How to Create a Bitcoin Wallet
|— A Bitcoin wallet is an essential tool for managing and securing your BTC.
— To create a Bitcoin wallet, you must choose a type of wallet: software, paper, or hardware. Each has its advantages and disadvantages.
— A hardware wallet is one of the most user-friendly options when creating Bitcoin wallets, and Ledger Bitcoin wallets are some of the most secure hardware wallets yet.
If you’re here, you probably want to know how to send, receive, and store Bitcoin safely. Perhaps you’ve never encountered crypto wallets before. Or maybe you’re just looking for a more robust and secure way to store your BTC. Either way, to execute any kind of function and manage Bitcoin yourself, you’ll need a Bitcoin wallet.
But setting up a Bitcoin wallet isn’t as simple as it seems. There are countless methods and types of Bitcoin wallets, and each has its own process. Let’s explore what you need to know.
How to create a Bitcoin wallet?
The method of creating a Bitcoin wallet varies depending on the type of wallet you choose. And the wallet you choose depends on the specific features you want your Bitcoin wallet to have. There’s no one-size-fits-all solution for storing and managing your Bitcoin and related assets. However, some wallets are much more accessible and easy to use than others.
So what is the general process of creating one exactly?
To understand how to create a Bitcoin wallet, let’s start at the beginning. In fact, what is a Bitcoin wallet exactly?
What is a Bitcoin Wallet?
A Bitcoin wallet stores private keys; the strings of characters that allow you to manage a specific blockchain address. While often misconstrued as directly storing Bitcoin, that’s not the case. Bitcoin is stored on the blockchain. Your Bitcoin wallet stores private keys; the special series of characters that allow you to manage the funds at a specific blockchain address.
How Does Creating a Bitcoin Wallet Work?
Creating a Bitcoin wallet mainly consists of generating a private and public key pair and storing it somewhere; either physically or digitally.
Today, most Bitcoin wallets are hierarchical deterministic wallets, meaning that instead of having to store multiple private keys (one for each blockchain address you generate) they generate and store a single piece of information called the entropy. This long random number is often translated into a series of 12-24 words familiarly known as your secret recovery phrase. Your wallet uses this code to generate key pairs, meaning you don’t have to record them separately. The entropy, and therefore your secret recovery phrase, is essentially a backup of all of your private keys. Essentially, you can restore your whole wallet and all of their associated accounts by importing that single secret recovery phrase on any HD wallet interface.
Most wallets will provide you with a secret recovery phrase when you set it up for the first time. They use this model to ensure ease of use, but not all Bitcoin wallets follow this model. Thus the process of creating a Bitcoin wallet varies greatly depending on the type of wallet you choose.
Types of Bitcoin Wallets
So what are the options for someone wanting to create a new Bitcoin wallet?
Centralized Exchange Bitcoin Wallets
Centralized exchanges (CEXs) such as Coinbase, Binance, and Kraken, allow you to buy Bitcoin with fiat currencies, such as dollars or euros, a.k.a. on-ramping. Due to this feature, exchanges are popular with beginners looking to start buying and using BTC.
However, it’s important to note that centralized exchanges use custodial wallets. Instead of allowing you to store and manage your private keys yourself, they provide you with a username and password to manage your assets. Unfortunately, this means forfeiting the ownership of your private keys, which means handing over ownership of your precious funds.
When you use a custodial wallet, the centralized company that issues the wallet can decide to revoke access to your account at any time; Often, if you lose access to your exchange wallet, it’s due to local regulations, hacks, or even service downtime. However, in any of these instances, you won’t be able to do anything about it. Thus, if you do use a centralized exchange Bitcoin wallet to on-ramp, it’s always a good idea to move your assets to a non-custodial wallet immediately. That way, only you can move and manage your BTC assets.
Software Bitcoin Wallets
A software Bitcoin wallet, also known as a hot wallet, is a piece of software installed on your computer, smartphone, laptop, or tablet. Typically, software Bitcoin wallets are non-custodial, meaning they allow you to manage your private keys yourself. This is great; you are the only person who can manage your Bitcoin wallet, giving you true ownership of your BTC. They also tend to use the HD model; so you can also restore software bitcoin wallets with ease on other interfaces too.
However, software Bitcoin wallets store your private keys on your host device, such as your smartphone or laptop. This means they are always connected to the internet, which is very convenient for sending transactions to the Bitcoin blockchain. Unfortunately, this also leaves software Bitcoin wallets vulnerable to online threats such as malware and spyware. This is because they rely on the security of your internet-connected device; and thus are vulnerable to online threats.
Of course, not all software Bitcoin wallets work the same, and there are some instances where you’ll need to use them. So let’s dive into some of the sub-types of software Bitcoin wallets you may encounter.
Mobile Bitcoin Wallets
Mobile Bitcoin wallets, as the name suggests, run as an app on your smartphone and store the entropy in your phone’s memory. Trust Wallet and BRD are two popular examples of such mobile Bitcoin wallets. These wallets allow you to pay, trade, and within the phone. They can also easily scan QR codes and remain accessible on the go.
Desktop Bitcoin Wallets
In a desktop wallet, you install wallet software directly on your computer, and the private keys are stored on a hard drive or solid-state drive (SSD). Bitcoin Core and Atomic Wallet are two popular desktop wallets for Bitcoin.
Bitcoin Wallet Extensions
These wallets, installed as browser extensions on your computer or laptop, allow you to access the Bitcoin blockchain directly in your web browser. Today, Electrum is the most popular Bitcoin wallet extension.
Bitcoin Wallet Extensions are dependent on your browser and are easy to use as you can access your wallet from any computer with an internet connection right after you are done installing them. However, they are subject to the same vulnerabilities as most software wallets: malware.
Bitcoin Paper Wallets
Paper wallets are simply pieces of paper with private keys printed on them. This type of Bitcoin wallet is immune to online threats: no one can hack a piece of paper!
Typically, you will generate a Bitcoin paper wallet using a generator, of which there are many to choose from. Picking a generator can present a challenge though: not all of the generators you find will be entirely secure. Web-based generators often have confidentiality issues, so make sure if you use one, you’ve researched its track record first.
Another challenge paper wallets pose is that they are not very user-friendly. Using your paper wallet to send BTC involves setting up a change address before transacting. If you don’t, then any leftover currency you may have from a transaction will be lost. That’s not the only issue you may encounter either. If a paper wallet is lost or destroyed, then so is your BTC stored on it. And as you may have realized, paper is not the most foolproof method of storing information. So if this is the type of Bitcoin wallet you choose, make sure to protect that paper by storing it in a dry, safe place like a safety deposit box.
Bitcoin Hardware Wallets
A safe and accessible option for securing your Bitcoin is a hardware wallet. Like a paper wallet, it’s immune to online threats as it stores private keys and signs transactions in an environment isolated from an internet connection. However, hardware Bitcoin wallets are also much more practical: they also allow you to send and receive BTC without complications and typically they allow you to manage multiple Bitcoin accounts from a single device. They usually allow you to secure and manage other cryptocurrencies too.
Ledger devices are a great option as Bitcoin wallets as they offer all of the features you’d expect from a Bitcoin hardware wallet and much more. For example, Ledger devices use a secure element chip: the same computer chip used in your bank card or passport. This chip is protected against multiple physical hacks such as side-channel attacks and glitching. This chip also directly protects the device’s Trusted display, allowing you to check the recipient of each transaction is correct. From there you must also confirm each transaction on the physical device.
Not only that, using a Ledger device also gives you access to the wider Ledger ecosystem, allowing you to access multiple apps and services safely via Ledger Live. Ledger Live offers a secure gateway to all of these services, so you always know the app is official. Plus, with Ledger Live’s clear signing plugin, you can check the outcome of each transaction in human-readable language. These important features keep you safe from online threats that software wallets can’t protect against.
How to make a Bitcoin wallet
Now that we have covered different wallets available for you, you can choose the one that best suits your needs. So let’s dive into the action: it’s time to set up a Bitcoin wallet.
Steps to Set up a Software Bitcoin Wallet
Remember: the steps on each software wallet platform will be different. However, typically they will follow this loose process:
1. Select a mobile/desktop wallet app
There are different software bitcoin wallets to choose from, so make sure you research them fully. The security features of each platform vary greatly, so make sure you look into which types of attacks your software wallet may be vulnerable to.
2. Download the wallet app to your mobile or desktop
To avoid compromising your security, make sure the app is legitimate by downloading it directly from the official website. Downloading an app from a phishing site could compromise your assets.
3. Create a Bitcoin account
To set up your wallet for the first time, it will prompt you to record your secret recovery phrase. Next, it will usually require you to set up a password too.
From there, you’ll be able to create a new Bitcoin account. Most software Bitcoin wallets will allow you to create multiple Bitcoin accounts and manage them all within the same interface.
4. Transfer your BTC assets:
Now you have an account, it’s ready to store your funds. If you already have BTC, you can send it directly to your new account using its blockchain address. If you are starting your crypto journey, you will have to buy Bitcoin via an on-ramp service. Some Bitcoin wallets will allow you to do this directly from the wallet via on-ramp providers, but it often requires users to undergo a KYC identification process, which may take days to weeks to complete.
Steps to make Bitcoin wallet extension
While different providers have different setup processes, they all are more or less the same. So, here are the steps to create a Bitcoin wallet extension:
1. Select a Bitcoin wallet extension
There are several different wallet extensions to choose from, and each of them has a different track record and security model. Make sure you look into these features of each wallet before sending any crypto anywhere.
2. Download the wallet extension:
In the next step, download and install the extension on your browser. Just like with any other software wallet, you should make sure you download the official app. Unofficial apps also hide within browser extension app stores, so make sure you double-check that you have the correct one at hand.
3. Create a Bitcoin account:
Next, create a new wallet and make sure to back up your recovery phrase and keep it in a secure location. From there, you should be able to generate as many Bitcoin accounts as you like with a single Bitcoin wallet extension app.
4. Transfer your Bitcoin (BTC) assets:
To transfer your assets into the wallet extension, you can either deposit funds from a bank account or receive BTC from another wallet.
Steps to create a Bitcoin paper wallet
Creating a paper wallet is a simple process.
1. Download a Bitcoin wallet generator:
The first step is to find a reputable paper wallet provider and visit its official website. Download their generator software.
2. Go offline
Disconnect your computer from the internet connection to generate your private key offline. Also, make sure that there’s no remote access to your device to ensure maximum security. This makes sure that you don’t accidentally reveal your keys via an internet connection in the generation process.
3. Print key
In the next step, print out your private key on a piece of paper and make sure to keep it in a secure location, such as a lockbox. This is important because the paper wallet key provides access to your crypto funds, and if it’s lost or stolen, then so is your Bitcoin.
Steps to set up a Bitcoin hardware wallet
Much like every other wallet type, the setup process will be different for each hardware wallet. However, this is how you get started with the Ledger device:
1. Buy a Bitcoin hardware wallet:
You start by purchasing the device most suitable for you. Ledger devices stand out for its industry-leading security research lab the Ledger Donjon, and for making use of a Secure Element chip for keeping private keys offline. The strength of Ledger’s security model means Ledger devices have never been hacked! Plus, Ledger Live, your device’s trusty companion app, offers a secure gateway to apps and services—meaning the rest of the crypto ecosystem is at your fingertips.
2. Install Ledger Live on your device
Once you have bought the Ledger device, install its software, Ledger Live, on your computer or mobile. This app is a safe interface for managing your Bitcoin using your Ledger device, which keeps your data directly on your device to eliminate the need to sign in using an email and password.
3. Follow the steps to set up a Bitcoin app via Ledger Live
Once the app is installed, you can connect your Ledger device to your computer or mobile phone using a USB cable. To set up the Bitcoin app, just follow the instructions carefully.
4. Confirm the installation on your device and start transacting
After your Bitcoin account is set up, you can use your wallet address to send, receive, and manage your BTC. Any Bitcoin in your Ledger will be stored offline, providing ultimate security to your crypto assets.
Bitcoin Wallets: Helping you access the Bitcoin Ecosystem
A Bitcoin wallet is a must to access a wide range of opportunities in the cryptocurrency market while keeping your assets secure. Of course, each type of Bitcoin wallet has its strengths and weaknesses. If you want to manage specific assets such as Bitcoin ordinals, you will need to have a wallet that supports those types of assets. Often though, Bitcoin wallets that support niche assets won’t offer you the security of a hardware wallet. If you do want to manage niche assets with wallets, it often means trusting wallets with inferior security features.
Today, user-friendliness and security are the two most important things to consider in crypto. Every day bad actors find ways to scam crypto users, and many of them capitalize on the difficulty of using a Bitcoin wallet. That’s why hardware Bitcoin wallets are one of the best options for securing Bitcoin. They let you manage multiple Bitcoin accounts, are protected from online threats, and have an accessible interface. Ledger hardware wallets are also some of the most secure hardware wallets in existence, benefitting from a secure element chip that keeps your Bitcoin safe from online threats. Not only that, they also allow you to access the wider crypto ecosystem; including countless Bitcoin services via Ledger Live.
So what are you waiting for? Get a Ledger Bitcoin wallet and start managing your Bitcoin with the confidence of security. With a Ledger wallet, you can rest assured your crypto is safe, and always under your control. With Ledger, self-custody is an undisputable benefit: only you can access your crypto; which is exactly how it should be.
Frequently Asked Questions About Bitcoin Wallet
Are Crypto Wallets Free?
It all depends on the type of crypto wallet you choose. Software wallets, which are downloaded on mobile or computer, are usually free but come with centralization risks. Hardware wallets, on the other hand, are physical devices that cost money but offer better security features. While hardware wallets have a price, insecurity is much more expensive. If you get hacked, the value you lose could be a lot more than the price of a hardware wallet.
How to Get a Bitcoin Blockchain Address?
Your Bitcoin address is a long sequence of 25-35 alphanumeric characters and starts with digits 1, 3, or bc1. You can find this information after setting up any Bitcoin account within your Bitcoin wallet. With paper wallets, your blockchain address will be generated by the software generator you install on your computer or phone. With a software or hardware wallet, your address will be generated each time you request a receiving address.
Interestingly, you can generate a near-infinite amount of Bitcoin blockchain addresses with a single hierarchical-deterministic (HD) wallet.
How do I find my wallet address?
It depends on your wallet interface. Generally, you can find your wallet address by going to your wallet app and then finding the “Receive” option. Click on this, and you’ll see your wallet address. If you have multiple Bitcoin wallets, then you will first need to select the specific wallet you need the address for.