2. Creating HW and SW wallets

Jan 24, 2023

We will start the DeFi tutorial by explaining how to create a cryptocurrency wallet.

You have two options to choose from, namely a hardware or software cryptocurrency wallet. These wallets will be used to securely store your cryptocurrencies and confirm transactions.

You will also use cryptocurrency wallets to interact with various platforms in the decentralized finance world. The use of them across blockchains will be very similar. Only the type of wallet will change, e.g. we will use a different wallet on the Ethereum blockchain than on the Solana blockchain.

We divide wallets for storing crypto portfolios into software (SW) and hardware (HW). Let's explain the fundamental difference between HW and SW wallets.

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What options do we have

If we have a HW wallet, we have to confirm the transaction in the crypto world by physical buttons on the HW wallet. We always know what transaction we are making and have complete control over our wallet.

SW wallets installed on a computer are vulnerable in this. If your computer is infected with a virus, a thief can steal the contents of your SW wallet without you being aware of it. If this happens, all is already lost and you will never see your crypto portfolio again!

A HW wallet is not a necessity. A SW wallet will be fine, but we do not recommend this option due to security concerns. Anyone who wants to safely navigate DeFi should definitely get a HW wallet.

There are several producers of HW and SW wallets on the market. In this tutorial, we will cover the set up and linking of Ledger Nano X (HW) and MetaMask (SW).

Ledger Nano X

‍is the most widely used HW wallet in the DeFi world and is fully compatible with MetaMask (Windows, Android, Apple). LedgerNano X also has Bluetooth functionality, which will make it possible to use the HW wallet with a mobile phone in the future, and offers the most compatibility with regard to tokens.

The list can be found here.

MetaMask

is a browser extension or app that functions as a crypto wallet and offers various ways to interact with blockchains. It supports EVM chains Ethereum, Binance Smart Chain, Polygon, Avalanche C-Chain, Arbitrum One,etc.

We prefer this combination and consider it the best choice if you want to enter the world of DeFi.

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HW wallet Ledger Nano X

Buy Ledger Nano X here.

Ledger Nano X set up: https://www.youtube.com/watch?v=bqmyNmjMmME

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The procedure, according to this video, is very simple. If we have successfully set up the wallet, we can move on to the installation of the SW wallet MetaMask.

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SW wallet MetaMask

MetaMask - download

On the official website we download the wallet according to the type of browser used. The wallet will be installed as a plugin and we should see it here:

Just click on the ‚Get Started‘ button.

In this tutorial we are showing how to set up a wallet, so we will select the 'Create a Wallet' option.

In the next step, we will create a password. We recommend using a minimum of 8 characters, upper and lower case, and a special character (£$?!...).

In the next step, we note down the Secret Recovery Phrase (seed). These 12 words can be written down or engraved on a metal plate, e.g.: Cryptotag Zeus

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We'll store the Seed in a safe place, and we never store it on the computer! One of the best-recommended practices in crypto world is to never share the seed phrase, or its location, with others, as this private phrase represents the key to your wealth.

Put the words we noted down in the previous step in exactly the same order and confirm.

Done, we have just set up the SW wallet.

Analyst opinion

Cryptocurrency wallets are an essential part of the crypto world. If you have followed the instructions, you should have set up and created your software cryptocurrency wallet. In the event you have also purchased a hardware wallet, you should have that set up as well. Now is a good time to become more familiar with the interface of your wallets. Just explore the wallet, but don not set anything up yet or get carried away. We will get you familiar with everything you need to know in the next steps of the tutorial.

We recommend using a combination of HW and SW wallets for maximum security of your digital assets. In the next step of our tutorial, we will look at linking these two types of wallets so they can work together. Always buy a HW wallet as a new one, never use a second hand one! You will get a seed when you initially configure it.

Never give the seed to anyone!