By Artie Fisher-Teller
February 15, 2022
The world is moving fast, the internet is moving even faster. Nobody wants to wake up one day (possibly sooner than you'd expect) and realize they've become a technology dinosaur.
Cryptocurrency and blockchain, Bitcoin and NFTs are almost everywhere in the news and on social media today, undoubtedly confusing and even intimidating many perfectly intelligent and logical human beings (i.e., You) with their jargon and buzzwords. As I began my educational journey in this space years ago, one of the most instructive tasks I did that helped me understand the space better was creating a crypto wallet.
The reason you should still create a crypto wallet, even if you don't plan on using it, is to understand blockchain-based assets better. What's more, creating one is free so there's no cost to the education.
A crypto wallet allows you to send and receive blockchain-based assets such as Bitcoin and NFTs. Wallets can be desktop, mobile, or browser-based; the most popular type of wallet is a hot wallet, which means it's constantly connected to the blockchain network. A cold wallet is one that isn't connected to the blockchain at all times (such as a computer hard drive or USB thumbdrive) and therefore offers greater security.
Once you've created your wallet, you can explore NFT marketplaces like OpenSea; cryptocurrency exchanges such as Coinbase or Binance; and block explorer tools including Etherscan or Bitcoin Block Explorer.
Learning about blockchain is the best way to understand blockchain-based assets and blockchain technology. Blockchain is a distributed ledger; it's decentralized, meaning there are no central authorities. The blockchain is encrypted with blockchain transactions that cannot be altered or reversed by anyone - even if they have the private keys to your account.
The blockchain is what makes cryptocurrencies like Bitcoin possible. It's a decentralized ledger of transactions that are validated by various users within its system with no need for a third party. Transactions on the blockchain are verified by miners, who use their computer power to solve complex mathematical problems to add new blocks of data to the blockchain and receive a reward of cryptocurrrency in return.
Bitcoin is the first and most well-known cryptocurrency; there are currently over 18 million Bitcoins in circulation, with a maximum supply of 21 million. Like all blockchain-based assets, Bitcoin is stored in a blockchain wallet; blockchain technology means that your Bitcoins are decentralized and therefore cannot be controlled by any government or institution.
NFTs (non-fungible tokens) are blockchain-based collectibles that allow users to own digital artwork, digital land, and other unique digital assets. NFTs are stored in blockchain wallets just like Bitcoin and other cryptocurrencies; as the blockchain technology evolves, so too will the possibilities for what can be done with NFTs.
The blockchain system is designed so that blockchain addresses can only be used once, making it difficult for thieves to access your coins without the password. The blockchain’s decentralized structure means there is no one person or organization that has complete control over all transactions; rather, each blockchain node (a computer connected to blockchain) tracks and verifies all blockchain transactions.
As with anything related to technology, there is always the risk of a hack. But blockchain is one of the most secure systems in existence: it hasn’t been hacked (yet). And blockchain wallets are so much more secure than traditional financial accounts. Traditional financial accounts have some protections in place that can help recover misdirected funds, but may not have recourse to recover intentionally stolen or laundered funds.
Blockchain technology and cryptocurrency are both still in their early developmental stages. Who knows what could happen down the road? A crypto wallet provides a way of securing your cryptocurrencies so that, even if something happens to the blockchain technology or cryptocurrency markets, you still have access to your money.
I created my wallet using Metamask but there are several other providers you can choose from.
MetaMask is a browser extension that allows you to store and use cryptocurrencies on the blockchain. It's available as a Chrome, Firefox, Opera, and Brave extension. Metamask also has a mobile app for iOS and Android devices.
Once you have installed the Metamask extension, you'll be prompted to create a new wallet. You can choose to generate a new password or use your Google or Facebook login credentials.
Metamask generates passwords and keys on your device, so only you have access to your accounts and data. You always choose what to share and what to keep private.
When you created a new wallet, you will be provided with a 12-word recovery phrase. This is critical: You need to keep track of your recovery phrase. Write it down on a piece of paper or print it out and put it somewhere safe. If you lose your password or seed phrase, you will not be able to access your wallet and cryptocurrencies. When you're done, click "I'm Done" and Metamask will generate a public address for you. You can use this address to receive payments and donations from other blockchain users.
The world of crypto is full of stories of people who forgot their password and/or seed phrase—and along with it, millions of dollars in wallet-bound cryptocurrency.
There are many stories out there about people who lost access to their crypto holdings due to forgetting their password and/or seed phrase and, along with it, millions of dollars in wallet-bound cryptocurrency
The benefits of creating your wallet include gaining familiarity with the terms, phrases, and community around blockchain. It will show you that it's actually not as difficult as it might first seem to navigate these newfangled websites and understand the new types of information they provide. Importantly, by dipping your toe(s) in the blockchain ecosystem, it makes you incrementally more comfortable and familiar with what is most certainly going to be an element in our tech future.
Good luck, and let me know how you fared in the Comments section below.
Artie Fisher-Telling has worked as a technical consultant to both startups and multinational corporations. In his spare time, he enjoys playing with his two Siberians, Christian and Alexander, barbecuing, and painting miniature figurines.