.
4. Customer Service:
- Reliable customer support is crucial, especially for beginners.
- Check reviews and community feedback about the wallet’s responsiveness and helpfulness.
- Check if the wallet has enough resources like FAQs, user guides, and tutorials to help you effectively use the wallet.
5. Additional Features:
- Some wallets provide built-in exchanges, allowing you to swap cryptocurrencies directly.
- DApps in wallets are valuable for exploring decentralised finance (DeFi) or NFTs.
- Consider wallets with portfolio tracking features. This will help you see your holding performance.
Looking for the list of top crypto wallets to store your cryptocurrencies and NFTs? We have covered it all in our best crypto wallet blog here.
Conclusion
Similar to how there are multiple ways to store cash, there are many ways to store crypto. Setting up a crypto wallet is your first step towards dealing with cryptocurrencies and the decentralised finance space.
Self-custody wallets, such as hardware and software, give you full control over custody and access to your funds. You can buy, sell, swap, stake, and hold your crypto funds however you want to generate profit with cryptocurrency.
Now, when there is profit, there are tax responsibilities. Several countries charge taxes on crypto investing and trading profit. Reviewing a large number of transactions can be complex; this is where KoinX helps you. KoinX is a platform where you can connect your crypto exchanges and wallets to get a reliable tax report. It has advanced features like a profit calculator and portfolio tracking, which makes it more useful.
So, sign up now and make your crypto journey easy with the KoinX crypto tax report.
Frequently Asked Questions
Which Crypto Wallet Is Best?
The best crypto wallet completely depends on your needs and investing goals. When learning how to set up a crypto wallet, consider some important features such as security, supported cryptocurrencies, and ease-of-use. You can choose hardware wallets like Ledger or Trezor with top security for long-term storage. Okto, MetaMask, and Binance are best in terms of convenience.
Are Crypto Wallets Free?
Many crypto wallets are free, especially software and hosted wallets. However, they are not very secure. Hardware wallets are paid, but remember that these wallets have a one-time cost. Free wallets are good, but you can buy a hardware wallet like a Ledger for enhanced security when you have large holdings.
How Do I Put Money Into A Crypto Wallet?
First, ensure you know how to set up a crypto wallet correctly. Then, you can buy crypto assets on an exchange and transfer them to your wallet’s address. Some wallets also offer direct purchase options using fiat currency through integrated exchanges or payment methods. You can choose the way which is more convenient for you.
