How to Create Your Personal Crypto Wallet and Why Is It Needed?

When you join the crypto community there are many things you need to do in order to make sure you receive the best and highest quality of experience possible. Among these, one of the must-do things is to create your own personal crypto wallet. Essentially, crypto wallets are what identify you and give you access to the blockchain and its many functions.

But not every crypto wallet is the same and there are different wallets each designed for a different type of trader. That being said, having a personal crypto wallet and not one provided by a third party is something that everyone should have, even if they use centralized third-party wallets every day. But why is it so important to have this wallet and how do we create one? That is what we will be discussing in this guide.

What are personal crypto wallets?

Personal crypto wallets are also referred to as non-custodial wallets. The reason they are referred to as personal wallets is that only the owner of the wallet has access to the funds, unlike custodial wallets provided by exchanges, where exchanges keep the private keys of the wallet to themselves. These private wallets give you the ownership of cryptocurrencies stored on them, and no one will ever be able to access these funds unless they get their hands on your private key. This removes the possibility of your funds being stolen by hackers or scammers, who might hack into exchanges and gain access to private keys. Private wallets also give you protection against exchanges themselves. Last year’s collapse of FTX showed the negative side of using third-party wallets, as millions of people were left with nothing after it was discovered that FTX used customers’ funds that were stored in the company’s custodial wallets.

What are personal crypto wallets used for?

The main and obvious answer to this question is to store and make transactions using cryptocurrencies. Whenever you receive crypto on your wallet, what happens is that the blockchain assigns these cryptocurrencies to your wallet and the private key of this wallet, and whenever you want to move these cryptocurrencies the private key of your wallet is used to prove ownership of these tokens and instruct the blockchain to transfer them.

But this can also be done using third-party wallets, with the difference being that these providers are the ones sending requests to the blockchain using the private keys and not you. The main usage of these wallets is associated with interacting with different blockchain projects and products. Whenever you visit a website that is associated with crypto and blockchain but is not an exchange or something similar, to use their services or just simply have an account there, you will need to connect your personal wallet. When connecting your personal wallet to these websites, you can use your cryptocurrencies to make purchases or transactions on these websites. For example, if you want to buy an NFT from OpenSea, you need to connect your personal wallet and when you press purchase, the wallet will give you a notification and will ask you to confirm the transaction. When confirmed this NFT will appear in your wallet.

But these personal wallets are not used just for this. If you are someone who plans on investing a lot in cryptocurrencies, storing your funds in third-party wallets is risky, and using a personal wallet is highly recommended. When you have your crypto in your personal wallet nothing can stop you from doing whatever you want with your tokens, and on top of that, if you follow basic safety measures, your cryptocurrencies will be protected from hackers, who mostly target exchanges since there is more to steal on there.

How to create your own personal wallet

Now that we know the benefits of a personal crypto wallet, it’s time to learn how we can get one. There are many different crypto wallets in both software and hardware form, called hot and cold wallets. The first step you need to take is to choose which provider of these wallets is best for you. The majority of crypto users have software wallets as they are more convenient to use, the reason being that they can be installed as applications or browser extensions, making it super easy to use them whenever you need to.

Once you select which wallet you wish to use, it is time to create your wallet. If you download this wallet as an app or even as an extension of your web browser, the wallet will simply give you the option to either create a new wallet or import an existing one. Since it is your first time creating a wallet, you will need to choose the new wallet option and follow the instructions.

When creating this wallet, the first thing you might be asked to do is to come up with a password. Since crypto wallets take security very seriously, this password will simply be connected to your computer or a phone, meaning that if someone was to gain access to this password, they won’t be able to do anything unless they have access to your computer.

After this, you will be warned about the importance of the next step and you should pay good attention. During the next step, you will be provided with a security phrase, which is a combination of random words and this is the actual password to your wallet. When giving you this security phrase, the wallet provider does not keep this phrase, meaning that only you will know the phrase and it is important that it is kept safe and never lost. Losing this phrase means losing access to your wallet permanently and there is no way to recover it, so it is best to write down this phrase and store it somewhere safe where no one other than you will have access to it. For security reasons, it will be better to write it down on a piece of paper and store it that way, but you need to make sure that you never lose that piece of paper. There is also the option of writing it in a text document and storing this document on a flash drive. However you choose to store it, the main goal is to keep this phrase safe.

After you have written down this phrase, you will be asked to enter the phrase to make sure you have written it correctly and have not made any mistakes. Once this is done, the wallet creation is done and you will be given access to the wallet where you can see both your public and private keys along with the cryptocurrencies that are stored there.

We need to mention that this is a basic process of wallet creation and each wallet will have a slightly different process for getting your wallet. But what we mentioned here will be present in almost every wallet setup.

Best private crypto wallets

Now you might be asking yourself, what is the best crypto wallet out there? Well, the final decision should always come down to personal preference, as you might like one wallet while someone might prefer another one. But we will present you with some of the most popular trustworthy crypto wallets out there, and choosing any of them will not be a bad decision.

MetaMask

Probably the most popular software crypto wallet, MetaMask is one of the best private wallets to use. Whenever you visit any website where you can connect your wallet, the MetaMask option will always be there. This wallet comes in two different forms, namely browser extension and mobile application. What makes MetaMask so popular is how easy it is to create a MetaMask wallet and how widely accepted it is.

The main cryptocurrency of MetaMask is Ethereum as it uses the Ethereum blockchain, but there are options for switching to different blockchains as well as adding other cryptocurrencies. All in all, if you are a beginner, this wallet will meet all your needs.

Ledger

Now if you are someone who does care about convenience and wide usage, while valuing security above everything else, then using Ledger as your private wallet is the best option. Ledger is a manufacturer of cold wallets also referred to as hardware wallets. Whenever you buy a Ledger wallet, you will receive a USB stick or something similar depending on the model, and this device will be your wallet.

What gives these Ledger wallets good security is that whenever they are not connected to your computer, they are inaccessible to anyone. So if someone were to hack you, they will not be able to access your wallet since it will be off the internet and outside of your computer. But you should also know that, unlike MetaMask which is free, Ledger wallets start at over $100 each. So if you are not sure that you need this type of wallet, then simply using MetaMask will be enough.

FAQs on how to create a private crypto wallet?

Is Binance a private wallet?

Whenever you create a Binance account and receive a Binance wallet, that wallet is not private. Binance keeps the private key of every wallet, making these wallets custodial, and the company remains the true owner of these wallets. Whenever you create a crypto wallet and you don’t receive a security phrase and access to a private key, that means that this is not a private wallet.

What is a crypto wallet security phrase?

Every private crypto wallet comes with a security phrase, which is a combination of random words, usually 12, and it is a password to your wallet. Whenever you wish to open this wallet on a different device, or you removed your wallet to re-install it on the same device, you will be asked to provide this security phrase in order to gain access to this wallet. This is why it is crucial to keep this phrase in a very secure place and make sure no one other than you ever lays eyes on it.