Introduction

A cryptocurrency wallet is required to trade NFTs. If you want to mint your own artwork as NFTs, or collect the wonderful NFT art that is available throughout web3, you will first need to set up a cryptocurrency wallet. In this article, I will explain the basics of what a cryptocurrency wallet is, why you need one, and how to set up your first wallet. My name is Lauren McDonagh-Pereira. I am a photographer, NFT artist, NFT collector, and web3 blogger. I have been fully immersed in the NFT art space since February 2022. Curious? Read on beyond my disclaimer for a crash course in crypto wallets.

Disclaimer

[caption id="attachment_746" align="alignright" width="150"]

ⓒ Lauren McDonagh-Pereira Photography 2013[/caption] Before we get into it, please consider a few quick DISCLAIMERS.

• I am not a financial advisor, an art expert, a lawyer, or an accountant. Always do your own research before purchasing NFTs and never spend money that you cannot afford to spend. 

• This post represents my personal opinions and is NOT financial advice.

• I am an NFT artist. At the time of posting, I have works minted on the Tezos and Ethereum blockchain. Links contained in this article may point to my own minted NFTs or may point to the NFTs of other artists that I have collected from. If you choose to collect NFTs referenced in this article, I may earn money from your purchase.

• This post may contain sponsored ads and affiliate links. I may earn a commission if you click on an ad and make a purchase. I am not responsible for 3rd party websites. 

• Review my Privacy Policy here. 

What is a Cryptocurrency Wallet?

A cryptocurrency wallet is a digital wallet that allows you to send and receive cryptocurrency and NFTs. The wallet works by storing the private key that accesses your assets on the blockchain. Private keys are used to sign transactions and provide proof of ownership of the crypto assets associated with your public wallet address. Cryptocurrency wallets are associated with three codes: a public address, a private key, and a seed phrase. The public address is a string of letters and numbers that can be shared publicly. If someone wants to send you a crypto payment or airdrop an NFT, they will need your public address in order to do so. As an NFT artist, your public address acts as your digital autograph. For example, my Tezos address is used to identify my wallet across any Tezos minting platform. If you buy an NFT that was minted by this address, you can be sure that it is an original NFT that I created. As an NFT collector, your public address serves as your gallery. Clicking on the “Owned” tab of my Objkt.com account will show you every Tezos NFT that is owned by my Tezos wallet. I can use my public address to log into gallery apps such as Deca, OnCyber, or Spatial and build online galleries with the NFT assets that my wallet owns. A private key is a secret code that is used to access the funds associated with a particular public address. It is a long string of letters and numbers that should be kept private and secure. It is used to sign transactions and provide proof of ownership for the corresponding public address. If a private key is lost or stolen, the funds associated with the public address will be inaccessible. Digital crypto wallets store your private key for you, so that you do not need to remember it, or enter it when you want to make a transaction. Private keys can be hundreds of digits long. When you use a digital cryptocurrency wallet to create and store your private key, you will only need to type in a typical computer password. Just don’t use "Password123". Make sure you choose something secure and do not use a password that is associated with anything else. A seed phrase is a sequence of 12-24 words that are randomly generated when you create a new cryptocurrency wallet. This seed phrase acts as your recovery phrase in case you lose or damage your cryptocurrency wallet, or want to access your digital wallet on a new device. When you create a digital wallet, or set up a hardware wallet, you will be given a string of words. Make sure to write down the phrase, in the exactly correct order, and save it in a secure place. If you ever lose your seed phrase, you will not be able to recover the funds or NFTs you own. If anyone else ever gets a hold of your seed phrase, they will be able to access your cryptocurrency account and drain it of all resources.

© Lauren McDonagh-Pereira Photography

What are the Different Types of Cryptocurrency Wallets?

There are three different categories of crypto wallets; software wallets, hardware wallets, and paper wallets. Software wallets are desktop apps, mobile apps, or online wallets. These wallets are fairly simple to set up, and are the most convenient option if you plan to frequently make cryptocurrency transactions. Unfortunately, the convenience of software wallets comes at the expense of security. The internet is rife with phishing scams. If you accidently click on the wrong link, or download the wrong file, a hacker can get into your software wallet, steal your NFTs and drain your funds. Hardware Wallets are physical devices that resemble USB drives. Hardware wallets store your private key offline. Each time you want to make a transaction with your hardware wallet, you will have to physically plug the device into your computer. Hardware wallets are much more secure than software wallets and are highly recommended if you  are in possession of a large amount of cryptocurrency or high-value NFTs. The downside is that you will have to have access to a computer and your hardware wallet device any time you want to make a purchase or accept an offer. If a popular NFT artist does a surprise drop while you are out at a restaurant, you will not be able to just pull out your phone and grab that NFT. I use a Ledger Nano as my hardware wallet. It shipped quickly, and was relatively simple to set up. You can purchase a Ledger hardware wallet directly from their website here. (Note: This is an affiliate link. If you decide to make a purchase, I will earn a commission at no additional cost to you). Paper wallets are physical documents that contain your private and public keys. These are stored offline, so they are not hackable. However, if you lose the paper wallet, or it is destroyed, you will not be able to access the funds associated with the account.

The 3 Types of Crypto Wallets

Why Do You Need a Cryptocurrency Wallet?

If you want to trade cryptocurrency or NFTs, you need a crypto wallet. Your wallet will store and manage the private and public keys associated with your holdings. You will need to use these keys to sign and verify transitions on the blockchain, and to prove you own the funds and NFTs attached to your public address. If you lose access to your wallet, you will permanently lose access to your NFTs and cryptocurrency. If you do not plan to trade cryptocurrency or purchase NFTs, but want to simply buy some cryptocurrency to hold for a few years, it is still a good idea to set up your own wallet. Leaving your cryptocurrency in your centralized exchange account, like Coinbase, isn’t a good idea. When FTX went under, customers lost access to billions of dollars worth of cryptocurrency. Centralized exchanges can be hacked, go bankrupt, or freeze your funds. After you have purchased some crypto coins on a centralized exchange, it is best to transfer the funds out to a secure wallet that you can control.

ⓒ Lauren McDonagh-Pereira Photography 2022

Are Cryptocurrency Wallets a Security Risk?

Each type of crypto wallet has its own security risks. Scammers are constantly coming up with new ways to phish, hack, install malware, install keylogging software, or even trick you into giving them your seed phrase through social engineering. You can also lose or damage hardware wallets, paper wallets, or wherever you wrote down the seed phrase to your software wallet. It is important that you take all necessary precautions to secure your assets. Make sure that your wallet provider is reputable, use two-factor authentication whenever possible, create a strong and unique password, make sure your devices are updated, and remain vigilant for phishing attempts on the internet. NEVER give anyone your private key or your seed phrase. If a third party app or website ever asks for your seed phrase, STOP what you are doing, and close the page. NFT platforms such as OpenSea, Objkt, or Foundation DO NOT need your seed phrase, and will NEVER ask for it. Scammers have gotten very good at creating dummy sites that look like the real deal, but if the site wants your seed phrase it is NOT legitimate.

© Lauren McDonagh-Pereira Photography

How to Create A Cryptocurrency Wallet

To create a cryptocurrency wallet:

1. Choose a wallet provider - do some research to find a reputable wallet provider that works with the specific cryptocurrency blockchain that you want to use. For example, many people who trade Ethereum NFTs use Metamask, while people who trade Tezos NFTs often use Temple.

2. Download and install the wallet - Both Metamask and Temple wallets work as downloadable Chrome extensions that need to be installed in your browser. They also both offer mobile apps that can be installed on your phone for crypto trading on the go.

3. Create a new wallet - after you have installed your wallet, carefully follow the prompts to create your new wallet.

4. Write down the seed phrase - midway through the process of creating a new wallet, a seed phrase will be generated. Make sure to write this down exactly and store it in a safe place. Do NOT store this seed phrase online. Do not, for example, copy and paste your seed phrase into a Google Doc or email it to yourself. If anyone ever gained access to your Google account, they would easily be able to steal your seed phrase and drain your account.

5. Verify the seed phrase - the wallet set up process will ask you to type in some of the words from your seed phrase in the order that they appeared. Make sure to proceed slowly and carefully to ensure everything is correct. Once your seed phrase is off the initial set-up screen, it can never be recovered.

6. Secure your wallet - Create a strong, unique password that would be difficult to guess. Do not use a password that is associated with any of your other accounts on the internet.

7. Receive and send transactions - use your public key to send cryptocurrency that you purchased on a third party exchange into your wallet.

Conclusion

Cryptocurrency wallets are a vital part of your journey as an NFT artist or collector. Make sure that you take the time to choose the best type of wallet for your needs, to choose a reputable wallet provider, and to carefully secure your password and seed phrase. Once you have a wallet you will be ready to create and purchase NFT art! If this article taught you something new, let me know what it is in the comments! Remember to follow me on my socials to stay up to date on all the latest NFT Art with Lauren articles and news. Twitter Instagram Linkedin Pinterest Facebook Tiktok Youtube

References

Frankenfield, J. (2022, February 8). What is a public key? Investopedia. Retrieved January 22, 2023, from https://www.investopedia.com/terms/p/public-key.asp Frankenfield, J. (2022, November 22). Blockchain Wallet: What it is, how it works, security issues. Investopedia. Retrieved January 22, 2023, from https://www.investopedia.com/terms/b/blockchain-wallet.asp Frankenfield, J. (2022, October 14). Private key: What it is, how it works, best ways to store. Investopedia. Retrieved January 22, 2023, from https://www.investopedia.com/terms/p/private-key.asp Person, & Berwick, A. (2022, November 13). Exclusive: At least $1 billion of client funds missing at failed crypto firm FTX. Reuters. Retrieved January 22, 2023, from https://www.reuters.com/markets/currencies/exclusive-least-1-billion-client-funds-missing-failed-crypto-firm-ftx-sources-2022-11-12/#:~:text=The%20exchange's%20founder%20Sam%20Bankman,amount%20at%20about%20%241.7%20billio Sharma, T. K. (2022, December 9). Types of crypto wallets explained. Blockchain Council. Retrieved January 22, 2023, from https://www.blockchain-council.org/blockchain/types-of-crypto-wallets-explained/ Wickens, K. (2023, January 18). NFT god's 'entire digital livelihood' drained after Clicking fake obs link. pcgamer. Retrieved January 22, 2023, from https://www.pcgamer.com/nft-gods-entire-digital-livelihood-drained-after-clicking-fake-obs-link/ Wickens, K. (2023, January 19). I will never click another sponsored link on Google Again. pcgamer. Retrieved January 22, 2023, from https://www.pcgamer.com/i-will-never-click-another-sponsored-link-on-google-again/

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MEET Lauren McDonagh-Pereira

Lauren McDonagh-Pereira is a photographer from Massachusetts, USA. She captures the beauty of the world around her, favoring Nikon cameras and lenses. She is drawn to shooting landscapes, wildlife, nature, and people authentically enjoying life. Tweet me @LAMPphotography Twitter Twitter Instagram Linkedin Pinterest Facebook Tiktok Youtube