As a member of the crypto community, it is important to ensure the best and highest quality experience. One critical step to achieve this is by creating your personal crypto wallet. Crypto wallets are essential as they give you access to the blockchain and its many functions. However, not all crypto wallets are the same, and there are different types of wallets designed for different types of traders. Regardless of whether you use centralized third-party wallets every day, having a personal crypto wallet is crucial. In this guide, we will discuss why it is important to have your wallet and how you can create one.

What are personal crypto wallets?

Personal crypto wallets, also known as non-custodial wallets, provide exclusive access to the owner of the wallet. In contrast, custodial wallets offered by exchanges keep the private keys of the wallet to themselves. Personal wallets give the owner the ownership of cryptocurrencies stored in them, and no one else can access the funds unless they know the private key. This eliminates the possibility of hackers or scammers stealing your funds by hacking into exchanges and accessing private keys. Private wallets also protect you from exchanges themselves. Last year’s collapse of FTX demonstrated the potential danger of using third-party wallets. Millions of users were left with nothing when it was discovered that FTX used customers’ funds stored in the company’s custodial wallets.

What are personal crypto wallets used for?

Storing and making transactions using cryptocurrencies is the most obvious solution to the question of how to use them. When you receive crypto on your wallet, the blockchain assigns these cryptocurrencies to your wallet and the private key associated with it. To transfer these tokens, you would need to use the private key to verify ownership and instruct the blockchain to transfer them. 

However, third-party wallets can also be used for this purpose. The difference is that these providers send requests to the blockchain using private keys, not you. These wallets are mainly used to interact with different blockchain projects and products. For instance, if you want to purchase an NFT from OpenSea, you’ll need to connect your personal wallet and confirm the transaction.

Personal wallets are also recommended for storing your funds if you plan on investing a lot in cryptocurrencies. This is because third-party wallets are risky, and if you follow basic safety measures, cryptocurrencies stored in personal wallets are protected from hackers. Exchanges are more prone to hacking attempts since they typically have more cryptocurrency to steal.

How to create your own personal wallet?

Now that we understand the benefits of having a personal crypto wallet let’s learn how to get one. There are two main types of wallets: hot and cold. Hot wallets are software wallets that can be installed as applications or browser extensions and are more convenient to use. Cold wallets, on the other hand, are hardware wallets that are physically disconnected from the internet and offer better security.

To get started, you need to choose a wallet provider that suits your needs. Once you have selected a wallet, you can create your wallet. If you download the wallet as an app or extension, it will prompt you to either create a new wallet or import an existing one. Since this is your first time creating a wallet, you need to choose the “new wallet” option and follow the instructions.

When creating your wallet, the first thing you will be asked to do is to set a password. This password is connected to your device, meaning that if someone gains access to your password, they won’t be able to access your wallet unless they have access to your device.

Next, you will be given a security phrase consisting of random words. This phrase is the actual password to your wallet, and only you will know it. It is important to keep this phrase safe and never lose it, as losing it means losing access to your wallet permanently. It is recommended to write down the phrase on a piece of paper and store it in a safe place where you have access only to it. Alternatively, you can store the phrase in a text document on a flash drive. After writing down the phrase, you will be asked to enter it again to make sure you have written it correctly.

Once you have completed the above steps, your wallet will be created, and you will be given access to your public and private keys. While the process of wallet creation may vary depending on the provider, the steps mentioned above are present in almost every wallet setup.

Best private crypto wallets

Which crypto wallet is the best? Ultimately, the decision depends on your personal preference, as what works for one person may not work for another. However, we can provide you with a list of some of the most popular and trustworthy crypto wallets available. Choosing any of these wallets is a safe bet, and you can go right with all of them.

MetaMask

MetaMask is a popular software crypto wallet and one of the best private wallets available. Whenever you visit a website where you can connect your wallet, the MetaMask option will always be there. This wallet comes in two different forms: browser extension and mobile application. What makes MetaMask so popular is how easy it is to create a MetaMask wallet and how widely accepted it is.

The Ethereum blockchain is MetaMask’s main cryptocurrency, but there are options for switching to different blockchains and adding other cryptocurrencies. Overall, if you are a beginner, this wallet will meet all your needs.

Ledger

If you prioritize convenience and wide usage while also valuing security above everything else, then using Ledger as your private wallet is the best option. Ledger is a manufacturer of cold wallets, also known as hardware wallets. When you purchase a Ledger wallet, you will receive a USB stick or a similar device, depending on the model, which will serve as your wallet.

The security of these Ledger wallets is excellent because they become inaccessible to anyone whenever they are not connected to your computer. Therefore, if someone tries to hack you, they will not be able to access your wallet since it will be off the internet and outside of your computer. However, you should also be aware that unlike MetaMask, which is free, Ledger wallets start at over $100 each. Therefore, if you are not certain that you need this type of wallet, using MetaMask will suffice.

FAQs on how to create a private crypto wallet?

Is Binance a private wallet?

When you create an account on Binance and receive a wallet, it is important to note that this wallet is not private. Binance holds onto the private key of each wallet, which makes these wallets custodial, and the company remains the true owner of the wallets. Furthermore, if you create a cryptocurrency wallet and do not receive a security phrase or access to a private key, this also indicates that it is not a private wallet.

What is a crypto wallet security phrase?

Every private cryptocurrency wallet comes with a security phrase, which is a combination of random words, usually 12, and acts as a password to access your wallet. Whenever you need to open this wallet on a different device or reinstall it on the same device, you will be asked to provide this security phrase to gain access to your wallet. Therefore, it is of utmost importance to keep this phrase in a secure place and ensure that nobody apart from you ever gets to see it.