What is a crypto wallet? All it is is a private key that is used to encrypt and decrypt information that is on the public internet; in regard to your wallet it is the tool that is used to utilize you public wallet address. There are multiple types of wallets, I will be focusing on Ethereum and Ethereum based wallets for this post.
The context of this article is focused around the individual crypto investor, hobbyist, etc.
I own both Gamestop and Loopring (LRC), and wish to see them succeed. I’m here for the technology and believe in the future of DeFi. I have been hopping in and out of crypto since 2012 to include Bitcoin, Ethereum, and other Blockchain technology to include non crypto blockchain technology like Hyperledger Fabric.
This is a 12 or 24 word phrase that is generated when you create a new wallet for the first time. This is used to recover your wallet in case you lose it, being a hardware wallet that you had or you got a new machine and you want to restore your EOA wallet onto your new computer. With this you can create public addresses within the wallet to use.
There is actually a great article (below) on this from Ledger that explains how the BIP-39 standard works in regards to how the Secret Phrase is generated.
DO NOT SHARE THIS WITH ANYONE, there is literally 0 ZERO reason anyone would need this for a legitimate purpose. If you think your Secret Phrase is compromised move ALL assets to a completely new wallet ASAP.
This is similar to a secret phrase but instead of it giving access to every account ever made under your secret phrase, this allows you to import individual accounts into a wallet that had been initialized with a different secret phrase.
I don’t recommend this for the vast majority of people, and because of that I’m not going to rewrite anything, here is an excellent article on how to setup and utilize a paper wallet.
This is what I recommend for HODLers and serious crypto investors. There are two major vendors that I am personally aware of for this option, Ledger and Trezor. I personally use a Ledger but have tried both, both work perfectly fine. The main benefit of a hardware wallet is that your private key ONLY exists on that physical device and never leaves it’s anywhere on your computer.
These are probably what you are most familiar with if you are getting into the crypto space. These are the wallets akin to MetaMask, GameStop’s Wallet, Brave’s browser wallet, etc. These are typically browser extensions and are fantastic for day to day use.
You can extract these private keys and use that private key to add your public address to multiple wallet applications. I.E. I can use my GME wallet private key to import that account into MetaMask, or take my secret phrase and use that on a fresh metamask installation to recover all accounts associated with the phrase.
These are the types of wallets that are prone to being scammed, as people tend to sign things or accept whatever pops up onto their screen only for their crypto to be immediately drained from their wallet.
This wallet is truly an evolution to your traditional EOA wallet. It is a great middle ground between an EOA wallet and a Hardware Wallet, with the ease of use like an EOA wallet with the near security of a hardware wallet.
I delve into Loopring in greater depth in my other article here:
Maybe these will help someone understand:
It should be noted in the account export/import if you were to reinstall metamask (in this scenario) with the pass phrase it wouldn’t recover the GME account, you would have to reimport it.
Blah blah blah, that’s all well and good but let me provide you with how I utilize my crypto wallets. I have multiple for various purposes that each have their own pass phrase.
Ledger Nano X
I use this for long term HODLing, assets that I store here are not meant to be touched. I send funds to my ledger from an Exchange like Coinbase and don’t touch them ever again.
I keep $$$$ on this type of wallet
Browser Based Wallet(s)
I utilize both the Gamestop Wallet (because Gmerica) and MetaMask. These are the wallets I use for my Web3 identity, daily purchasing/sales of various things (mostly NFTs), etc. I have actually imported my GME account into my MetaMask to improve compatibility.
I keep $ on this wallet, as this is the least secure and if I were to fall victim to a scam/malware site this is all they would take. This is VERY temporary funds/NFTs. I use this for purchasing and then send whatever I purchase to another wallet.
Loopring Smart Wallet
I use this primarily for day trading crypto as Loopring is a purpose built DEX that also allows anyone to mint NFTs. With low fees and completely transparent DEX features I will never trade on a CEX again.
I keep $$ money on this wallet, I don’t do much day trading anymore.