Okay, so this is step one. But even just at step one... shit isn't super clear. There are all kinds of different wallets, different networks, different interfaces. Its a lot to take in. But we'll make it easy here. I put together a primer on how things work, but if you already kind of get it and just want to know what the best wallet, I made a list at the bottom.
This is usually the first thing that trips people up. They are like "wait but I have a coinbase account is that not "my" bitcoin wallet? And, well... the answer isn't super clear at first. In order to understand the answer, we need to understand how crypto wallets work.
A wallet isn't really like a "wallet" in fintech land. Like we're not getting some app from a venmo or something like that and calling that our wallet... In crypto, we're doing something much more interesting. A "Wallet" in crypto is a pair of “Keys”. One key is public and another key is private.
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The private key is what lets you say "send funds there" and a public key is what you can send to people to say "send funds here."
Think about it like this, your public key is your username, and your private key is your password.
But where things get weird is that if you lose your password, you can't go click "forgot password" and regenerate your password by verifying your email or something. If you lose it, its gone forever.
But now if we go back to that earlier point on coinbase, you might ask "but I can tell coinbase that I forgot my password, wtf are you talking about melch!?" and this is now where we get to talk about the fun subject of Custodial vs Non Custodial.
So in some cases, companies have realized, people are not ready to manage their own wallets. Never losing your keys is terrifying for a lot of people, but those people still want to hold crypto. Thats where custodial wallets come in. This can be anything from Cash App to Coinbase to Blockfolio to your cousin saying "i got you." Custodial basically means someone else is managing the private keys (password) for you. Now while this might sound nice and easy, it does come with some downsides. If you want to learn more about this, check out the Defi vs Cefi post. But for quick takeaways, a custodial wallet means you need someone else's permission to engage with your funds. Where as with non custodial wallets, you are literally the only person who is able to control your money.
Okay, now if you understand the difference between Custodial and Non Custodial, the next thing to learn is the difference between a Hot wallet and a Cold wallet. This one is much easier...
Hot wallet: One connected to the internet that you frequently transact with
Cold wallet: One disconnected from the internet that you don't really use on a day to day basis.