How to set up a crypto wallet 2022

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A crypto wallet is an area in which you could competently keep your crypto. There are many specific styles of crypto wallets, however the maximum popular are hosted wallets, noncustodial wallets, and hardware wallets.
Which one is proper for you relies upon on what you need to do together along with your crypto and what form of protection net you need to have.

Hosted wallets

The most popular and easiest to set up crypto wallet is a hosted wallet. When you buy crypto using an app like Coinbase, your crypto is automatically held in a hosted wallet. It’s called hosted because a third party holds your crypto for you, much like a bank holds your money in a checking or savings account. You may have heard of people “losing their keys” or “losing their USB wallet” but with Hosted Wallet you don’t have to worry about any of that.
The biggest advantage of keeping your crypto in a hosted wallet is that if you forget your password, you won’t lose your crypto. One drawback to a hosted wallet is that you can’t access everything crypto has to offer. However, this may change as hosted wallets begin to support more features.

  1. Choose a platform you trust. Your main considerations should be security, ease of use, and compliance with government and financial regulations.
  2. Create your account. Enter your personal info and choose a secure password. It’s also recommended to use 2-step verification (also called 2FA) for an extra layer of security. 

Buy or transfer crypto. Most crypto platforms and exchanges allow you to buy crypto through a bank account or credit card. If you already own crypto, you can also transfer it to your new host wallet for safekeeping.

Self-custody wallets

A self-custody wallet, like Coinbase Wallet, puts you in full control of your crypto. Non-custodial wallets do not rely on a third party – or “custodian” – to keep your crypto safe. While they provide the necessary software to store your crypto, the responsibility for remembering and protecting your password falls entirely on you. If you lose or forget your password — often called a “private key” or “seed phrase” — there’s no way to access your crypto. And if someone else finds out your private key, they will have full access to your assets.
Why have a non-custodial wallet? In addition to full control over the security of your crypto, you can also access more advanced crypto activities such as yield farming, staking, lending, borrowing, and more. But if you just want to buy, sell, send and receive crypto, a hosted wallet is the easiest solution.

How to set up a non-custodial wallet:

  1. Download a wallet app. Popular options include Coinbase Wallet.
  2. Create your account. Unlike a hosted wallet, you don’t need to share any personal info to create a non-custodial wallet. Not even an email address.
  3. Be sure to write down your private key. It’s presented as a random 12-word phrase. Keep it in a secure location. If you lose or forget this 12-word phrase you won’t be able to access your crypto.
  4. Transfer crypto to your wallet. It’s not always possible to buy crypto using traditional currencies (like US dollars or Euros) with a non-custodial wallet, so you’ll need to transfer crypto into your non-custodial wallet from elsewhere. 

If you’re a Coinbase customer, you have a choice of a hosted wallet or a self-custody wallet. The Coinbase app, where you buy and sell crypto, is a hosted wallet. You can also download the standalone Coinbase Wallet app to take advantage of the benefits of a non-custodial wallet. Some of our customers have both, making it easy to buy crypto with traditional currency as well as participate in modern crypto activities. Setting up any wallet is free.

Hardware wallets

A hardware wallet is a physical device, about the size of a thumb drive, that stores the private keys in your crypto offline. Most people don’t use hardware wallets because of their increased complexity and cost, but they do have some advantages – for example, they can keep your crypto safe even if your computer gets hacked. However, this advanced security makes them inconvenient to use compared to software wallets and can cost upwards of $100 to purchase.

How to set up a hardware wallet

  1. Buy the hardware. The two most well-known brands are Ledger and Trezor. 
  2. Install the software. Each brand has their own software that’s needed to set up your wallet. Download the software from the official company website and follow the instructions to create your wallet.
  3. Transfer crypto to your wallet. Similar to a non-custodial wallet, a hardware wallet typically doesn’t allow you to buy crypto using traditional currencies (like US dollars or Euros), so you’ll need to transfer crypto to your wallet.

Just as there are many ways to store cash (in a bank account, in a safe, under the bed), there are many ways to store crypto. You can keep things simple with a hosted wallet, have full control over your crypto with a non-custodial wallet, take extra precautions with a hardware wallet, or even have multiple types of wallets. Are — the choice is yours with crypto.