Crypto Wallet Basics
In crypto, there's a saying: "Not your keys, not your coins." Understanding how wallets work is the first step to protecting your assets.
What is a Crypto Wallet?
A cryptocurrency wallet doesn't actually "store" your coins - it stores your private key. The private key is like the key to a safety deposit box; whoever has it controls the corresponding cryptocurrency.
Tip
Wallet address = Bank account number (can be shared) Private key = Password (never share this)
Wallet Types Comparison
Hot Wallet
Internet-connected wallets - convenient but less secure.
Pros:
- Easy to use for daily transactions
- Mostly free
- Support multiple cryptocurrencies
Cons:
- Risk of hacking
- Not suitable for large amounts
Popular Hot Wallets:
- MetaMask (Ethereum ecosystem)
- Trust Wallet (Multi-chain support)
- OKX Wallet (Web3 integration)
Cold Wallet
Wallets that store private keys offline - the safest option.
Pros:
- Private keys never touch the internet
- Ideal for long-term, large holdings
Cons:
- Requires hardware purchase ($60-150)
- Less convenient to use
Recommended Cold Wallets:
- Ledger Nano X
- Trezor Model T
- SafePal S1
Exchange Wallet
Keeping coins on an exchange - the exchange holds your private keys.
Warning
The 2022 FTX collapse proved that keeping large amounts on exchanges is risky. Only keep what you need for trading.
Wallet Recommendations
| Portfolio Size | Recommended Solution |
|---|---|
| < $1,000 | Exchange + hot wallet is fine |
| $1,000 - $10,000 | Primarily hot wallet, consider cold wallet |
| > $10,000 | Strongly recommend cold wallet |
Security Rules
Danger
The following actions may result in permanent loss of assets!
Never Do:
- Share seed phrase/private key - Anyone asking for this is a scammer
- Click unknown links - Phishing sites steal your wallet
- Approve random contracts - Malicious contracts can drain your wallet
- Screenshot your seed phrase - Phones can be hacked or lost
Always Do:
- Paper backup seed phrase - Write it down and store safely
- Use hardware wallet - Essential for large holdings
- Diversify storage - Don't put all assets in one place
- Regularly check approvals - Use Revoke.cash to revoke unnecessary permissions
Setting Up MetaMask
MetaMask is the most popular Ethereum wallet. Here's how to set it up:
- Go to metamask.io to download
- Install the browser extension
- Create a new wallet
- Write down and safely store the 12-word seed phrase
- Set a password
- Done!
Danger
The seed phrase is shown only once! Make sure to write it down and store it safely.
Summary
- Use hot wallets for small transactions, cold wallets for large storage
- Seed phrase is the most important thing - never share it
- Don't keep all assets on exchanges
- Develop good security habits to survive long-term in crypto
Ready to start buying cryptocurrency? Check out our exchange registration guides: