Crypto 101: Securing Your First Crypto
So one of the greatest features (and biggest weaknesses) of the whole Crypto ecosystem is the need to secure your own assets. For many, they will go to Coinbase or another venue and buy something, and then keep it there forever. Honestly its a pretty natural thing to do, we have been trained by our current society to completely trust the institutions we interact with by the fact that if something happens to our money or assets we will be made whole in some fashion. Crypto is very different…
The best example is what banking was like a very long time ago. If you had a gold coin and wanted to keep it safe you could hold it in your own house, or if you thought it might be stolen, you’d give it to a local bank to keep it safe. But if that bank got robbed, you were out of luck. That is the same thing with crypto and using an exchange (coinbase is a type of exchange) to keep your assets, you are taking a big risk that something might happen to that exchange, either they mis-appropriate the money, or they get hacked. It is generally viewed, by almost everyone who knows about this stuff, that best practice is to secure and your own crypto assets. Now this sounds scary and daunting but really it isn’t. It just takes a little effort, and in the end your assets will be much safer, and under your full control. Literally no one on earth can take your assets without your permission if you do it properly, that is a very powerful thought.
As a disclaimer everything I talk about below, I have used, or use. I have looked into it somewhat, but you should always do your own research. There is always a risk with this stuff, and you should try to educate yourself to a reasonable extent. That being said, I trust this with a little bit of money you can probably do the same. If we are wrong we can have a beer and cry over our mistake. So that means don’t be putting huge amounts of money into these things without a ton more research!!!
So the first thing to know about these stuff is that there are different blockchains. I won’t go too deep into this because it might get super confusing for people. But lets put it like this, the different chains are like different venues for doing activities. Kind of like how you go to different websites to do different things, or different businesses to buy different things. Some chains like the bitcoin blockchain do very little else other than act as a money, and then their are chains like Ethereum that do literally 1000’s of things. Why this is important is that that in order to secure your assets you need to have a program that will work with whatever chain you have an asset on.
So for example if you buy bitcoin and want to secure that yourself, you will need to have a Bitcoin compatible wallet (a wallet is a piece of software that keeps your bitcoin safe and you control). If you bought Ethereum, an Ethereum wallet, if you bought a token like USDC (US Dollar Coin) then you’d need something compatible with Ethereum as well because that asset operates on Ethereum’s blockchain, and does not operate on Bitcoin’s blockchain.
For beginners the best bet is to get what people call a “multi-coin” wallet. Its a piece of software specifically designed to interact with multiple blockchains. Over the years I have used a lot of wallets, many started off as bitcoin wallets and then have migrated to offer more and more coins. Right now what I have found the best user experience so far is something called Trust Wallet.
This is a great mobile app (available in the app stores for free) that also includes a browser that lets you use your crypto assets super easily (this feature we will use in future posts). Its honestly been an incredible shift for how I use crypto. I would suggest using it as your first wallet and for small amounts of money (whatever is small to you, meaning your life isn’t hurt if something goes wrong).
So the Trust wallet can be your transactional wallet. What if you want to start looking at something a little heavier duty? Then you probably want to get something called a hardware wallet. “Hardware wallet, WHAT!” I know for people who have never heard of this stuff, its sounds crazy confusing. Well a hardware wallet put very simply is the same type of thing as the Trust wallet above, but its all housed on a single device, so nobody can hack it. Even if someone got into your phone or computer and got full access, if they don’t have access to your hardware wallet and password, they can’t get any of your crypto assets. Its a little crypto vault!
A hardware wallet usually interacts with your computer and browsers. The one that seems to be the most popular right now and also supports almost all the bigger tokens and coins out there is a device called a ledger. They have a couple of options, ranging in price from about $70 to $150. Either of them will do.
So those are the two easy options for securing your crypto. There are many more quality wallets and applications out there but that may be a subject for another post.
Next up on your crypto road is learning how to actually move your crypto, and some of the terms that go along with it. See you then!