- What are Cryptocurrencies?
- Why should I own crypto?
- Where can I buy crypto?
- What is a Crypto Wallet?
- How does a Crypto Wallet work?
- What type of wallet should I get?
- Further Reading:
What are Cryptocurrencies?
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?
- 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.
- 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.
- 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?
What is a Crypto Wallet?
How does a Crypto Wallet work?
- A public key is linked to an address that lets you send and receive transactions.
- A private key proves that you own the assets associated with your address.
- A seed phrase is 12-24 words that let you access your private key.
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:
- You can share your public key with others to send and receive transactions.
- You must never share your private key or seed phrase with anyone.
What type of wallet should I get?
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
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 MetaMask, Rainbow, 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.