A crypto wallet is a digital tool that securely stores your public and private keys and provides a user-friendly interface to manage your crypto assets.
It allows you to view your cryptocurrency balance on the blockchain, but it’s important to note that your crypto isn’t actually stored in the wallet. You can also import your private keys into another wallet and still access the same balances.
Your private and public keys are made up of random numbers and letters, and every public key has a corresponding private key.
The public key is the address you use to send and receive crypto in the public domain. This is completely fine to share your public key with others as it doesn’t give them access to your wallet.
Alternatively, your private key is like a password or passphrase to access your wallet. It should never be given out to anyone, not even close friends or family!
To put it simply, it’s like an email account.
Your email address is public; people can send you emails without accessing your email account. This is like your “public key.”
Your password to enter your email account is private and never shared with anyone. This is your “private key.”
Hot wallets and cold wallets are the main types of crypto wallets. A hot wallet is a web-based crypto wallet that is connected to the internet. These usually are desktop or mobile wallets.
Whereas a cold wallet is the opposite and is kept offline, usually in the form of a small physical device.
Both wallet types have pros and cons; you should use them for their specific use case.
It’s beneficial to have one of each, as you can always store your most valuable long-term holds away in a cold wallet and have the wallet to transact with.
Crypto wallets can be broken down further into custodial and non custodial wallets. These types of wallets can be either cold or hot wallets too.
Custodial wallets are crypto wallets where a third party or service provider holds your private keys. This means you aren’t in complete control of your assets, as the custodian can manage your funds.
They are perfect for people who worry about being responsible for their own private keys. Custodial wallets are generally very user-friendly and are often preferred by beginners. However, suppose the third party that manages your assets goes bankrupt. In that case, you will nearly always lose your funds, too, as many crypto assets aren’t insured by the FDIC (Federal Deposit Insurance Corporation).
Whereas with non custodial crypto wallets, you have possession of your private key, and you’re responsible for its safekeeping. It may sound scary, but you then have complete control over your digital assets.
Non custodial wallets are commonly referred to as ‘self-custody’ wallets, as you’re in complete control. They offer greater security and privacy than custodial wallets, as only you can access your funds.
However, if you lose your private key and seed phrase, you lose complete access to your funds.
What’s a seed phrase? A seed phrase is a backup of 12 or 24 randomly generated words that you can use to gain access to your crypto assets. You can import the seed phrase into any crypto wallet, and it will show you your funds on the blockchain (providing the wallet works for specific networks and that particular crypto asset).
Firstly, identify your needs. Once you’ve done this, you can choose what wallet(s) you should use. But ensure you know the best practices in keeping your wallet safe [internal link to best safe practices blog].
At Silver Token, we recommend you start with one of the best non custodial hot wallets on the market, MetaMask. Also, MetaMask has great resources to learn how to use their wallet.
And once you’re comfortable using MetaMask, you can then look at using a cold wallet.
If you want to safeguard a large amount of Silver Token, it’s highly recommended that you purchase a hardware wallet, like a Trezor Model T