Hi, course participants!
It’s me again, Alina from CryptoRobotics.
I am glad that today we have our first practical class!
We named this third lesson «Creating your first crypto wallet in 3 minutes», but first let’s understand:
- what is a crypto wallet
- what types of wallets exist
- how does a crypto wallet differ from a regular wallet in our pocket
- how to create your first wallet on your phone in just a couple of minutes
So what is a crypto wallet? Are your coins stored in it?
No, the coins are stored in the blockchain.
A crypto wallet is like having two keys — your login and password to access your coins that are stored on the blockchain.
Let’s compare it to having a mailbox. The letters in it are actually stored on the Internet, but only you can access them because you have an email address and a password to access it.
Similarly, with a crypto wallet:
You have a public key, which is the address of your wallet, and a private key, which is the password to access this wallet.
And any actions can only be taken with your wallet if you have both of these keys.
We can easily compare a crypto wallet to a bank card:
To receive money on your card, you only need to pass on your card number. The card number is equivalent to a public key.
To make a payment from your card, you need the CVV code of your card — and it should not be shared with anyone, like a private key.
Similarly, in blockchain — if someone wants to send you money, you give them your wallet number (or public key), and if you want to access your wallet and send coins — then you enter the private key.
You need to store your keys either in an encrypted file, either memorize them — which is difficult, but I know some people who memorize these keys — either write them down on paper, but hide it in a safe place. Or you can do all three.
And what happens if I lose my bank card? I will go to the bank or write in the app and the bank will send me a new one.
But what about my crypto wallet? If I lose my keys, will my funds be lost forever?
If you have only chosen this method of protection, then yes.
But there is another way to protect your wallet — it’s called a seed phrase. I would compare it to a secret word: in banks it’s usually the nickname of your first pet or other private word.
In blockchain wallets, a seed phrase is automatically generated by the system when creating a wallet and consists of a set of words not related to each other.
You need to save them, and you can restore access to your wallet from any device anywhere in the world. Today we will see how it works in practice when we create a wallet.
In the meantime, remember that you need to write down all the words of the seed phrase in the correct order to use them later.
You can store this phrase just like your keys, but the most important thing is to keep it secure.
You can see an example of a seed phrase on the slide.
Now let’s discuss the types and classes of crypto wallets.
There are 2 classes of crypto wallets — custodial — when wallets have a financial agent, such as an exchange that provides the wallet, and non-custodial, when only you have access to the wallet.
A custodial wallet can be compared to a bank account, while a non-custodial wallet can be compared to a stack of dollars in a home safe. Both have their pros and cons.
An exchange can guarantee access recovery in case of lost access, similar to a bank. If you lose all the keys to your non-custodial wallet, it will be an irreparable loss, just like someone stealing your safe.
However, the exchange can cease to exist at any time, while only you and those you trust have access to your house.
Moving on to the types of wallets, the selection is wider:
- Hot wallets
- Warm wallets
- Cold wallets
- Paper wallets
And let’s look at each type in more detail:
Hot wallets are always connected to the Internet and accessible through a browser.
The main downside is that they are usually exchange wallets, meaning they are not the most secure. The main advantage is that they are very easy to use.
An example of a hot wallet is a wallet with different currencies on an exchange on your screen.
Warm wallets are applications on your computer or phone.
The main advantage is that they are convenient and easy to use, like online banking, and the main disadvantage is that if your phone breaks and the seed phrase is also stored in it, access to the wallet cannot be restored.
Cold wallets are like properly secured USB drives or similar devices with a USB cable, which will only be connected to the Internet when you connect them yourself.
Such wallets are considered the most secure way to store cryptocurrencies, but not the most convenient. It is also important not to lose the seed phrase, as well as not to lose the wallet itself.
And the fourth type is a paper wallet — a sheet of paper with a printed QR code that contains the password to access the wallet. Very secure, but it is important not to lose the sheet, not to get it wet, and not to store it in direct access for pets.
For each type of wallet, you have the most popular wallets in the world selected on your slides.
First, I suggest you create the first wallet, and the first wallet is a hot wallet from Trust wallet service.
Trust wallet is a convenient mobile application that allows you to quickly receive and send funds. It supports over 10 million coins and can be used to pay for a large number of services. It is also anonymous, so you do not enter any personal data during registration.
Very important: the commission for transfers in this wallet is taken in TRX coin, one of the most stable and proven on the market. Therefore, we will also make the first purchase in TRX so that a small amount appears on the wallet for future commissions.
On the slide, you will have a short text instruction on how to install this wallet, and now I will show you on the screen how to install the wallet application and how to access it.
- We go to the App Store or Play Market
- Enter Trust wallet in the search tab r
- Check the logo with what you see on my screen
- Click DOWNLOAD, confirm the download
- After the application is downloaded, click the Open button.
- Go to the application and select the Create New Wallet button.
- Agree to the storage rules and security for storing the seed phrase for the wallet.
- Click the CONTINUE button.
We can see a seed phrase of 12 words:
- You can write them down in the correct order or forward them to yourself and then delete and save them in a safe place
- I forwarded them to myself on Telegram
- We click the continue button, the system asks us to select the words from the list in the correct order to check if you have saved the seed phrase before creating the wallet.
- We choose all 12 words one by one and click on the continue button.
- Your wallet is created!
The balance is zero for now, but you can find the address of one of your wallets and start receiving bitcoin or TRX to it.
We click on the bitcoin — select the receive button and copy the wallet address. Super! Now we are ready for lesson 4 and 5!
In lesson 4, we will go over security rules for cryptocurrencies, and in lesson 5, we will buy our first cryptocurrency together with you.
At the end of the lesson, there are terms and definitions for you, and in conclusion, a link to Trust wallet.
See you in lesson 4: How to Avoid Scammers: 14 Rules of Digital Security.