Hey everyone and welcome back to Cointelligence Academy.
Today we are going into our fifth session where we'll stop for a second and talk about many things that seem pretty basic like how to operate a crypto wallet but learning how to do these things correctly is crucial for correct behavior in the crypto space.
So in order to build your tower of information correctly we need the foundations that we lay now to be as robust as possible.
And so again my name is Raz like it says right here next to me.
I'm Head of Research at Cointelligence and I am teaching this course at the academy and I like to thank our sponsor Puma pay for allowing us to offer this course for all of you guys.
Puma pay is the first comprehensive crypto payment solution for businesses.
We combined the flexibility of payment cards with the advantages of block chain technology and we are excited to be partnering with a company that genuinely wants to increase adoption of crypto currencies and help many people pay less fees and have more control over their own money.
I'm reminding everyone that we are taking the discussion to our WhatsApp group where you can ask us questions about these sessions or about anything in the crypto space.
We answer all of your questions there.
And if you want to know whenever there's a new session available to watch or any other academy related update that we have.
Make sure you're signed up for the Academy to receive emails from us and links to everything that I talked about and all the links in today's session will be down in the video description.
All right.
So let's get started
and let's recap shortly so we've started with taking a close look at Bitcoin and we explained why it is so important in how it achieved certain things that no value transfer system has achieved before mainly its decentralized nature alongside its immutability which means that the information can't be altered and its sustainability which means that the bitcoin network supports itself without external help or reliance on other factors.
And from there we saw how many people were inspired by bitcoin to create other networks that aim to achieve similar but slightly different goals such as litecoin who wants to be the silver to Bitcoin gold if you remember this phrase and ethereum who wants to become a decentralized world computer.
Right.
And with this understanding the crypto market started to accelerate and in only a few years it became a market of its own which is completely global.
It has rules in properties that are similar in part to traditional markets but also there are many differences between traditional markets and the crypto market.
And finally during the last session we talked about how we use metrics such as market cap and supply types and Bitcoin dominance to gain information about the market and better understand the dynamics within the market at any certain moment.
So with all of that said I want to jump into today's session but first I want to do a small pause and talk about some stuff before we get into wallets.
So now that we know a thing or two about this exciting new industry I want to get the terminology right because many people don't get the terminology right.
Most of the time in crypto and I know it may seem petty but in my view it's crucial if you want to have the proper discussion to know what you're talking about and use the correct terminology.
So we'll start with the definition of a digital asset and a digital asset.
It's the most basic definition and it's any object whose value is represented in a digital way.
For example the dollars that people transact in our digital assets they've simply taken traditional assets U.S. dollars and represented them digitally and they allow people to transact in these digital assets.
Another example is a rare item in a video game.
It could also be considered a digital asset.
So it's very easy to also say that Bitcoin is a digital asset as we know from all of its properties that we've already described but also ethereum for example right.
Either I mean either the native currency on the ethereal Network also a digital asset it has value and it is represented digitally.
It's a digital asset for any any mean.
And so the next definition is crypto currency.
And this term is mostly used to describe Bitcoin , ethereum.
I mean ether on top of ethereum, litecoin and their likes and note that decentralization is not a requirement to qualify as a cryptocurrency for example XRP is also a crypto currency it's based on a crypto network.
It's based on a block chain based network.
It's a crypto currency.
It is a very centralized cryptocurrency but a crypto currency nonetheless.
It's simply a digital asset that is secured by cryptography.
Right.
And for example to the question which crypto has the best consensus mechanism that refers to to an individual cryptocurrency.
But when I say crypto is very exciting but also very risky.
I'm talking about the broader cryptocurrency market.
So the word crypto can be can be used to describe two different things right.
I can say this crypto is very interesting.
I'm talking about a certain asset but when I say crypto is very volatile I'm saying that the crypto market is volatile that the crypto industry is volatile.
So pay attention to the context and then you know what the person is talking about.
It takes time it takes experience.
But just know that the word crypto is used to describe a few different things.
Next one is block chain and block chain.
Let's get this straight.
The word block chain simply means a database structure to manage information changes and that's what it is.
And note it enables decentralization of the network upon which it is built right.
Blocking enables decentralization but it doesn't mean that every time someone uses the word block chain they immediately mean that the network is decentralized because you can have the network be decentralized using block chain.
You don't necessarily do that and the truth is that most block chain networks today are practically centralized even though they claim not to be or they claim or they they they wish not to be or they aspire not to be.
The truth is that the most most of the block chain net ness excuse me blocking based networks out there today are these are are centralized in in practice not envision.
But that's what's happening in the real world.
And there are also block chain platforms that are designed to be very different from from not networks such as Bitcoin from example IBM block chain platform which some of its biggest strengths come from the fact that it is a centralized business solution.
Right.
It is a solution that a company called IBM.
You might have heard about them.
They're offering for business and enterprises to use block chain.
And it's a completely centralized solution and there is nothing wrong with that because it accomplishes the goals that this product set out to accomplish.
Now the next one is coin and coin is also a term that people use which is similar to crypto but only when talking about an individual asset.
So like I said earlier when I say this crypto is very interesting.
I'm talking about an individual asset.
I can also say this coin is very interesting and it's sometimes used to refer to a unit of an asset such as bitcoin.
Right for example which coin do you like the most is probably asking about which cryptocurrency Do you like the most.
But when I say the 18th million coin was recently mined I'm definitely talking about bitcoin.
So that is coin.
And the next one is token.
That's the final one for the terminology today.
And token is a kind of asset that generally is not meant exclusively for value transfer but other uses such as unlocking certain features on platforms.
Think for example you are in a video game and you need to unlock the next level.
But the only thing you can unlock it with is one hundred of these tokens for example.
So tokens can be used for practically anything because we are now able to program value and there are many interesting use cases for tokens.
One example could be M.K. are the maker governance tokens which give their holders voting rights on certain issues and certain topics so that's it for the terminology and it's important to get it right going into the next section where we'll talk about this very long and confusing term hierarchical deterministic oil it's or from now on I promise you we're not going to be saying the whole thing just HD wallet and it's not video right.
It's not high definition.
It's just short for hierarchical deterministic HD wallets.
So we talked about what a basic Bitcoin wallet is built from which are the private key and public address.
These two things.
But if you've tried maybe to open up a wallet for yourself using one of the newer wallet solutions you've probably noticed these terms are not really used anymore and no one is asking you to hold on to your private key for dear life because it is the only thing guarding your precious bitcoins right.
Most wallets don't do that these days.
And the reason is that while this basic combination of private and public was the method to store coins for for a long while as time progressed many changes and upgrades were introduced to the way we store and manage crypto funds.
And one of the biggest improvements was the switchover from regular wallets like we know already to hierarchical deterministic HD wallets.
And since then it's mostly most most popular wallets most wallets.
Use this method and these wallets are considered more modern and they are much more user friendly while also providing better functionality and more security.
So basically this sounds like I'm saying hey HD wallets are objectively better than regular wallets right.
It's not.
It might not always be the case but let's learn what in HD wall is.
Before we decide upon it so when using these HD wallets the thing you then have to safeguard is no longer the private key.
It is the mnemonic seat right.
And the more pneumatic the mnemonic seed or simply the seed from now on.
This is a string of English words chosen randomly and it severe.
It's either 12 or 24 a word long.
Right.
It's just a string of words English words words that you probably know not too hard.
And it's 12 or 24 word long and since us humans are much better.
I'm human.
By the way since us humans are much better with using language than we are with random strings of numbers and letters.
This is much easier to remember and interact with than any private key.
Right.
Remember how private key looks.
It's this weird combination of letters and numbers uppercase and lowercase letters and many people simply memorize this string of words so they can recite it at will.
So because it's in English you can then just remember it.
Right.
And it's another way to back up your wallet simply remembering it the same way you remember your phone number.
And also this string is not limited to the creation of just one account of just one address which means that one seed is not equal to one.
Public and private key.
But many How many lots were a lot right.
More than you can use.
So when you are creating an HD wallet and receive a seed you can create multiple accounts from that seed and you can use each account for different purposes up to your consideration right.
Think if you go to the bank and you ask them to open up an account they will give you one one killer but they say hey you have as many accounts as you want.
Just use any one of them to any purpose you want.
That's what HD wallets give you essentially.
So in the end by safeguarding only one long phrase of English words you can have as many accounts as you wish and you use each one for different purposes.
Again up to your consideration in all of this sounds very hard to understand and manage.
I know but bear in mind most popular wallets do all of that automatically for you.
So all you have to do is just open up the wallet application or program and manage your funds from there.
It sounds hard but in the end it's going to be very easy and this is an example of a seed of a mnemonic seed 12 word seed.
I'm not going to read it but if you look at the words that you see here in English they're not so hard to understand and it's practically you can memorize it right.
And if you open up a wallet and you choose the option to restore a wallet using a backup seed and you enter this seed the one you see here you will have access to the exact same wallet that I generated in order to demonstrate this.
So I just went on a wallet application I clicked create new wallet and it used a random math function to generate this wallet.
And this is the see that it gave me.
And if you enter this seed into any Wallet application you will have the same wallet that I created then.
And of course there is no money in there.
I didn't put money to it in this wallet because I'm showing this the seed to all of you so you have access to to the wallet as well.
But it is a functional wallet.
You can go on there and just use it as any other wallet.
And behind my video for a second.
For the purposes of this guide will show how I created and ethereum based wallet which will allow us to transact in tokens and smart contracts across the Ethereum network and we'll use two examples.
This one is met a mask and met a mask as a browser extension.
And this one is my crypto dot com which is a wallet provider that can also be downloaded as a desktop app so you can use it online and you can use it just on your computer.
And note that these are both ethereum wallet providers but the process in bitcoin is very similar.
So what you see here will be essentially the same if you do so with a bitcoin wallet or for that matter any other HD wallet in any other platform.
So we'll go on one of these wallets and choose the option to create a new wallet.
And then we will receive one of these screens either this one or that one showing us a randomly generated seed which we then have to back up and sometimes we get tips from the wallet provider like you see in metal mask example right.
You see it says here tips.
Store it somewhere safe.
Write it down on a piece of paper in a secure location.
And that's it.
So after you've used the wallet to create the seat and you follow the instructions.
Many wallets like these two will ask you to enter the seat yourself so as to test you that you've actually written it down and you're not just clicking next next next you know to get it over with.
And this is done to protect users and emphasize that once you've created a wallet and you send funds to it no one has access to your wallet but yourself.
So in the event that you lose your seat you will no longer have access to your money.
So this is how these screens look like they say hey just enter your seat.
Make sure it's correct.
So you press these words in order.
Same thing here on my crypto the next screen after going through the process you presented with a message that tells you you've finished setting up a new wallet and it gives you additional tips as to how to store the seed and keep it for yourself.
Right.
It mentions here Madam ask cannot recover your seed phrase and it says that in any place basically they all want you to know that you've generated a wallet through them but they have no access to it and they can't help you in the event that something goes wrong.
So when you do this and this process pay close attention to all of the instructions provided by your wallet provider.
And again this was a process that I made using an Ethiopian wallet.
But the process using a bitcoin wallet light coin wallet in any other while it basically in most wallets do it this this way these days same process so we know about wallets.
We learned about HD wallets.
We can finally come to the part where I show you how to choose the wallet that best fits your needs.
And first we'll see what type of wallets even exist.
And we'll start with paper wallets and paper wallets.
We've already seen in our second session for a brief a short time and we saw how they are generated using random functions.
And then you can print them out and store them somewhere safe.
And like I said paper wallets are not HD wallets right.
Since they only are comprised of a public address and a private key.
So there is one account one private key one public address and only that's it.
And you can also store a seed on paper.
And it functions the same way.
And obviously you can just write down the words but most paper wallets that you find online are using the old model of one account.
It's basically just print as many paper wallets as you want to.
Now the next type is software wallets and software wallets or any wallets that run as apps whether it's on your phone on your computer or on your smart refrigerator.
Anything that can store data and connect to the network any network in order to broadcast transactions anything of this sort can be used to run bitcoin for example or ethereum or any other peer to peer crypto network or block chain network.
Right.
The only thing you need remember is a network connection.
So it's any app that knows how to broadcast transactions and is connected to the network.
And remember Bitcoin is an open source source software.
So I don't need to if I'm writing an app if I'm developing an app a wallet app I don't need to ask permission from anybody.
I just know the protocol.
I just know what rules my network will accept and I write them into the code in my app and the final type of wallet are hardware wallets and hardware wallets are a unique physical devices that can be used with software wallets but the actual part of creating the transaction is done entirely on the physical device and all the private keys are stored on the device and they never leave it all of the transaction things that's happening to create the transaction are are happening on the wallet itself.
The physical device it's called signing the transaction signing the transaction is done on the device itself and it's a super secure option but it costs money.
Since you're buying a physical device from from a company where the other two options are mostly free most software wallets and paper wallets are just free to use.
Go ahead use them.
And of course of course there is not one wallet which fits all users and different people have different things they need from their wallets.
So there are wallets that do certain things better than others and some that are doing things very differently than others but they achieve similar goals.
For example some bitcoin wallets are considered less user friendly but are focused on privacy and making sure it's difficult to follow the actions that you've done on the Bitcoin network career trail.
As infosec securities call it and the bottom line is while a choice comes down to personal preference right you got to see what you want in a wallet.
Play around with it a little and then decide for yourself which type is best for you.
But we will give you some tips today and for now let's go over go over all wallet types and see how they differ in which ones you should choose based on your needs.
We'll start by talking about a paper wallet and spoiler alert.
I'm not going to recommend paper wallet for most people but let's see why.
So paper wallet is nothing fancy.
It's simply printing out a public address and a private key.
Right.
Like I said in the sensually completely disconnect your credentials from the Internet which means that they cannot be hacked and stolen because paper can't be hacked right.
Do you know of somebody that knows how to hack paper that sits somewhere safe.
Because I don't.
And in practice not many people use paper wallets these days since they are very cumbersome.
And when you need to do access your funds it's not always easy.
And also paper has all the disadvantages of paper.
Eventually it can burn the ink could wear out a lot of stuff can go wrong with paper that you're just leaving somewhere so paper wallets are again just a way to secure content credentials that you print out or write down.
That can be used to access your account.
And remember all bitcoins are tied to the addresses that they're stored in.
So I'm using Bitcoin as an example but it applies to every cryptocurrency out there.
So all bitcoins are tied to their addresses.
So when you create a paper wallet that holds bitcoins the bitcoins are not in the paper itself.
Right.
It sounds weird because it really isn't the case the paper controls the keys that enables you to access your funds that are on the block chain.
The key is to access your funds.
I'm rephrasing are printed on the paper when you use these keys to access your funds that are on the block chain.
And in order to use this funds you will always have to import the wallet into a software wallet.
Right.
Which means that the paper wallet is a sort of passive while it all the time it is in storage.
And only when you want to send out funds from the wallet then you can import the private key that is written down into a software wallet of your choice and use that to move funds around.
So when you have a paper wallet you cannot send out transactions from the paper wallet unless you've imported it into a software wallet.
The only thing you do is keep receiving funds because you have the public address and you can just tell everyone your public address
now most of the people who do use paper wallets are very long term holders mainly of Bitcoin and they plan to not touch their bitcoin balances in a very long time.
Most of them out of a strong belief that the bitcoin value will continue to increase as time goes on.
This practice has grown to be so big.
And that is sometimes jokingly considered a sort of a cult or in the Internet culture a meme and the name for doing that is hotel right.
Like I've written down here HDL Hodel that's how most people pronounce it which is the wrong spelling of the world hold actually right.
And that dates back to an old internet joke from the bitcoin forums at around 2013.
I think about some guy that regrets trading bitcoin when he could have just held it or hold all it because he makes some sort of joke and writes down hole.
Just just go to see that post just write down hotel and your favorite search engine and you'll see it.
But basically that's what people do they hold bitcoin and hopes of price appreciation now a software wallet is any wallet application that allows you to manage funds on a certain crypto network.
Any app that allows you to manage your funds on any crypto network and it doesn't matter on which platform you're running your wallet app.
It could be a mobile AOS app mobile Android app could be an app for Windows it can be a Web site.
It could even be an app for a smart refrigerator.
Like I said the main point is that it can store private keys or be used with a mnemonic phrase and being able to interact with the network of the cryptocurrency which it deals in.
For example I can run a bitcoin wallet app on my phone at stores keys on my device and sends my transaction to the Bitcoin network over the Internet.
Right now many bitcoin wallet apps for phones and since it's simply a matter of programming you can support more than one crypto network on one wallet.
Take for example this screenshot of the B R.D. wallet which was used to be called Bread wallet and that's a mobile app and you can see that it knows how to interact with not only the bitcoin block chain but also the ethereum network and with BRD token which is a token issued by the company B R D but it's a token on ethereum.
Remember we talked about E R C 20 tokens on ethereum.
B or D token.
Is it an E.R. C twenty token on ethereum.
So you just program the wallet app for whichever network you want to support.
And down in the next screenshot right here you have the electron wallet which is historically one of the most recommended wallets for desktop users.
Right.
If I'm not wrong I guess this even a screenshot from links showing that electric is available not only for Windows but also for Linux and Mac right.
So for every operating system you probably have a wallet that you can use to manage your funds and not only on bitcoin on many crypto network so the most important part to remember when when using a software wallet is to keep your keys with you.
You don't want a wallet generally right.
It's a general rule of thumb it doesn't apply to all wallets but generally you want to keep the keys on your device.
You don't want the wallet to be a sort of a cloud wallet that you sign into with an email and password for example because that shows that the keys are not stored by you on your device it shows that it's stored by a company on their servers and servers.
Companies can be hacked and are hacked all the time so you're putting putting your money not in your hands but in the hands of a company that can be hacked in an entity that can lose your money and you'll have nothing to do with it.
So make sure to use a wallet a software software wallet that tells you that the keys never leave the device.
When you try to open in your wallet or in the App Store in the description or whatever just make sure you see that and there are tons of software wallets and I can't really say that there is one.
That's the best and the things that you really do need to look for are one you want to see that the community recommends it.
You want to see positive reviews online on this app.
Don't just settle for positive reviews on an app store right.
Because reviews can be bought up look up forums look up Reddit.
Look up Twitter see which people have positive experiences but swallow it who has negative experiences with the wallet.
So the next one is you want to be able to back up your seed.
Obviously you want the seed to be in your control and to make sure that the seed does not leave your device.
Like I said and the next one is not requiring a sign up.
Like I said this is not for every wallet as we'll see in a minute but it generally mostly signifies that the keys are not kept on your device.
They are kept on a company and companies can be hacked since they hold so many keys.
There are a big target for hackers and attackers now.
Each user has different preferences so it's best to look at a few wallets and figure out what you need the most in a wallet and see who delivers it best.
For example if you want privacy and dealing with bitcoin definitely used either wasabi here or wasabi.
I don't really know how to pronounce it or samurai which is not listed here but I'll give you links to it in the description.
But if you want to use ethereum smart contracts in the wallet for example look at the Coinbase wallet app or trust wallet up and if you're an Android user I recommend going with one of these or another one that you see that fits you.
These are just the ones that I know that are OK BRT.
Like I said here samurai.
Like I said it's a very privacy focused Bitcoin Wallet app and for Iowa's again BRT.
Also for us in Zen go now Zen go they have a new way of managing private keys which is not just keeping the keys on your device but sort of distributing the keys between your device and their servers.
I don't want to go into the difficult intricacies of how they do it here but look it up if you're interested in that.
I do still recommend them since they're very user friendly their wallet is super user friendly and I feel it's and it feels like any other regular account that you sign up for.
But if you do choose to go with them learn their secure security model beforehand so so you know it.
No I did say that generally I don't recommend wallets that require sign ups but there are some wallets like Argent which is an ethereum and wallet app that they do require sign up but they're still safe to use but for now just just try to avoid using sign ups as you progress in your crypto education and knowledge your.
You have the experience and know how to distinguish the good from the bad so moving on to hardware wallets and hardware wallet is considered the best of both worlds since it has operated and managed using software.
But since the private keys never leave the device itself the devices generally look like this.
There is no risk of someone stealing your funds even if you use it with a computer that you know is compromised or filled with viruses or malware.
I'll repeat that even if you use a computer that you know is infected there is no problem in using these devices because all of the sensitive stuff is happening on the device and doesn't leave the device even if he connected the U.S. to be so hardware wallets are protected by a PIN code and in some of them you enter in some of them if you enter the PIN code wrong a few times the wallet is reset and the funds are no longer accessible using the wallet until you restore from a backup.
So if you've entered the PIN code wrong a few times it's going to wipe all of the things in your wallet but you've backed up the seed before you've initialized before you sent any money to the wallet and you can restore it from the backup.
And this is this mechanism is there to deter thieves right.
If a thief grabs hold of one of these hardware wallets there has three four or five million dollars worth of crypto on it and doesn't know the pin code they're going to try to open it up a few times and it is just going to wipe itself to protect the original owner.
And when you see when you use this wallet you open up an app on your phone or on your computer which you see the actual balances on and choose where and who to send the money to.
But the final approval of the transaction is done manually by pressing one of the hardware keys on the wallet itself.
It does however mean that you have to physically have the wallet with you whenever you need to do something with your money which is can be a little inconvenient in May.
This makes it so if someone wants to steal your funds they the only way they can they can do so with a hardware wallet is to physically threaten you.
I'm not trying to scare you guys but that's the only way you can have your funds stolen from.
They have to physically threaten you while you have the wallet on you and make sure that you send a transaction on your own.
Right.
It's happening very very few times it's happened.
But that's the only way people can still steal money from a hardware wallet or if they know your PIN code for whatever reason.
So finally hardware wallets are initialized and backed up using mnemonic seeds.
Right.
We talked about seeds today when we talked about HD wallets just like software awards are initialized using seeds which means that the seed back up that you keep while initializing the wallet is actually the most important thing that you need to watch for the physical wallet can be stolen can be broken.
But if someone doesn't know the pin.
If they steal the wallet they wouldn't have no access to the funds.
But if you keep your physical wallet safe and you don't have a backup if you're seed that's the real mistake.
Right.
If you lose your physical wallet or it's stolen or even stops working for any reason you can always restore the seed on any compatible wallet even software wallets.
Right.
Sorry.
Seeds are accepted on any wall it doesn't matter if it's hardware or software.
And remember the most important thing that you need to safeguard is the seed itself the hardware while it is just a vessel a place to to use the hardware to sign transactions.
The real the real thing you need to guard is the seat and the wallet will just show you the scene and give you the seat when you initialize it when you get the wallet for the first time.
And that's what you have to keep.
That's what you have to store in the safest way that you know of.
So to talk about a few models of hardware wallets.
The most popular hardware wallet probably in the world is the ledger nano.
As this guy right looks like a flash drive and it's the most popular due to its very long list of coins that it's compatible with.
And it's considerably low price tag and.
Right now it's fifty nine dollars right.
It's considered low in the world of cryptocurrency hard hardware wallets and but recently there have been a few problems that people reported having with the nano s..
I didn't have some sort of small issue with the nano s. But I do still think it's a very viable option because in the end you have a company behind the product right.
Ledger that's the name of the company and they they have a support staff.
They help you solve your problems.
And to this date they solved every problem that every user had.
So it's still a very viable option.
I just wanted to get the information out there so you know everything.
Other options are the ledger nano X right.
Quite a bit more expensive options first option is the larger nano X this guy which is an upgrade over the US and it's using Bluetooth so you don't have to mess around with cables and you can use it with your phone very easily or the trouser Model T which is essentially the same way with treasure.
The same thing that treasure offers similar to the nano x.
These two are competitors.
So go on their sites see which one works for you.
What user reviews on youtube there are many and see which one works for you.
These two are very popular.
The ledger and the treasure and so let's do a comparison between the wallet types and see basically the advantages disadvantages in how they stack up to each other.
So if you're looking at a we'll start with a paper wallet right so paper wallets are considered the most secure because paper can be hacked.
Right that's the tagline keep paper can't be hacked but they're also very hard to use and very cumbersome.
You also you only sorry whenever you actually want to move the funds to a new wallet.
You have to import the paper while it to a software wallet.
And from experience it's not hard and there are no problems with it.
If you do it according to to the way it should be done but it's a long process it's tedious and you can't do that with funds that you need to move around very often.
It is free.
It is a free method of storing whatever amount of money that you want.
So most people that do use it in the common use case call them or they use it for long term.
It's people who just want to keep their bitcoins in a safe.
Forget about them not do anything for the next few years and you know they hope to be millionaires and then in the next few years and just take their wallets from the paper take the bitcoins from them with paper wallet and use them wherever the risks you have with paper wallets are well being stolen if they're not kept safe enough they can burn the ink and spare basically all of the disadvantages of paper itself.
Moving onto software wallets we have a security that is a medium right.
Well when compared to the higher security levels of both hardware and paper because software can be hacked computers can be hacked.
And if you have a PIN code or a password on your on your software app which every app has this you can be socially engineered to give up your password.
You can be a victim of a phishing attack.
Basically the security is not top notch.
If you are a security freak that's not the method I would recommend but it's the easiest to use.
Right.
You have a software either on your computer or on your phone so you can just put it pull it out of your phone is it.
Wherever whenever it is also free you do pay transaction fees.
And it's not that you don't pay transaction fees using a paper wallet.
But remember wherever whenever you want to move funds from a paper wallet you always have to import them into a software wallet.
So you always pay transaction fees.
Right.
If there are transaction fees on the network that you're transacting on but the cost of the wallet itself is free in the software case.
Most people who use software wallets are either heavy users of crypto or people who are not that security minded which I do not recommend being at all because it's very easy to to steal funds from you if you're not security minded and the risks are not one one dimensional right.
There are many risks but mostly the theft of keys resulting from being connected to the Internet.
Right.
You can be hacked.
You can be socially engineered to give up your password stuff like that but eventually we'll come to the middle ground sort of balance that we have with the hardware wallet and the security is extremely high not as high as paper because it is a physical device that can be stolen.
But even if it is stolen you get to know the pin code.
Remember to open it up and send out transactions.
And the ease of use with hardware is OK right.
It's.
It's not the easiest to use.
You can't just whip out your phone.
Press a button and send out any amount of funds that you want.
It's a little bit harder to use because you get to carry it around and you get approved.
Physical transaction you get approved transactions physically by pressing a button and there is a cost to it and it can be high for some people and for others it's considered very very little as opposed to what you are getting from it.
Right.
If you're going to store 2 3 million dollars worth of crypto on a hardware wallet then buying one for sixty dollars probably wouldn't be such a problem for you in the common use case is.
Well where many people will land they do want to invest in crypto and use it lightly but not you know 10 to 20 times a day.
And it's for the medium and long term and the risks that you have with hardware wallets is.
Well you know getting threatened at gunpoint.
But aside from that you have hardware vulnerabilities and what that means is that people who create the people who create these wallets and engineer them they're not perfect.
And so very very sophisticated attackers are theoretically able to find ways to even hack into the hardware but it's arguably the largest concern of these companies.
So they always try to attack their own warnings to see if they can be attacked.
They hire outside teams to do it.
There is even a an annual conference I think where people actively group together and try to hack these wallets to find vulnerabilities.
And so far there wasn't any major vulnerability that was found and exploited basically on this on this level.
Everything was safe until now.
So it's a small risk as far as I am concerned.
OK.
So you need a crypto wallet.
You know your options and you want to make a decision which while it will work best for you.
So if you're just starting out in crypto and you're not looking to invest or require a large amount I would definitely recommend you go with a software wallet.
Of course following all the security procedures of backing up the seed and storing it somewhere safe this option is best for people that are just starting out looking to understand how transactions are made.
They want to experience the way crypto works without having to deal with cumbersome papers or they don't want to pay for physical hardware or a wallet.
That's how I started out I started out just using a software wallet playing around with it see how it works.
And that's it.
And paper wallets are very rarely used today as opposed to a few years ago and they are still being used by a very niche audience.
But there's still people who use it.
It's not completely gone.
And the reasoning is that it's completely on hackable and since the wallet is generated using random math functions as we've seen in our second session.
The most privacy minded people who use paper wallets they even generate them are flying or on computers who have no network connection to completely ensure that there was no contact with the Internet.
So the keys weren't exposed to any malicious actors.
I personally would not recommend paper wallets since so much could go wrong.
Starting from the ink drying out to a fire and I would recommend sticking with software or hardware what's unless you do know what you're doing and you know it's for sure the best option for you.
So that's the one I would least recommend for you guys.
Now we've come to the part
well hardware it's are we've come to the part where you need to make a decision if you want to actually pay for your wallet.
And bear in mind that when you buy a wallet like that you're not just buying a physical device you are also buying the support from a company that will help you with any problems that may arise while you use the wallet.
They also develop the software solutions that go along with the wallet.
For example the company ledger they have an application called ledger life treasure have treasure bridge.
And these are apps that you use on your computer or your phone by connecting to your wallet.
So if you plan on seriously entering the crypto space or maybe invest significant amounts of money I would definitely recommend going with a hardware wallet since it's the best balance that you have between security and usability that we have in the wallet space today.
If you have the budget for it of course and I want to again give you a final reminder that when using a hardware wallet the most important piece of information that you need to safeguard is the seed not the device itself.
You paid good money for the device itself but this seed is what keeps your funds secure so we've talked about wallets.
You've hopefully arrived at a decision which one you want to use.
So how do we actually get cryptocurrency like every traditional asset.
We have four ways of getting cryptocurrency.
We can create it from scratch which is something that the average person couldn't do with fiat currencies right.
Remember fiat currencies are currencies issued by governments U.S. dollar European Euro currencies like that.
So people can't make their own currencies legally right at home but you can mind crypto and this crypto will be accepted by the network as long as you mined it according to the protocol.
So you can get crypto by mining it.
You can't be a bad guy and steal your crypto from someone else.
But we're obviously not going to teach that here.
Not that I know how to do it but this is not the purpose of this course.
And you can work for crypto currency the same way you work for salary and many people are already receiving all or some of their salary in Bitcoin or other currencies especially remote workers who were having a bad time dealing with cross-border payments which are a non-issue in crypto crypto doesn't care where geographically you reside in.
Finally you can exchange fiat money that has value for the same amount of value in crypto currency or in other words you can simply buy crypto with fiat money right now.
This is what we're going to be focusing on today since this is not a guide on how to steal crypto or how to get paid in crypto.
Do ask me do approach me if you are interested in getting paid in crypto but not in stealing crypto.
I don't know how to do that but we're going to be focusing on how to buy crypto currencies.
And before that there's a very important question that you need to ask yourself Should I invest in crypto.
The answer that I have for you is I can't tell you what to do.
That's up to you not me.
I can't tell you what to do because I'm not a financial adviser and this is an informative course.
The decision whether or not to invest in crypto is solely up to you.
People who do buy cryptocurrency do arrive at the decision to buy crypto.
They mostly choose to buy bitcoin first.
And these are the reasons the reasons why First it's the easiest cryptocurrency to acquire since there are tons of crypto excuse me tons of different platforms that allow people to buy bitcoin using fiat in several different ways.
You have items where you can pay for it in cash.
We have bank transfers and you even have credit card purchases so Bitcoin is definitely the most liquid crypto currency.
Which means it has the most offerings of people willing to buy and sell it or in other words market trading volume.
We've talked about it in our previous session which is how much Bitcoin is changing hands all the time.
And another reason that big people buy Bitcoin is not necessarily to keep it but maybe to use it to buy other crypto currencies later using bitcoin including going on exchanges that don't accept fiat money in buying your favorite obscure cryptocurrency.
Also it might sound strange at first but there are many traders and investors around the world who already see bitcoin as an asset.
What sort of relationship with other financial assets.
So people simply buy it because other people simply buy it because they believe in that the value of bitcoin will increase and there's no problem with that right.
It's your investment thesis.
It's what you think that that's your decision.
And finally and this is not a large portion of the pit of the bitcoin trading volume but it's still important to note.
It's nice to know that that many people buy Bitcoin simply because they have to or they need to.
In Venezuela for example the local currency the bolĂvar has an extremely low value that's caused by hyperinflation and people who have access to Bitcoin mostly people of higher socioeconomic status.
They're buying Bitcoin since it's a much better store of value for them than their local currency.
Also there is a sort of cyber attack that's called ransomware where the attacker puts a program on your computer that encrypts all of the files on it and will decrypt them only if you pay a ransom with Bitcoin.
And if you don't pay it it just deletes all of your files.
It's pretty scary and it's happening all the time.
People who are getting attacked using ransomware they have to figure out how to buy bitcoin in order to get their files back.
Right.
All right.
So to conclude today's session we've discussed the proper terminology crypto currencies crypto coins tokens all that we've learned about a new type of wallet the HD wallet which uses a mnemonic seed or a list of random English words to back up the wallet and generate multiple addresses or accounts.
Today it's the most used type of wallet in the industry.
And we've also learned about wallet types.
Paper software hardware right.
We explained what the details of each wallet are and what it's good for right.
What you want to use it for but also what it's not so good for.
We compared between all the three different types of warrants.
So if you want to make a lot of transactions or just starting out and using a small amount of money you probably should go for a software wallet.
If you really want to get the best balance of security and usability and you are willing to pay a little extra then get a hardware wallet.
And generally I wouldn't recommend a paper wallet.
We've also seen the four ways to acquire crypto out of which we will only be talking about how to buy it using fiat currencies.
And at our next session we'll show you where to buy crypto online.
Right.
If you've made the decision it will show you places you can go on and buy crypto in.
Finally we talked about the various reasons why one may choose to invest in crypto currency.
So you have all the information and can arrive at an independent decision by your self.
So to wrap it up.
Thank you guys for listening.
All of the links that I talked about today links to wallets.
They will be down in the video description in our next session we'll talk about places you can buy crypto.
Like I just said.
And until then make sure to sign up for both our academy mailing list on our academy page on our site intelligence dot com and join our WhatsApp group.
Also linked in the description we're talking about crypto there people are asking questions.
We are answering and there is very great discussions happening on there.
So thank you so much for listening and I hope to see in our next session Bye bye.