Cryptocurrencies & Crypto Wallets – Why, What & How
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Cryptocurrencies & Crypto Wallets – Why, What & How

What are Cryptocurrencies?

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Cryptocurrency is digital money stored on a blockchain.

You can send and receive crypto...

  • ...without middlemen (such as banks that take a fee for every transaction)
  • ...without revealing your personal information
  • ...at any time to anyone in the world in minutes
  • ...in fractional shares (e.g., you can send 0.00000001 bitcoin)

However, you do need to...

  • …pay network fees (e.g. Ether gas) which can be as high as bank fees
  • …deal with large price fluctuations
  • …be wary of scams and phishing attempts

Why should I own crypto?

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In the short term, if you own crypto, it is like you’re on a rollercoaster ride. Over the long-term, proponents argued that owning crypto has more benefits. Here’s why:
  1. Long-term investment: Bitcoin is one of the best performing asset in the past decade and the 5th largest “company” in the world. Ethereum, the 2nd most popular cryptocurrency, has grown even faster than Bitcoin in the last five years.
  2. Safeguard savings against inflation compared to traditional banking. For example, in the US, the inflation rate is at 6.8%. If you have money in a bank savings account, it earns a measly 0.5% per annum. This means you're losing 6% every year. Bitcoin is considered a good safeguard against inflation because it is capped at 21M coins, while governments can always print more fiat money.
  3. Good utility. Crypto is becoming a utility besides an investment – you can send crypto to anyone in the world, buy goods and services, and use dApps (decentralised apps) to support creators and more.

Where can I buy crypto?

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You can buy cryptocurrency through crypto exchanges, such as:
  1. Binance: Global exchange with low fees, but it is not accessible in the US.
  2. Coinbase: US exchange with good security, liquidity, and UX.
  3. Kraken: Offers 50+ cryptocurrencies, has great support, and lower fees than Coinbase.
  4. Gemini: A US-based exchange that offers ten free withdrawals a month.

What is a Crypto Wallet?

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A crypto wallet is software or hardware that lets you store crypto and make cryptocurrency transactions.

How does a Crypto Wallet work?

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A crypto wallet stores two keys:
  • public key is linked to an address that lets you send and receive transactions.
  • private key proves that you own the assets associated with your address.
  • seed phrase is 12-24 words that let you access your private key.
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If your wallet was your bank account, your public key would be your account number, and your private key would be your PIN.

In Web3, your assets are on the blockchain – not in a bank.

Just remember that:

  1. You can share your public key with others to send and receive transactions.
  2. You must never share your private key or seed phrase with anyone.

What type of wallet should I get?

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Crypto wallets include hot (software) and cold wallets (hardware). Our advice is to:

Start with a hot wallet, then move your long-term assets to a cold wallet

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1. Start with a hot wallet

Hot wallets are connected to the internet. They’re more convenient but less secure than cold wallets. There are two types of hot wallets:

  • Hosted wallets are managed by an exchange (e.g., Coinbase) that you log in to with a username and password. With a hosted wallet, you don’t own your keys. Most people use exchanges without realising that they have a wallet.
  • Non-custodial wallets are managed by yourself – you own your keys, and can use these wallets as your Web3 identity. Popular non-custodial wallets include MetaMaskRainbow, and Coinbase Wallet.

2. Move long-term assets to a cold wallet

Cold wallets are hardware devices that are offline by default, and therefore are more secure.

If you don’t want to trade your assets anytime soon, consider moving them to a cold wallet like Trezor and Ledger to secure your long-term assets (they cost $60-150 USD).

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