Introduction to Crypto Wallets

Crypto wallets are tools that allow you to manage your cryptocurrencies on a blockchain. A common misconception about crypto wallets is that they store cryptocurrencies like traditional wallets store money. This is not the case.

Rather, they store the security keys required to access and manage your cryptocurrency. They also provide an interface that allows you to interact with and authorize transactions on a blockchain. Similar to an online banking app in traditional finance.

Here, you will learn how crypto wallets work, how to set one up, and how to interact with a dApp.

How do crypto wallets work?

When you create a new wallet, the wallet automatically generates the following:

• a private key,
• a public key,
• a wallet address,
• and a 12-24 word long seed phrase.

The private key is a large, unique, secure number that the wallet uses to create a signature that proves that a transaction is authentic and was initiated by you. As the name suggests, the key is private and MUST never be shared. If someone else gains access, they can control your funds.

The public key is derived from the private key using a cryptographic algorithm. It can be shared without risking the security of your funds, and it is further hashed to create a wallet address.

The wallet address is a string you can use to receive cryptocurrencies or digital assets on a blockchain. You can think of it as your bank account number on the blockchain.

The 12-24 word seed phrase is a form of your private key. It provides access to the wallet and all keys derived from it. These keys should be kept private and not shared, as they grant anyone with the keys access to your wallet.

Now, you have learnt how a crypto wallet works. The next section will explore the different types of crypto wallets.

Types of crypto wallets

There are two main types of crypto wallets: Cold and hot.

Cold wallets

Cold wallets are wallets that are not connected to the internet. They are more expensive and less convenient to use than hot wallets. However, they provide more security and are less prone to online attacks.

Examples of cold wallets are hardware wallets like Ledger and Trezor and paper wallets, which are physical locations where the private and public keys are written down or printed.

Hot wallets

Hot wallets are wallets connected to the internet. They are cheaper, more convenient to use, and suitable for beginners and everyday users who make many transactions.

However, they are more prone to online attacks and hacks than cold wallets. Examples include,

• Browser-based wallets: Browser-based wallets exist as browser extensions and offer seamless interaction with dApps. Examples include Phantom Wallet for Solana and Metamask for Ethereum and EVM chains.
• Mobile Wallets: Mobile wallets exist as mobile phone apps ideal for on-the-go transactions. Some browser-based wallets also exist as mobile wallets and vice-versa. Examples of mobile wallets include Trust Wallet and Coinbase Wallet.
• Desktop Wallets: Desktop wallets exist as desktop apps. They are usually more feature-rich than the rest. Examples include the Exodus wallet.

You have now explored the different types of wallets. In the next section, you will set up a hot crypto wallet.

Setting up a crypto wallet

For this tutorial, you will set up the browser version of Phantom Wallet. To install it, navigate to the Phantom Wallet download page and choose your browser.

Choosing a browser should take you to your browser’s web app store, where you can install Phantom Wallet as an extension.

Once the installation is complete, open the Phantom Wallet extension and click the “Create a new wallet” button, as shown in the image below.

Clicking the button will provide you with 2 wallet creation options, “Continue with Email” and “Create a seed phrase wallet”. Select the “Create a seed phrase wallet” option.

Next, you will be prompted to create a password that you will use to unlock the wallet extension.

After confirming your password, you should see your 12-word secret recovery phrase. Copy the phrase and store it securely, as anyone with it can access your wallet.

After saving your recovery phrase, click the “Continue” button to complete your wallet set-up. You can access your wallet by clicking the Phantom Wallet icon on your extension list.

Now that you have successfully set up your Solana Phantom wallet, you will need to fund it.

Adding Funds to Your Wallet

You can fund your wallet by depositing crypto from another wallet or centralized exchange or buying crypto with a debit/credit card through a third-party provider. This tutorial will cover buying crypto with a debit/credit card through a third-party provider on Phantom Wallet.

Open your Phantom wallet and click the Buy button on your dashboard. Select Solana as the token you want to buy, enter the desired amount (in USD), and click the Buy button.

This will redirect you to the third-party provider’s page and prompt you to enter your card details. Note that this option is only available in regions the third-party provider supports.

Now that your wallet is funded, you can interact with the Solana blockchain and its ecosystem of Dapps.