MetaMask Wallet
In simple terms, a crypto wallet helps you buy, sell, and store your cryptocurrency and your NFT assets. Going a level deeper, a crypto wallet manages access to your private key, which is needed to control a blockchain wallet address. Your cryptocurrency and NFTs are not stored in/on a crypto wallet; they remain on the blockchain and can be accessed, controlled, and managed through use of a crypto wallet.
Think of your wallet as the key to your address on the blockchain — you use the key to open the safe where your items are stored on the blockchain and use the key to send/receive items to/from your address on the blockchain. Just like any key, security of your wallet and private key (or seed phrase) are critically important. In this article, we’ll walk through the types of crypto wallets and how to set one up.
There are two main types of crypto wallets: custodial (also called “hosted”) and non-custodial wallets. Custodial wallets are managed by a third-party company, whereas a non-custodial wallet is not. Custodial wallets are akin to keeping the key to your safe at a secure facility operated by a third-party (who will verify your identity in some way before giving you the key), and non-custodial wallets are akin to keeping your key with you or at your home.
Custodial wallets therefore require less responsibility, but are at the mercy of the third party (like, if the third-party’s facility was robbed).
Non-custodial wallets give you full control but also mean you have to be extra careful (like, not losing your key or accidentally throwing it away when you reorganize your closet).
Non-custodial wallets include software and hardware wallets. These are also known as “hot wallets” and “cold wallets.”
A software wallet (or hot wallet) is a program that lives on your computer or on your internet browser. This makes software wallets a great option for quickly and conveniently buying, selling, and transferring NFTs and cryptocurrency.
A hardware wallet (or cold wallet) is a physical device that you may need to plug into your computer to use. Because it’s not always connected to your computer or browser, it’s a great option for long-term secure storage but is a bit less convenient for fast or frequent transactions.
Software and hardware wallets typically require you to set up your own password or pin to access the wallet. This password or pin is different than the seed phrase used to regenerate your private key.
A seed phrase, also sometimes known as a recovery phrase, mnemonic phrase, or seed mnemonic, is used to back up and recover a crypto wallet. It consists of a set of words in a specific order that are randomly generated. A seed phrase is typically made up of 12, 18, or 24 words, although some wallets might use different lengths.
The seed phrase serves as a human-readable representation of the private key that controls access to your wallet and items controlled by your blockchain wallet address. When you create a new wallet or set up a wallet for the first time, you’re usually prompted to write down and securely store this seed phrase. If you ever lose access to your wallet, you can use the seed phrase to regenerate the private key and regain access to your wallet.
It’s crucial to keep your seed phrase secure and private. Anyone who gains access to your seed phrase can access your wallet. Many people store their seed phrases offline in a physically secure location, such as a safe or a security deposit box. It’s generally not recommended to store your seed phrase digitally or online, as that may increase your risk of exposure.
A private key is generated during the process of creating a crypto wallet and serves as a digital signature proving ownership of the contents of cryptocurrency and/or NFTs stored at a specific public blockchain address.
Here’s how it works:
Public Address: A crypto wallet is associated with a public address, which is a long string of characters. On the Ethereum blockchain, these are 42-character strings and begin with “0x” as a prefix. This public address is what you share with others when you transact on the blockchain. Think of it like an email address; anyone who knows it can send you emails and you can send emails from that address.
Private Key: The private key is a randomly generated string of characters, typically around 64 characters in length. It’s kept secret and is essentially the password to access and control your wallet and whatever is stored at the related public address. Think of this like the password to your email account.
Access and Transactions: When you want to send tokens from your public address to another public address, you use your private key to digitally sign the transaction. This signature proves that you have verified access to the tokens at the public address and authorizes the transfer.
The process of setting up a crypto wallet differs from wallet to wallet, but for this example we’re going to walk through the flow of setting up a Metamask wallet. Metamask is a non-custodial software wallet that’s popular for NFTs.
Like many wallets, Metamask has a browser extension, an iOS app, and an Android app. You only need the browser extension to get started, so download that.
Open the extension once it’s installed. You’ll be prompted to get started. Choose the option to set up a new wallet and follow the prompts.
During the setup process, you’ll be presented with your seed phrase. Make sure to follow best practices for keeping your wallet safe. Store your seed phrase in a safe place that no one else will be able to access. Never share your seed phrase with anyone.
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