Set up wallet
What is a wallet?
A wallet is a digital wallet for digital currencies like Bitcoin, Litecoin, Ethereum etc. The Wallet keeps the private keys that each user needs to gain access to a Bitcoin address ("account number") and receive or send funds. From a technical point of view, you do not actually keep bitcoins, but rather you keep the digital keys, which allow you to access a public Bitcoin address and authorize a transaction. This information about the digital keys is stored in a wallet.
So those who have access to the "private keys" also have access to the cryptocurrency and can steal it. As in the "old world," where you have to be careful that no other access to your wallet has to be, you have to be careful in the crypto world that no one gets to the private keys.
See wallet addresses, for example So out of:
Bitcoin (BTC) Wallet Address: 37CB51EbJb72m3SncofWDdMZ8HhbdfkSeG
Ethereum (ETH) Wallet Address: 0xB08beEE7B822CECEeDc5A72F0E7dafe6717f45d
Or as a QR code so that you can easily pay from your mobile phone and not have to enter a long Bitcoin address first.
There are various ways to secure his coins.
- Desktop wallet
- Mobile wallet
- Hot Wallet/Online or Web Wallet
- Paper wallet
- Cold Wallet/Hardware Wallet
Each category has certain advantages and disadvantages. Take the paper wallet as an example. Anyone can create their own Bitcoin Paper Wallet in one minute (e.g. https://www.bitaddress.org/).
This has the great advantage that the private key can be printed out and therefore access by hackers is almost impossible. But, of course, Paper Wallet also brings disadvantages. This is because in order to access your own wallet, for example, to transfer Bitcoins, the public and private key have to be entered every time. Thus, for example, the Bitcoin Paper wallet is not suitable as a daily current account to make multiple transfers – to save bitcoins in the longer term can be more of a useful application for the paper wallet.
We'll go into the following two here.
- Cold Wallet - in our case a hardware wallet "Ledger Nano S"
- Hot Wallet - e.g. an exchange such as Coinbase or Binance
If you want to keep your purchased or purified coins "hodln," i.e. in the longer term, we recommend a hardware wallet, as the security there is relatively high.
The hardware wallet is protected by pincode and is only connected to the Internet if it is connected to the computer via USB. As soon as you deal with the transaction etc. When finished, you separate the stick from the computer and the wallet is offline and the coins are better protected from hacker attacks.
Hardware Wallet Ledger Nano S @ Amazon
Logging on to an Exchange Exchange
In principle, the registration is similar for all stock exchanges. You create an account, here you have to enter various data in the KYC (know your customer) procedure in order to confirm your identity. As a next step, you have to add a payment method. The quickest and easiest method is a credit card, there is no waiting time here and you can buy directly. You can also use the Giro account, then you first have to run a test transfer of a small amount to a Coinbase account to verify your account. That can take a few days. If you have loaded money into your Coinbase account, you can now buy, receive and ship cryptocurrencies. For this purpose, a transaction fee is required, depending on the network utilization and the fees of the Exchange exchanges.
To, for example, To receive Bitcoins we first need to determine our Bitcoin Wallet address. To do this, you select the currency you want to receive in the wallet and click on Receive. Then a window opens in which the recipient address of your wallet is displayed.
Now you can copy the address and send it to the person (via email, messenger, etc.) who wants to send us Bitcoins.
When copying the wallet address, make sure that no error creeps in and better compare the addresses again. So that you don't have to control the whole address it is enough to control the first four digits and the last four places, for example:
Are Bitcoin wallets anonymous?
Basically, the Bitcoin wallets are anonymous, meaning bitcoin wallets don't store personalized information such as the owner's name or address. However, these are assigned to one person, the person who owns the private key of the wallet and thus has control over the bitcoins. This means that bitcoins is often seen as a pseudo-anonymous means of payment. Because the true identity of the person is not apparent, but any transaction of the person can be traced via the blockchain. The Bitcoin address is therefore directly linked to a person and is used as a pseudonym of the person. There are cryptocurrencies like Monero which rely very much on anonymity but unfortunately are not yet so easy to use.
"Each wallet is anonymous – no personal information such as name or address is stored."
In the blockchain, every transaction of the Bitcoin wallet is recorded and is also visible to everyone. As a result, everything in the blockchain can be traced from the first transfer to the last transaction.
When is the Bitcoin wallet no longer anonymous? There are different ways in which the anonymity of the Bitcoin wallet is no longer given. Some might be:
- A Bitcoin wallet address is published with names: "Please donate to my address: 123"
- The Bitcoins are purchased and the recipient address is given
- FIAT money ("euro," "US dollar") is exchanged for bitcoins. Here, the identity usually has to be stated due to various money laundering laws
"If someone knows your wallet, they can also see how much credit you have on it."
Often, a new address is used for each incoming transaction, so that the balance of your own wallet cannot be viewed. Although the credit of each wallet can be viewed, it can only be accessed with the private key.
You can find out more about Bitcoin and blockchain in our tutorials.