Key Takeaways
Crypto wallets come in many shapes and forms. Custodial wallets are easy to set up but offer less control.
Non-custodial wallets give you full control, but you are entirely responsible for the safety of your keys and assets.
Hardware wallets offer strong security against hacks and exploits but are relatively expensive and not as beginner-friendly.
In this guide, we introduce the different types and show how to set up a crypto wallet in just a few steps.
Introduction
Getting started with cryptocurrency? The first thing you need is a crypto wallet! A crypto wallet is a tool to send, receive, and store cryptocurrencies and digital assets. They come in various forms, each with its own benefits, limitations, and risks. Let’s go through the different types so you can choose the best crypto wallet that fits your needs.
Custodial Wallets
Also known as hosted wallets, custodial wallets are provided and managed by a crypto exchange or another third party. Hosted wallets don’t give you full control over your assets, and you rely on the provider’s services when making withdrawals or payments.
The main advantage is that you don’t have to worry about managing your keys, and you can reset your password if necessary.
How to set up a custodial crypto wallet
1. Choose a platform: Select a reputable crypto exchange and make sure it’s compliant with local regulations.
2. Create an account: Sign up using your email and a strong password.
3. Verify identity: Most platforms require ID verification (KYC) to comply with regulations.
4. Add funds: Once verified, you can link a payment method to deposit fiat currency or crypto into your wallet.
5. Start trading: You are ready to trade or invest. For more details on how to get started with Binance, check out Binance Beginner's Guide.
Non-Custodial Wallets
Non-custodial or self-custody wallets give you complete control over your keys and funds. While these wallets provide greater freedom and control, you are entirely responsible for remembering the passwords and seed phrases that keep your crypto safe.
In the vast majority of cases, if you get hacked or lose access, there is no way to reset your password or recover your funds. MetaMask and Trust Wallet are popular examples of non-custodial crypto wallets.
How to set up a non-custodial crypto wallet
1. Get the wallet app: If you are on mobile, make sure to install a trusted wallet app from official sources (App Store or Google Play). If you are on a desktop, get the browser extension from the official websites. We will use MetaMask as an example.
2. Create a new wallet: Open the app and choose the option to create a new wallet.
3. Set a strong password: This will protect the app from unauthorized access.
4. Back up your seed phrase: Write down the 12 or 24-word seed phrase provided by the app. Keep it private and safe. The seed phrase is crucial for recovering your wallet if you lose access.
5. Add funds: The traditional way to add funds to your non-custodial wallet is by transferring crypto from a crypto exchange like Binance. But, some wallets also offer onramp services with credit card and bank payments.
Your self-custody wallet is ready to use. You can now connect to DeFi platforms like Uniswap, PancakeSwap, and many more. But be careful. Connecting to malicious DApps or phishing websites may lead to loss of funds.
Make sure you are using reputable and legitimate services before connecting your wallet to Web3 platforms. You can also split your funds and use burner wallets to reduce risks.
Binance Web3 Wallet
The Binance Web3 Wallet is a unique crypto wallet that combines the best of both worlds. It’s a self-custody wallet that eliminates the need to store your private keys in a single place. Binance Web3 Wallet users don’t have to worry about seed phrases and can count on a 24/7 customer support service.
How to set up Binance Web3 Wallet
1. Log in to your Binance account in the Binance app and go to [Wallets].
2. Create a wallet. Click [Create Wallet] and follow the instructions. The Binance Web3 Wallet uses Multi-Party Computation (MPC) technology, so you don’t need to worry about a seed phrase. Instead, it creates three “key-shares” that are stored in three separate locations.
3. Back up your wallet and set up your recovery password. The key-shares are protected by your recovery password. Keep it private and safe.
4. Activate wallet: Once you activate the Web3 wallet, it will be ready to use for trading, staking, or interacting with DApps.
Binance Web3 Wallet provides 24/7 customer service, making it an excellent choice for users who need guidance.
Hardware Wallets
Hardware wallets are physical devices that store your private keys offline. Popular brands like Ledger and Trezor can offer strong protection against malware and hackers. However, hardware wallets can be relatively expensive and are not very beginner-friendly. They are more suitable for experienced crypto users who plan to HODL large amounts as long-term investments.
How to set up a hardware wallet
1. Buy a hardware wallet: Purchase a Ledger Nano or Trezor from the official site or a trusted retailer.
2. Install wallet software: Download the accompanying wallet software (e.g., Ledger Live or Trezor Suite) on your computer or smartphone.
3. Connect the device: Plug in your hardware wallet to your computer using the USB cable.
4. Set a PIN: Choose a secure PIN to protect your device.
5. Backup recovery phrase: The device will generate a recovery seed phrase. Write this down and store it in a safe place.
6. Send and receive crypto: Once set up, you can transfer crypto to and from your hardware wallet.
Closing Thoughts
With a few simple steps, you’ll be ready to securely store, send, and receive cryptocurrencies. Remember, the key to staying safe in the crypto world is protecting your private keys and staying aware of potential security threats.
Further Reading
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