How to Use Crypto Wallets

Why Do You Need a Crypto Wallet?

Unlike regular (or Fiat) currency, you can't just keep your Bitcoin or Ethereum in the pocket of your jeans or your purse. Digital coins need a digital place to be stored. This is where the crypto wallet comes in to help.  

But, if you think a crypto wallet stores your crypto coins, you're wrong again. (We know this sounds weird and complicated but bear with us. We'll get there!)

The crypto wallet only stores the public keys, private keys, and the passcode through which you can access your cryptocurrencies. Remember, cryptocurrencies are stored only on their respective blockchains. 

Think of your Bitcoin as a treasure chest located on a remote island. The crypto wallet only stores the secret map you use to get to the treasure. 

How to Transfer Crypto to Your Hot Wallet

If you want to transfer cryptocurrency to your hot wallet, here is what you need to do:

Step 1: Signing up for the wallet.

Most hot wallets are managed by a third party, so all you really have to do is open an account. Keep in mind that many cryptocurrency exchanges offer their own hot wallets, and most of the time, if you are conducting trades on the exchange, you will want to use those specific wallets for the lowest transaction fees.

Step 2: Buy and deposit your cryptocurrencies.

When you visit a cryptocurrency exchange and click on buy or trade, you can decide where you want the cryptocurrency to be sent. Here, you need to enter your wallet address, and after it is selected, a pop-up will show up on your screen where you will need to confirm the transaction itself. Many cryptocurrency exchanges will automatically place your crypto into your hot wallet. 

Step 3: Begin trading.

After your cryptocurrency is in your wallet, all that is left for you to do is start trading.

How to Transfer Crypto to Your Cold Wallet

If you want to transfer cryptocurrency to your cold wallet, here is what you need to do:

Step 1: Unboxing the cold wallet.

Here, you will need to unbox the package that came with your cold wallet and see all of the contents within it. Typically, you will find the device itself, a USB cable, a keychain, and 3 paper cards, such as a blank recovery sheet and instructions. 

Step 2: Connecting the device.

Many cold wallets or at least the more expensive options will have small LCD screens with multiple buttons. These buttons allow you to navigate the menus, select options, and confirm or sign transactions. You will need to plug in your wallet through a USB port on your computer, and this will typically only work with the cable provided in the box, and in some cases, you can use alternatives. Once you connect it, you will see a welcome message on your display and some instructions on how to use it.

To navigate the menu items, use the left or right buttons. To select an item on the menu, press both of them at the same time.

Step 3: Installing the software.

Typically, cold wallets will have their own software that you need to install to use them. Navigate to the wallet's website, download the official software, click on "Get Starter" or other similar buttons, and set up your device that way. 

Here you can configure the wallet and set up a PIN code. The developer recommended that you set up an eight-digit pin code. You will also receive a recovery phrase, and you need to store it in a safe location. We'd recommend writing it down on paper just to be on the safe side since it's a 24-word recovery phrase in most cases. 

Step 4: Transferring the cryptocurrency. 

To get your cryptocurrency onto your wallet, you need to go to your wallet and sign in with your passcode. Then go to the wallets tab, pick the one you want to receive the cryptocurrency too, and copy that wallet address. 

Next, go to the exchange where you purchased your cryptocurrency, login, and navigate to your balances. Click on the cryptocurrency you want to send, insert the wallet address you previously copied from your hardware wallet, and click on "Send." 

Approve the transaction, and you should see your cryptocurrencies on your hardware wallet. 

Bottom Line

Learning how to use a crypto wallet is a simple process. Now that you know how each of the two (hot and cold) wallets is used, it's time to start using one. If you don't know which, check out our article on the best crypto wallets available right now. 

If you want to start trading crypto and don't know which platform is the best for you, go to our crypto exchange page and answer our short questions. Our algorithm will analyze your answers and show you which crypto exchange is best suited for your current needs.