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A general overview on crypto wallets and how to securely store cryptocurrency assets, tokens and NFTs.
What is a crypto wallet? It can be defined as a program or physical device that stores the public and private keys linked to a user’s cryptocurrency account. In general, a crypto wallet allows the user to send and receive cryptocurrency and, depending on the capabilities of the specific wallet in question, perform a number of additional functions as well, such as providing access to decentralized applications (dApps).
It is commonly said that these wallets “store” cryptocurrency, but this isn’t strictly true. Cryptocurrency always remains on the blockchain. What the wallet does is give users a secure, easily accessible way of storing their private keys and conducting crypto-related transactions.
Is it possible to conduct crypto transactions without a wallet? Yes, but dedicated crypto enthusiasts find wallets enormously useful. Anyone beyond the beginner-level stage of their crypto education will want to familiarize themselves with the different kinds of wallets and their various capabilities.
To aid you in your explorations, we’ve put together this brief how-to guide that will explain basic wallet concepts and show you how to go about setting up your own crypto wallet that is compatible with the Avalanche network.
Common Crypto Wallet Terminology
Crypto wallets aren’t all alike, and it’s important to understand the terminology used to describe the variants available out there.
Custodial vs. non-custodial wallets - A custodial wallet is one where the private keys are stored by a third party. By contrast, a non-custodial wallet gives the user full ownership of their private keys.
Many beginners opt for custodial wallets, which essentially allow another organization to assume responsibility for safeguarding their funds. More advanced users generally prefer the greater degree of personal control offered by non-custodial wallets. Beware, though—with a non-custodial wallet, losing your password may mean losing access to your crypto.
Hot vs. cold wallets - In short, a hot wallet is connected to the internet in some way, while a cold wallet is not. The main difference between these two options is the trade-off between accessibility and security. Active crypto traders prefer hot wallets because it’s quicker to access funds, but these wallets are also susceptible to hacking by unauthorized persons. Cold wallets are offline and therefore unhackable, but it’s also harder to access crypto on short notice. Another way to illustrate their differences is to describe a hot wallet as a checking account and a cold wallet as a savings account.
These concepts should be borne in mind when selecting the type of crypto wallet that is right for you.
Types of Crypto Wallets
Crypto wallets can be classified into three categories:
Software walletSometimes called an online wallet, this is an app that stores your private keys. It can be divided into web-based, desktop, and mobile subtypes. As a type of hot wallet, it is vulnerable to malware or malicious actors and for that reason requires strong security features. When commentators allude to “crypto wallets” as a general phenomenon, this is the type they usually mean.
Hardware walletThis is a physical device, such as a USB drive, in which you store your private keys. When not in use, a hardware wallet is unconnected to the internet and, ideally, is kept in a safe and secure place. It is therefore considered a type of cold wallet.
Paper walletThis is just any kind of offline physical medium on which you write or type your private keys. For example, index cards or sticky notes used for this purpose would be considered paper wallets. As a cold wallet storage solution, it has the benefits (immunity to hackers) and drawbacks (lack of immediate accessibility) inherent to that type.
Some crypto enthusiasts use a combination of the above to juggle their various coins—for instance, a hot software wallet might be used for one coin, while a crypto cold wallet might be devoted to another coin that they trade less often. But for serious cryptocurrency traders, the use of a software wallet in some capacity is virtually unavoidable.
The benefits of crypto wallets that are connected to the internet are impossible to ignore. That brings up an obvious question: How do you go about getting your own wallet?
AVAX Wallets Currently Available
When it comes to accessing the Avalanche network, you have multiple software wallet options to select from. The most widely used AVAX wallets include:
Released in 2022, Core is a non-custodial wallet that serves as a complete Web3 command center. In addition to enabling the trading of AVAX, Avalanche's native coin, Core includes various user-friendly features such as an address book; a portfolio display that shows all stored crypto assets associated with your account; a bridge that enables the transfer of Bitcoin and Ethereum tokens; and a collectibles gallery for the management of NFTs. Core is also compatible with Ledger, the popular hardware wallet for crypto.
Core is completely free of charge, and it’s easy to install it on your Google Chrome browser. You can learn more from the official Core website. Or, if you prefer, you can download Core from the Chrome Web Store.
From there, you can easily create a wallet in Core. Then you can begin sending and receiving crypto assets.
Avalanche Wallet is a simple, non-custodial wallet for the Avalanche network. As the original “official” AVAX wallet, it’s been around for a while now, and lacks the advanced features of Core, but it is still in wide use. It’s still a good option for anyone looking for a crypto DeFi wallet. Here’s how to set it up (before you begin, be ready to write down the 24-word key phrase that will be used to access your account):
1. Visit wallet.avax.network
2. Press “Create New Wallet”Press "Generate Key Phrase"
3. Click the box indicating you've written down your key phrase, then press "Access Wallet"
4. Enter your key phrase in the pop-up, then press "Verify"
5. Press "Access Wallet"
If you prefer to see the process step by step, view our video on Creating a New Wallet with the Avalanche Wallet. You might also wish to view our video on How to Send AVAX from an Exchange to the Avalanche Wallet.
MetaMask is a popular software wallet that is available both as a mobile app and as a browser extension. Although it was designed as an Ethereum crypto wallet app, MetaMask can be used to access the Avalanche platform, which is EVM-compatible.
With MetaMask, you have your choice of downloading it to the Chrome, Firefox, Brave, or Edge browsers, as well as iOS or Android.
Once you have installed it, you can watch our video on Connecting Avalanche to MetaMask.
Whatever wallet you use, it’s a sound idea to play around with it a little to get accustomed to its various features. You can also consult the collection of how-to articles on the Avalanche website for additional information about navigating the platform with a software wallet.