A cryptocurrency wallet is a digital tool that facilitates the buying, selling, and storage of your cryptocurrencies and, in numerous instances, your Non-Fungible Tokens (NFTs).
It is responsible for managing the private key necessary for accessing a blockchain wallet address. It's crucial to understand that your cryptocurrencies and NFTs are not physically stored within the wallet itself; instead, they remain on the blockchain, accessible and manageable via the wallet.
Consider your wallet as the key to your blockchain address—it unlocks your digital vault, allowing you to engage with your assets stored on the blockchain, including sending and receiving items. Ensuring the security of your wallet and its private key or seed phrase is of utmost importance. This guide will explore the various wallet types and their setup processes.
Custodial vs. Non-Custodial Wallets Crypto wallets fall into two primary categories: custodial (or "hosted") wallets and non-custodial (or "self-custodied") wallets.
Software vs. Hardware Wallets Non-custodial wallets can be either software (or "hot") wallets, which operate on devices like computers and smartphones, facilitating quick transactions, or hardware (or "cold") wallets, which are physical devices offering enhanced security for long-term storage.
Both types necessitate setting up a personal access password or pin, distinct from the seed phrase used for private key recovery.
Wallet compatibility varies across different blockchains, and not all support NFT transactions. Platforms like Mereo allow the use of NFT-compatible wallets. Examples include Metamask and Wallet Connect, are compatible with Mereo.
Understanding Seed Phrases A seed phrase is a backup tool for crypto wallets, consisting of a sequence of words generated in a specific order. It acts as a human-readable form of your wallet's private key, essential for wallet recovery and access restoration.