Crypto Wallet Basics
The first step in your Crypto journey was probably opening an account with Coinbase or one of the other brokerage style firms and buying some Bitcoin or other token. If you haven’t done this yet, here’s an older post I wrote on how to get started. As you move deeper down the rabbit hole, you are going to need to get your own Crypto wallet.
A Crypto wallet is a place you can hold tokens and also any type of NFT or digital asset. Your wallet serves as your identity and login to the Crypto world. You use it to verify your ownership of digital items when you are participating in Crypto communities. This will allow you to watch exclusive content, enter gated communities, sign up for IRL events, and much more.
The early leader in the war to be the wallet of the future is MetaMask. MetaMask was launched by a company called ConsenSys, which is led by Joseph Lubin — one of the founders of Ethereum. The company has raised nearly $300MM in venture capital, with a valuation of $3.2Bn on the most recent round. They have over 20 million users already. This is important. You want a wallet from a big company with resources to build out good features and the proper security.
The first thing you will notice once you get on the MetaMask site is that there is no way to “Sign Up” like a traditional web service. You need to download MetaMask to use it, and this is the same for most wallets. If you want to use MetaMask on your computer, it will ask you to download a browser extension to Chrome or whatever browser you like to use. You can also download the MetaMask wallet app and set it up on your phone. I have MetaMask in both my browser on my computer and on my phone.
Once you get MetaMask installed, you will set up a password and a “seed phrase” to evidence your account ownership. A seed phrase is 12 random words used for account verification. Be super careful with these two things, there is no way to restore your password or ownership of your Crypto wallet without the seed phrase. No help desk to call. No recovery questions. No resetting it, nothing.
MetaMask has some properties like a real wallet. If you lose your wallet from your pocket while walking on the street, anything in it is gone. Yes, I understand a good Samaritan might return your physical wallet, but that is also unlikely with a Crypto wallet. If you lose the password or the seed phrase or someone steals them, you are totally out of luck here. Anything in your wallet, whether it is Cryptocurrency or NFTs, is going to be gone forever. Never, ever, ever share your seed phrase with anyone on the internet. They are a ton of scammers on Discord and Twitter that will message you about fake problems with your account or amazing opportunities that require you to type in your seed phrase. Do that and your wallet is gone forever. You might get a message from MetaMask or ConsenSys about problems with your account asking for your seed phrase, this is also a scam. Be careful.
Once you have your wallet set up, you use this to connect to blockchain applications. Your wallet effectively serves as your login/password to sites like OpenSea to buy NFTs and Discord to verify your ownership of NFTs or tokens to get into communities. Increasingly having a Crypto wallet will be required to use some of the most innovative and fun parts of the internet. Often this is done by digitally signing a transaction from your MetaMask wallet in the application you want to interact with. This is another place you need to be super careful. Do not connect your wallet to strange places. Think of it like this, would you leave your wallet sitting on a table in a restaurant and walk away? No way! Same thing here, if you sign into a strange website with your wallet, there may be ways for people to steal items from your wallet. Until you are much more experienced in web3, stick with the biggest and most well-known websites and apps please.
At this time, MetaMask only works with Ethereum and related blockchains and tokens. If you want to buy an NFT on Solana or Flow, unfortunately you’ll need to use a different wallet. Phantom is the most common wallet for Solana. Blocto is the wallet for Flow. You need a Dapper wallet for their platform. This is messy, and I’m confident we will see multichain wallets soon. For now, I’ve got wallets on all four of these platforms myself.
One of the big new entrants to the wallet space is Coinbase. They launched their wallet a few months ago, and it is gaining traction quickly. If you have a Coinbase trading account, you might want to skip MetaMask and just open a Crypto wallet with Coinbase. I haven’t used it, but I am seeing easy integrations of the Coinbase Wallet in lots of popular blockchain apps.
One last topic to cover is that you are going to need to get some Crypto into your wallet to do anything with it. On your MetaMask wallet you’ll see a big button that says “Buy”. This connects with a service called Wyre. On Wyre, you can purchase Ethereum ($ETH) with a credit card and it goes directly into your MetaMask wallet. Alternatively, if you have a Crypto trading account at a place like Coinbase you can transfer $ETH from your trading account to MetaMask. At the top of the MetaMask app, you’ll see your wallet address as a string of numbers and letters. Copy it to the clipboard, head over to your Crypto trading account and you’ll be able to send money to your MetaMask wallet for a small gas fee.
I’ll have more to say on wallet functionality in the future, but this post got long, so I am going to wrap it up here. In the next post, we’ll go into more details about the coming Wallet Wars and discuss why this is going to be so important.
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