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Hello everyone, I'm a veteran crypto investor. Recently, I've received many messages from readers asking about cryptocurrency wallets. As someone who has been tinkering with various wallets since 2017, I'd like to share my experience with you today.

I can still vividly remember my first encounter with cryptocurrency wallets. It was late at night, lying in my rented room, scrolling through my phone when I saw Bitcoin hitting another all-time high. I thought I couldn't stay ignorant about something so popular, so I started researching. Just understanding concepts like private keys and mnemonic phrases gave me a massive headache.

I remember staying up several nights, reading through various tutorials and documents over and over. It felt like learning English grammar for the first time - I knew each word individually, but couldn't understand them when put together. After years of experience, I've finally gained some insights. I'm sharing these today, hoping to help others who might be equally confused.

Basic Concepts

When it comes to cryptocurrency wallets, many people might think, like I did initially, that it's just a place to store money. But actually, this understanding isn't quite accurate. You know what? A cryptocurrency wallet is similar to a banking app we use daily, but with significant differences. It doesn't actually "store" your cryptocurrency, but rather keeps the private keys that allow you to operate assets on the blockchain.

This concept might sound abstract, so let me make an analogy. It's like your bank card number is your public key, and your password is your private key. The public key is like your bank account number, which you can freely share with others for receiving payments; while the private key is like your bank card password, which you must never share with anyone.

Speaking of which, I have to share an embarrassing mistake I made when I first started. I made a big error - saving screenshots of my private key in my phone's gallery. I thought it was very convenient at the time, thinking I could look it up if I forgot. Looking back now, it was extremely dangerous. Because if someone gets your private key, it's like they have your "bank card password" and can transfer your assets at will.

Moreover, phone gallery photos are now usually automatically backed up to the cloud, and if the cloud service provider's servers get hacked, or if an internal employee does something malicious, your assets would be at risk. So now I use the most primitive method - writing private keys and mnemonic phrases on paper and keeping them safe.

Types of Wallets

After discussing basic concepts, let's talk about types of wallets. They can be broadly categorized into hot wallets and cold wallets. These two types of wallets each have their characteristics, just like how we use both debit cards and cash in real life.

Hot wallets are like the cash wallets we carry around, convenient for daily use. They're always online and can make transfers and transactions at any time. For example, MetaMask and Trust Wallet are very popular hot wallets. I personally use MetaMask most often - its interface is clean, operations are intuitive, and it's especially suitable for beginners.

I remember being charmed by MetaMask's fox icon when I first used it. The installation process was also very simple, just like installing a regular browser plugin. However, it's important to note that you must download from official channels, as there are many fake wallets in the market, and using a fake wallet will result in asset theft.

Cold wallets are more like safety deposit boxes, used for storing large amounts of assets. They're more secure because they're offline. I remember in the 2021 bull market, many friends were asking me whether they should buy a Ledger (a hardware wallet brand). The coin prices were rising so crazy then that everyone started paying attention to asset security. Honestly, if you hold cryptocurrencies worth more than 100,000 RMB, I think having a hardware wallet is very necessary.

Although hardware wallets are a bit expensive, compared to potential asset losses, this investment is really nothing. I got my Ledger Nano X in late 2020, spending about 1,000+ RMB. After using it for so long, the experience has been good. Most importantly, it helps me sleep better at night, not having to worry about asset security.

However, when it comes to cold wallets, there are some usage tips. For example, when using it for the first time, you must initialize it in a secure environment. I specifically waited for the weekend, locked myself in my room, turned off WiFi and mobile network, and then started setting up. Some might think I was too cautious, but in the blockchain world, it's better to be safe than sorry.

Also, don't put all your assets in a hot wallet just because it's convenient. My suggestion is to keep about 80% of your assets in a cold wallet for long-term holding, and the remaining 20% in a hot wallet for daily transactions. This way, even if something happens to the hot wallet, the loss is within acceptable limits.

Security Advice

When it comes to wallet security, I really have too many painful lessons to share. Having been in this space for so many years, I've seen too many cases of asset losses due to insufficient security awareness.

The worst time was in 2019 when I almost lost all my assets because I entered my mnemonic phrase on a phishing website. At that time, I saw a so-called airdrop activity that said you could receive free tokens just by importing your wallet. I was greedy and entered my mnemonic phrase. Fortunately, I reacted quickly enough and created a new wallet to transfer out all assets after realizing something was wrong. If I had been a few minutes late, I might have really lost everything.

So I want to especially remind everyone: your mnemonic phrase is your lifeline, never tell anyone, and never enter it on any website or software. Remember one principle: legitimate projects or activities will never ask for your mnemonic phrase.

Now I follow these security principles: First, small amounts of frequently used funds are kept in mobile hot wallets, like Trust Wallet. This is like the cash we carry around for daily expenses. Second, large assets must be kept in hardware wallets, which is like our safe. Finally, I split my mnemonic phrase into several parts and store them in different secure locations.

Specifically, my current mnemonic phrase storage solution is like this: I split the 24 words into three parts, 8 words each. Then store them in different ways: one part in the home safe, one part with the most trusted family member, and one part in a bank safety deposit box. This way, even if something happens to one location, other backups are still there, ensuring asset security.

Another important security advice is about backups. Many people like to save private keys and mnemonic phrases in phone memos or note-taking apps, which is very dangerous. Because these apps usually automatically sync to the cloud, once the cloud server is attacked, your assets will face risks.

I suggest everyone use the most primitive but also safest method - writing it down on paper with a pen. Although this seems a bit old-fashioned, it's indeed the safest. Of course, paper storage also needs to be fireproof and waterproof, it's best to choose some special waterproof paper for recording.

Practical Guide

Now let's talk about some tips for daily use. These are experiences I've summarized from the pitfalls I've encountered over the years.

First is the process of creating a new wallet. This step is particularly important because if you do it wrong from the start, it might lead to irreversible losses later. I suggest everyone create new wallets in a secure environment. Specifically, I always turn off WiFi first, ensure there's no screen recording, and then start recording the mnemonic phrase.

Many newcomers like to take screenshots directly, which is very dangerous. Because phone screenshots are usually automatically uploaded to the cloud, and if your phone is infected with trojans, hackers can remotely access your screenshots. So you must write it down with a pen, and preferably write it multiple times to ensure there are no mistakes.

Then there are precautions for transfers. Always carefully verify the address before transferring. My suggestion is to compare each character after copying the address to ensure it's completely identical. Although this is troublesome, in the blockchain world, once you transfer to the wrong address, it's basically impossible to recover.

I suggest always making a small test transfer first, and only proceeding with large transfers after confirmation. This might cost a bit more in fees, but it's definitely worth it. I've seen too many cases of asset losses due to wrong addresses or wrong network selections. Data from 2022 showed that asset losses due to wrong addresses amounted to hundreds of millions of dollars. So there can't be any carelessness in this matter.

Another often overlooked issue is fee settings. Many newcomers always choose the lowest fees to save money, resulting in transactions not being confirmed and causing anxiety. Actually, when the blockchain network is congested, it's necessary to appropriately increase the fees. I usually look at the current network's average fee level and set it slightly above medium, so I won't have to wait too long or spend too much money.

Regarding daily wallet maintenance, I also have some suggestions. First is to regularly update wallet software, as new versions usually fix some security vulnerabilities. Second is to regularly clean up unused tokens and authorization records. Many people's wallets are filled with scattered tokens, which not only make the wallet interface messy but some might also pose security risks.

Future Outlook

Looking at the current development of wallet technology, I'm looking forward to more innovations in the future. For example, social recovery features make wallet usage more user-friendly. The principle of this feature is that if you lose your private key, you can recover your wallet through several pre-set trusted contacts. This is like how we give spare keys to trusted friends in real life.

Some wallets have also started integrating DeFi functions, allowing users to participate in liquidity mining directly in the wallet. This is really convenient, no need to switch between various DeFi protocols anymore. I remember when I first used DeFi, I had to open several web pages, which was very cumbersome. Now many wallets have integrated these functions together, greatly improving user experience.

Smart contract wallets are also a promising direction. Traditional wallets are all based on private keys, and once the private key is leaked, it's over. But smart contract wallets can set up more complex security mechanisms, such as multi-signature, transfer limits, emergency freezing, and other functions. This is like adding multiple insurance policies to your assets.

However, honestly speaking, no matter how advanced the technology is, basic security awareness cannot be abandoned. Just like how we manage cash, we must be cautious when necessary. I've seen too many cases of people losing assets due to seeking convenience or momentary carelessness.

Concluding Thoughts

Writing to this point, I wonder how many friends have gained new understanding of cryptocurrency wallets. Looking back at my years of experience in the blockchain world, it has been both exciting and interesting. From being completely clueless at the beginning to now being able to skillfully use various wallets and DeFi products, this learning process has made me deeply appreciate the changes brought by technological progress.

Actually, what attracts me most about blockchain technology is that it allows everyone to truly control their own assets. In the traditional financial system, our assets are managed by institutions like banks. But in the blockchain world, as long as you keep your private key safe, no one can control your assets. Of course, this freedom also means greater responsibility.

I remember when I first entered the space, I often lost assets due to operational mistakes or being scammed. That feeling was really awful, but it was precisely these lessons that made me understand the importance of security. Looking back now, the money lost was actually tuition fees, teaching me many valuable experiences.

Finally, I want to say that blockchain technology is still developing rapidly, and there will definitely be more innovative applications in the future. As users, we need to maintain a learning attitude, but also always keep security in mind. Security and convenience are often contradictory, finding the balance between these two is something every cryptocurrency user needs to think about.

What do you think? Welcome to share your experiences and insights about using cryptocurrency wallets in the comments. If you have other questions, feel free to discuss them. Let's learn and grow together in the blockchain world.