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When you deal with cryptocurrencies, you don’t actually access "coins" themselves. They are data that stays encrypted inside the blockchain at all times, but what you can have is "rights" to owning that amount of data—similar to how, in the old days, your bills were "bank notes" representing certain amounts of gold. Those rights, which determine which coins and how much you have, are what you will be storing in your crypto wallet.

Speaking technically, there are exactly three things that your wallet stores: your public key, your private key, and your wallet’s address. You can learn more about these here. Now that you have an idea of what a wallet is, you can get your own.

But first, you have to choose:

Just as you wouldn’t take a metal safe to pay for your groceries, there’s no point in using an ultra-safe and slow wallet for something casual and day-to-day. There are certain tools for certain jobs, and you can always choose what you need. Here are your five different types of wallets to look out for:

Hot Wallet
Cold Wallet
Custodial
Non-Custodial
Multisignature

Let’s get into understanding each one.

Hot Wallet

If you want an association, a hot wallet is the most similar to your real wallet—it’s easy to get and easy to use. But if you want to store your family’s wealth and savings, that’s not what you’d choose.

Cold Wallet

If a hot wallet is like your everyday wallet, a cold wallet is more like a safe deposit box at the bank. It’s designed for long-term storage and maximum security, keeping your cryptocurrency offline and out of reach from hackers or online threats. Cold wallets come in forms like hardware wallets (think USB-like devices) or even paper wallets, where your keys are written down and stored physically. They’re not as convenient for quick transactions, but if you’re looking to stash away a significant amount of crypto for the future, this is your go-to option.

The trade-off? You’ll need to plan ahead when you want to access your funds. It’s not instant like a hot wallet—think of it as retrieving something valuable from a vault. Popular hardware wallet brands include Ledger and Trezor, which are widely trusted in the crypto community.

Custodial Wallet

A custodial wallet is like handing your money to a bank for safekeeping. With this type, a third party—usually an exchange or a service provider—holds your private keys for you. It’s beginner-friendly because you don’t have to worry about losing your keys or managing the technical details. Platforms like Coinbase or Binance offer custodial wallets, often tied to their trading services, making it seamless to buy, sell, or trade crypto.

However, there’s a catch: “Not your keys, not your crypto.” Since someone else controls your keys, you’re trusting them to keep your funds secure. If the provider gets hacked or shuts down, your assets could be at risk. It’s convenient, but it comes with a layer of dependency.

Non-Custodial Wallet

On the flip side, a non-custodial wallet puts you in full control. You hold your private keys, and no third party has access to your funds. This is the truest form of crypto ownership—aligned with the decentralized ethos of blockchain. Software wallets like MetaMask or Trust Wallet fall into this category, offering flexibility for everyday use while keeping you in charge.

The downside is responsibility. Lose your private key or forget your seed phrase (a backup set of words), and your funds are gone forever—no customer service to call for a reset. It’s empowering, but it requires diligence and basic security know-how.

Multisignature Wallet

Think of a multisignature—or “multisig”—wallet as a group-safe with multiple locks. It requires more than one private key to authorize a transaction, adding an extra layer of security. For example, you might set up a wallet where three out of five trusted people (or devices) need to approve a transfer. This is ideal for shared funds, like a business account, or for individuals who want to protect against a single point of failure.

Multisig wallets can be a bit complex to set up and manage, but they’re a powerful tool for advanced users or organizations. Services like Gnosis Safe offer multisig solutions if you’re ready to explore this option.

How to Set Up Your Crypto Wallet

Now that you’ve got a sense of the types, here’s a basic roadmap to get started:

Pick Your Wallet Type
Decide based on your needs—quick access (hot), long-term (cold), managed (custodial), independent (non-custodial), or extra secure (multisig).
Choose a Provider or Device
Research reputable options. For hot or non-custodial, apps like MetaMask or Exodus are solid. For cold storage, consider a Ledger Nano X. Custodial? Try an exchange like Kraken. Multisig? Look into Gnosis Safe.
Download or Purchase
For software wallets, download the app or extension from the official site—beware of fakes! For hardware, order from the manufacturer directly.
Set It Up
Follow the instructions—create a new wallet, write down your seed phrase (seriously, keep it safe and offline), and generate your public address. For hardware, connect it to your computer and initialize it.
Secure It
Store your seed phrase in a safe place (not your phone or computer). Enable two-factor authentication if available. Test with a small amount of crypto first to ensure everything works.
Start Using It
Send crypto to your wallet’s address, and you’re live! Use your private key or seed phrase only when absolutely necessary—like recovering your wallet.

Final Thoughts

Choosing a crypto wallet is about balancing convenience, security, and control. If you’re just dipping your toes in, a hot or custodial wallet might be enough. For serious hodlers or big investments, cold or multisig wallets offer peace of mind. Whatever you pick, treat your private key like the key to your house—guard it well, and you’ll be set to navigate the crypto world with confidence.

What’s next? Maybe you’re ready to fund your wallet—or curious about securing it even further. Let me know where you want to go from here!

How to make a crypto wallet