Make sure you know this before you start with Crypto

Cryptocurrency is not a space to venture into without the proper tools and basic knowledge. It is extremely essential to know what to prepare for before you start your cryptocurrency journey.

The varieties of cryptocurrency exchanges and digital wallets, as well as how they work specifically, are some of the most crucial things for you to understand, as you will always need them along the journey. Many people have lost a significant amount of money as a result of the lack of knowledge about how to operate their wallets correctly to avoid permanent loss. Understanding the differences, functioning, and self-management capabilities of custodial and non-custodial cryptocurrency wallets is crucial.

You might need to write down a seed phrase or private keys while generating some of these wallets, and they must not be lost. Though, there are some wallets you can create without having to worry about losing your private keys — you can quickly recover your account.

So, how do you perfectly create, use, and secure your cryptocurrency exchanges and wallets? Let’s find out!

What are Crypto Exchanges?

Exchanges are a type of platform that let users purchase and sell cryptocurrency tokens. Like other forms of exchanges, crypto exchanges offer a wide range of digital assets to trade among one another or to fiat currencies. Cryptocurrency exchanges allow you to convert fiat currencies, such as dollars, euros, rupees, and others, to digital currencies, such as Bitcoin (BTC), Ethereum (ETH), and Mr Mint (MNT), as well as the other way around. In fact, some leading exchanges, like Binance and Coinbase, already permit the purchase, sale, and exchange of non-fungible tokens and other types of digital assets.

How to Understand Crypto Exchanges

You should understand that crypto exchanges can be classified into two categories — Centralized exchange and Decentralized exchange, and these two categories operate in completely different ways.

Centralized exchanges

Centralized exchanges (CEX) refer to an exchange that is run by a custodian, or trusted third party, who usually stores and safeguards user assets while serving as a trusted intermediary in deals, i.e. in place of a smart contract. These are regarded as centralized because a single organization controls all transactions and establishes the exchange’s policies and charges.

In other words, you don’t have the private keys that grant you direct control over the cryptocurrency; instead, the firm maintains track of how much cryptocurrency you own and holds it on your behalf. Instead of a private key, you have your email address and password for logging into your accounts.

Leading exchanges provide access to a wide range of digital assets with a variety of trading choices, including spot, futures, and margin trading, as well as security, fair market pricing, regulatory compliance, and consumer protection.

Decentralized Exchanges

Decentralized exchanges are the kind of cryptocurrency marketplaces that let consumers trade assets without having to leave their funds to someone else’s care. Users can download and run their wallet software and trade on a “decentralized” exchange (DeX) like Uniswap or SushiSwap for the highest level of security and variety. This means that users just connect their wallets to such DEXs to execute transactions without having their cash leave their wallets.

Hence, traders do not have to go through the know your customer (KYC) system or disclose any type of personal information before they may be able to trade their assets. Every operation on DEXs is carried out using smart contracts, which are automatically validating, self-executing contracts. Therefore, most DEXs are unregulated and generally do not allow you to transact with fiat currencies.

Now that you are familiar with the terms, types, and working systems of cryptocurrency exchanges, we can move on to talking about how to use them.

How to Use Crypto Exchanges

Centralized exchanges are much easier to use as they provide an easy-to-understand interface for traders at every level of experience. Likewise, setting up a centralized exchange is somewhat easy because you won’t have to be concerned about remembering an alphanumeric or secret phrase that provides you access to the account. Only your email, password, and occasionally your phone number are required for registration.

You will probably need to pass your KYC verification after creating your CEX account because most custodial wallets want to be sure they know who is transacting on their platforms. Of course, regulators also require them to implement the KYC mechanism.

Decentralized exchanges, on the other hand, could be a little complex for traders, especially for beginners. This kind of cryptocurrency exchange utilizes smart contracts to conduct its operations and runs directly on blockchain networks.

Although it might be complicated for new traders, using decentralized exchanges is safer, as your assets are still residing in your crypto wallet. You only need to link your wallet to the exchange once, execute your trade, and then disconnect.

What are crypto wallets?

A crypto wallet is a piece of hardware or software that you can use to store your cryptocurrency and facilitate crypto transactions. It is similar to a wallet in which you store cash and credit cards, although it is digital. A crypto wallet provides an interface for users to easily access their funds on the blockchain and use them. This kind of wallet is made of two key pairs: private keys and public keys.

Your private keys are the passwords that grant you access to your cryptocurrencies and let you ‌transfer and receive them. They must be kept safe. On the other hand, the public key acts as the address and functions as a bank account number that enables you to accept payments from others.

Types of crypto wallets

There are two types of crypto wallets: custodial and non-custodial.

While noncustodial wallets are those in which you are responsible for keeping your key secure, custodial wallets are hosted by a third party that stores your keys for you.

Cryptocurrency users who control their private keys and carry out transactions through non-custodial wallets (i.e wallets not maintained by exchange or another third party) are essentially acting as their banks. However, anyone who has access to a wallet’s private key can take control of the funds stored inside.

Wallets can be further divided into two categories: hot and cold. In contrast to a cold wallet, which has no connectivity, a hot wallet is connected to the internet or another device. Finally, there are three main subcategories of wallets:hardware, software, and paper. Each of these is categorized as either a hot wallet or a cold wallet.

Hardware wallet

A hardware wallet is a physical wallet–a small device that can store crypto offline. A hardware wallet maintains your keys off of your phone or computer. Crypto users typically connect the hardware wallet through a USB port to their computers to access their funds. No one can access the wallet unless they have the stick and the passcode, making this far safer– and since all the signing is done off your computer.

The Ledger Nano S, Trezor Model One, and D’CENT Biometric Wallet are good examples of hardware wallets.

Software wallet

A software wallet is an application that can be downloaded onto a computer, a mobile device, or a web-based wallet that can be accessed online. Software wallets fall under three other categories: desktop, online (web), and mobile.

Online wallets are those that can be accessed through a web browser, whereas desktop wallets are those that can be downloaded as software on a computer. A good example of an online wallet is Sollet.io.

The most popular ones are mobile wallets because users may access them from any location at any time. With their phone and a working internet connection, users may swiftly and securely send or receive cryptocurrency using mobile wallets.

Trust wallet, Metamask, Electrum, and BitPay are a few examples of mobile wallets.

Paper wallet

This is a way to store cryptocurrencies offline. A paper wallet is a printed piece of paper having both private and public keys that can be accessed by scanning a QR code. People use this type of wallet to store sizable sums of cryptocurrencies because they believe it to be the safest type of wallet as your funds won’t have any way to go online until it’s actively being used, which reduces the risk of hacking. However, if necessary precautions are not taken, it is exceedingly risky. For instance, the paper is more susceptible to damage than anything else.

The two most popular paper wallets used globally are the Bitcoin paper wallet and MyEtherWallet.

How Secure Are Crypto Wallets?

The private key owner can only manage a cryptocurrency wallet, especially non-custodial. Users are in charge of safeguarding their private keys because neither law enforcement nor the entity that created those wallets has a way to recover them when lost.

People’s primary concerns about the security of their cryptocurrency wallets include losing access to their assets if malware makes its way into the wallet and losing their private keys to a hacker who may choose to empty the wallet at any time.

Due to the high value of cryptocurrencies as targets for hackers, wallet security is critical. A few security measures you may want to consider include encrypting your wallet with a strong password, using two-factor authentication for exchanges, keeping any sizable amounts you possess offline, and keeping your passphrase from any form of exposure.

Conclusion

It’s crucial to look into the exchange’s security history, whether it’s centralized or decentralized before you trust the platform with your funds.

Similar to this, before selecting a crypto wallet, evaluate your priorities and gauge how much you value features like security and ease of use. Consider how convenient you want your crypto usage to be, and how much security you’re ready to give up for it. Most people analyze that formula while deciding which wallet is best for them.

Watch this video to make sure you know all the information before investing in cryptocurrency.

To know more about the Mr Mint project, log on to www.mrmint.io

Important Dates:

Private Sale: 2nd April — 15th May 2022 [CLOSED]
Pre Sale: 16th May — 30th June 2022 [CLOSED]
Public Sale: 1st July — 31st December 2022 [LIVE]

Join us on social:

Telegram: Mr Mint_Official Ann
Twitter: @MrMint_Official
Instagram: @MrMint_Official
Facebook: @officialmrmint
YouTube: Mr Mint [MNT]