Now that the Cryptoverse is becoming increasingly popular, many have begun contemplating investing in this sector. Keeping everything aside, the first step to entering into this new field is to set up a crypto wallet to securely store all of your cryptocurrencies in one place. There are quite a few types of crypto wallets but the three most popular ones have hosted wallets, custodial wallets, and hardware wallets. Here is how you can determine which wallet to use and how to set it up easily, ensuring the security of your stored crypto.
Hosted Wallets
This is the most basic wallet, storing all your crypto automatically when purchasing your currency from Coinbase. A third party is keeping your crypto for you just like a bank savings account. With hosted wallets, you don’t have to worry about losing access to the wallet, like losing the keys, and even if you get your password, you won’t lose your crypto. With this wallet, however, you won’t have access to all the features that other crypto wallets offer.
To set up this wallet, choose a reliable and secure platform that offers easy convenience and is in line with government regulations. You can create your account on the website and choose a password to secure it, along with 2-step authentication. You can also transfer already owned crypto to your new hosted wallets quite conveniently as well.
Self-Custody Wallets
These wallets give you full control of your crypto, not relying on a third party to store your crypto. Self-Custody wallets just provide the software to store your crypto but you will have to remember your passwords and take on the responsibility to safeguard them. If you forget your password, called “private key” or “seed phrase”, there is no other way for you to access your crypto. Similarly, if your private key is discovered by a third party, they will have full access to your crypto assets.
However, Self-Custody wallets offer advanced features like yield farming, staking, lending, borrowing, etc. You can set up this wallet by downloading an app, like Coinbase, and creating your account. The wallet will not require you to share personal information, but you will need to choose a 12 letter key that will grant you access to your wallet. With this wallet, you cannot buy crypto using traditional currencies so you will have to transfer your crypto from a non-custodial wallet.
Hardware Wallets
These wallets are physical objects or devices storing keys to your crypto offline. While this wallet may be complex and expensive, it will ensure the security of your crypto assets even if your computer is hacked. To set up this wallet, you will need to purchase the device from a store, the most popular stores being Ledger and Trezor. You will have to download the software from the purchased company’s website and follow instructions on how you can set up your wallet. A hardware wallet doesn’t allow you to buy crypto using traditional currencies as well, crypto will have to be transferred to the wallet.
Hosted wallets offer simplicity, but non-custodial wallets grant full autonomy over your crypto assets and hardware wallets ensure security and better precautions.
