Key points
There are several types of crypto wallets. Custodial wallets are easier to set up, but they provide less control.
With a non-custodial wallet, the user has full control over the assets, but also bears full responsibility for the safety of the keys and funds.
Hardware wallets provide reliable protection against hacks and attacks, but they are relatively expensive and less user-friendly for beginners.
In this guide, we'll cover the types of wallets and walk you through how to start using them step-by-step.
Introduction
Where to start with cryptocurrency? With a crypto wallet! A cryptocurrency wallet is needed to send, receive and store cryptocurrencies and digital assets. There are different types of wallets, each with their own advantages, disadvantages and risks. Below we will look at these types to make it easier for you to choose the right crypto wallet for your needs.
Custodial wallets
Custodial wallets (wallets managed by a third-party service) are provided and managed by a crypto exchange or other third party. Custodial wallets do not give the user full control over the assets. Instead, the providers are involved in all withdrawal and sending operations.
The main advantage of such wallets is that users do not need to worry about managing keys and can reset the password if necessary.
How to Set Up a Custodial Crypto Wallet
1. Choose a platform: Choose a reputable crypto exchange and make sure it complies with local regulations.
2. Create an account: Register using your email address and a strong password.
3. Pass verification: to work on most platforms, you need to pass identity verification (KYC).
4. Deposit funds: After verification, you can choose a payment method and deposit fiat currency or cryptocurrency to your wallet.
5. Start Trading: Now you can start trading or investing. For more information on how to get started with Binance, check out the Binance Beginner’s Guide.
Non-custodial wallets
Non-custodial wallets give the owner full control over the keys and funds. While such wallets provide greater freedom of action, the user is fully responsible for storing passwords and seed phrases, as well as protecting their cryptocurrencies.
Typically, if you hack or lose access, you won't be able to reset your password or get your funds back. Examples of non-custodial wallets include MetaMask and Trust Wallet.
How to Set Up a Non-Custodial Crypto Wallet
1. Install a wallet app: If you are using a mobile phone, install a reliable wallet app from official sources (App Store or Google Play). On a computer, you can install a browser extension from the official website. Let's take MetaMask as an example.
2. Create a new wallet: Open the app and create a new wallet.
3. Set a strong password: This will protect the application from unauthorized access.
4. Back up your seed phrase: Write down the 12 or 24 word seed phrase that appears in the app. Keep it private and safe. If you lose access to your wallet, you will need the seed phrase.
5. Deposit funds: The easiest way to fund a non-custodial wallet is to transfer cryptocurrency from a crypto exchange like Binance. However, some wallets also offer the option to pay with fiat via a bank card or wire transfer.
After this, the non-custodial wallet is ready for use. You can now connect to DeFi platforms such as Uniswap or PancakeSwap. But be careful: connecting to malicious DApp or phishing sites may result in loss of funds.
Use only trusted services and carefully check Web3 platforms before connecting a wallet. To reduce risks, it is also recommended to separate funds and use disposable wallets.
Binance Web3 Wallet
Binance Web3 Wallet is a unique crypto wallet that combines the benefits of both types. It is a non-custodial wallet, which eliminates the need to store private keys in one place. Binance Web3 wallet users do not need to worry about seed phrases and can contact the 24/7 customer support team at any time.
How to Set Up Binance Web3 Wallet
1. Log in to your Binance app and open the Wallet section.
2. Create a wallet. Click “Create wallet” and follow the instructions. Binance’s Web3 wallet uses distributed computing (MPC) technology, meaning users don’t have to worry about a seed phrase. Instead, the wallet creates three key fragments that are stored in three different locations.
3. Back up your wallet and set a recovery password. This password protects the key fragments. Keep it secret and safe.
4. Activate the wallet: Once the Web3 wallet is activated, it can be used for trading, staking and interacting with DApp.
Binance's Web3 wallet provides 24/7 customer support, making it ideal for users who may need assistance.
Hardware wallets
A hardware wallet is a secure device for storing private keys. Popular projects like Ledger and Trezor offer strong protection against malware and hacks. However, hardware wallets can be relatively expensive and inconvenient for beginners. They are more suitable for experienced users who plan to hold (HODL) large amounts of cryptocurrency as a long-term investment.
How to set up a hardware wallet
1. Buy a hardware wallet: Buy a Ledger Nano or Trezor device from the official website or a reputable seller.
2. Install wallet software: Download wallet software (such as Ledger Live or Trezor Suite) to your computer or smartphone.
3. Connect the device: Connect the hardware wallet to your computer using a USB cable.
4. Set Password: Choose a strong password to protect your device.
5. Back up your recovery phrase: The device will generate a seed phrase for recovery. Make sure to write it down and keep it in a safe place.
6. Send and receive cryptocurrencies: Once set up, you can start transferring cryptocurrencies to and from your hardware wallet.
In conclusion
In just a few simple steps, you can safely store, send, and receive cryptocurrency. Remember, the key to security in the world of cryptocurrency is protecting your private keys and being aware of potential threats and risks.
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