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- Part 3
Welcome Gatekeeper,
Understanding Cryptocurrency part 3
What is a cryptocurrency wallet?
A cryptocurrency wallet is a software program that allows you to store, send, and receive cryptocurrencies such as Bitcoin, Ethereum, or Litecoin. There are different types of wallets available, including desktop wallets, mobile wallets, web wallets, and hardware wallets. Here's a general overview of how to set up a cryptocurrency wallet:
Choose a wallet
First, you'll need to choose a wallet that meets your needs. Consider factors such as security, ease of use, and the types of cryptocurrencies supported. Some popular wallets include Metamask and Phantom, and Ledger.Download or access the wallet
Depending on the type of wallet you choose, you may need to download software or access the wallet through a web browser. Follow the instructions provided by the wallet provider to get started.Set up your account
Once you've downloaded or accessed the wallet, you'll need to set up an account. This may involve creating a username and password, or generating a seed phrase to back up your wallet. Be sure to follow the instructions provided by the wallet provider carefully, and keep your login information and seed phrase safe and secure.Add cryptocurrency
To add cryptocurrency to your wallet, you'll need to obtain some from an exchange or another source. Once you have the cryptocurrency, you can transfer it to your wallet by sending it to the wallet's public address. Be sure to double-check the address to avoid errors or sending cryptocurrency to the wrong wallet.Send and receive cryptocurrency
Once you have cryptocurrency in your wallet, you can send and receive it as needed. To send cryptocurrency, you'll need to enter the recipient's public address and the amount you want to send. To receive cryptocurrency, you'll need to provide your own public address to the sender.
Overall, setting up a cryptocurrency wallet is a relatively straightforward process, but it's important to choose a reputable wallet provider, follow security best practices, and be cautious when sending or receiving cryptocurrency.
What is a cryptocurrency wallet (Explain it to 5 year old)?
A cryptocurrency wallet is like a special piggy bank that you can use to keep your digital money safe.
Just like you have a piggy bank for your coins and bills, you can use a cryptocurrency wallet to store your digital coins and tokens. You can use it to keep track of how much you have and how much you've spent, just like how you keep track of how much money you have in your piggy bank.
But instead of keeping your wallet in your pocket or your room, your cryptocurrency wallet is stored on your computer or your phone, and it's protected by a secret password that only you know. That way, no one else can take your digital money!
You can also use your cryptocurrency wallet to send and receive digital money to other people, just like you would share your coins and bills with your friends. But instead of handing them the money, you can send it to them instantly and safely through the internet!
So, a cryptocurrency wallet is like a special piggy bank that helps you keep your digital money safe and lets you send and receive it to other people over the internet!
What is a public key?
A public key is a special code that is used in cryptography, which is a way to keep information secret and secure.
In cryptography, there are two types of keys: a public key and a private key. A public key is like a special padlock that is used to lock up information so that only certain people can access it. The public key is shared with everyone, just like how you might share your address with your friends so they can find your house.
When you want to send someone a secret message, you use their public key to lock up the message, just like how you might use a padlock to lock up a secret diary. Once the message is locked up with the public key, only the person who has the matching private key can unlock it and read the message.
So, a public key is like a special code that is used to lock up information so that only certain people can access it. It's called a "public" key because it can be shared with everyone, unlike a private key which is kept secret.
What is a public key (Explain to 5 year old)?
A public key is like a secret code that you can give to your friends so they can send you a special message that only you can read!
Just like how you might have a secret password for your favourite game or website, a public key is a special code that helps keep messages safe and secure. It's like a puzzle that only you can solve!
When your friends want to send you a special message, they can use your public key to help make sure that no one else can read it. It's like putting the message in a secret box that only you have the key to open.
So, a public key is like a special secret code that helps keep messages safe and makes sure that only you can read them!
What is a private key?
A private key is like a secret code that only you know and it is used to unlock messages that are meant only for you.
Just like how you might have a secret password for your favorite game or website, a private key is a special code that helps keep messages safe and secure. It's like having a special key that can unlock a secret box that only you are allowed to open.
When someone sends you a message that is locked with your public key, you use your private key to unlock and read the message. Just like how you might use your password to log in to your game or website.
So, a private key is like a secret code that only you know and it helps to keep your messages safe and secure, by allowing you to unlock messages that are meant only for you.
What is a private key (Explain to 5 year old)?
A private key is like a special key that can open a secret box that only you are allowed to open.
Just like how you might have a special password to keep your favourite game or website safe, a private key is a secret code that helps keep messages safe and secure. It's like a secret puzzle piece that only fits in your secret puzzle!
When someone sends you a special message that only you can read, they lock it with your public key, and you can unlock it with your private key. It's like using your special password to log in to your game or website.
So, a private key is like a secret key that only you know and it helps keep your messages safe and secure by allowing you to unlock messages that are meant only for you.
What is a hot wallet?
A hot wallet is like a special wallet that you keep with you all the time and can use to quickly and easily access your cryptocurrency.
Just like how you might keep your pocket money in a wallet that you can carry with you, a hot wallet is a type of cryptocurrency wallet that is connected to the internet and allows you to easily send and receive cryptocurrency.
Hot wallets are usually used for smaller amounts of cryptocurrency and are convenient for everyday use, like buying things or sending money to friends. However, because they are connected to the internet, they can be more vulnerable to hacking and security risks, so it's important to keep them secure and protect your private key.
So, a hot wallet is a type of cryptocurrency wallet that you can access from anywhere with an internet connection, and it's like carrying your pocket money with you all the time!
What is a hot wallet (Explain to 5 year old)?
A hot wallet is like a special wallet that you can use to store your digital money, kind of like a piggy bank for your allowance!
Just like how you can keep your piggy bank with you all the time and use it to buy things you want, a hot wallet is a type of digital wallet that you can use to quickly and easily send and receive digital money, also known as cryptocurrency.
A hot wallet is connected to the internet, so you can use it on your phone or computer to buy things online or send money to your friends. But because it's connected to the internet, it's important to keep it safe and protected, just like you keep your piggy bank safe and protected from others who might want to take your money.
So, a hot wallet is a type of digital wallet that lets you use your digital money wherever you go, just like how you can use your piggy bank money to buy things you want!
When should I use a hot wallet?
You should use a hot wallet when you need quick and convenient access to your cryptocurrency, such as when you're making frequent transactions, like buying things online or sending money to friends.
Hot wallets are usually more user-friendly and accessible, making them a good choice for everyday use. However, since they are connected to the internet, they can be more vulnerable to security risks and hacking, so it's important to only keep small amounts of cryptocurrency in your hot wallet and make sure to follow good security practices to protect your private key.
If you plan on holding larger amounts of cryptocurrency for a longer period of time, you may want to consider using a cold wallet instead, which is a type of wallet that is not connected to the internet and offers higher security for storing larger amounts of cryptocurrency over a longer period of time.
When should I use a hot wallet (Explain to 5 year old)?
A hot wallet is like a digital piggy bank that you can use to store and spend your digital money. It's called "hot" because it's connected to the internet and is always ready to be used.
You should use a hot wallet when you want to spend your digital money quickly and easily, like when you buy things online or send money to your friends. However, because it's connected to the internet, it's important to be careful and keep it safe, just like you would with your piggy bank.
You should also only keep a small amount of your digital money in your hot wallet, and keep the rest in a more secure wallet, like a cold wallet.
What is a cold wallet?
A cold wallet is like a special container that you can use to keep your digital money safe. It's called "cold" because it's not connected to the internet, which makes it less vulnerable to being hacked.
A cold wallet is usually a physical device, like a USB stick, that you can plug into your computer or phone when you want to use it. You can also unplug it and store it somewhere safe when you're not using it, like in a secret drawer or a safe.
You should use a cold wallet when you want to keep your digital money safe for a long time, like when you're saving it for the future or holding a lot of money. Because it's not connected to the internet, it's much harder for hackers to steal your digital money.
What is a cold wallet (Explain to 5 year old)?
A cold wallet is like a magic box that helps you keep your digital money safe. It's called "cold" because it doesn't talk to the internet very often, so bad guys can't steal your money as easily.
Imagine you have a special toy that you really like and want to keep it safe.
You could put it in a secret box that only you know the password to, and then hide that box somewhere no one else can find it. This is kind of like what a cold wallet does for your digital money. It puts it in a special box, keeps it hidden away from bad guys, and only lets you get to it when you're ready to play with it.
When should I use a cold wallet?
You should use a cold wallet when you want to store your digital money, like cryptocurrency, for a long period of time and keep it safe from potential threats, such as hackers and online scams. A cold wallet is an offline storage device that keeps your private keys, which are like secret codes that let you access your digital money, secure and out of reach of hackers.
Using a cold wallet is a good idea when you have a large amount of digital money that you don't plan on using right away. It's also a good idea if you're concerned about the security of online wallets, which are connected to the internet and therefore more vulnerable to attacks. With a cold wallet, you can have peace of mind knowing that your digital money is safe and secure.
When should I use a cold wallet (Explain to 5 year old)?
A cold wallet is like a treasure box that you use to keep your digital money, like a magic coin, safe and protected. It's called "cold" because it's not connected to the internet and stays offline most of the time, which makes it harder for bad guys to steal your money.
When you want to use your digital money, you can take it out of the treasure box and use it to buy things online, just like you use real money to buy things at the store. Then, you can put it back in the treasure box when you're done to keep it safe again.
Using a cold wallet is a good idea when you want to keep your digital money safe for a long time, like when you're saving it for something special, or when you want to make sure it doesn't get stolen by bad guys online.
What is a hardware wallet?
A hardware wallet is a type of cold wallet that you can use to keep your digital money safe. It's called "hardware" because it's a physical device that you can hold in your hand, like a small computer or a USB stick.
A hardware wallet is specifically designed to keep your digital money safe by storing your private keys, which are like secret codes that let you access your digital money, offline in the device. This means that your private keys are not stored on your computer or phone, which could be vulnerable to hacking.
You can plug your hardware wallet into your computer or phone when you want to use it, and then unplug it and store it somewhere safe when you're done. Because it's not connected to the internet very often, it's much harder for hackers to steal your digital money.
A hardware wallet is a good choice if you want to keep your digital money safe for a long time, like when you're saving it for the future or holding a lot of money. It's also a good choice if you're worried about security and want to make sure that your digital money is as safe as possible.
What is a hardware wallet (Explain to 5 year old)?
A hardware wallet is like a tiny computer that you can use to keep your digital money safe. It's a special device that you can plug into your computer or phone, like a USB stick, and it will store your secret codes (called private keys) that let you access your digital money.
The important thing about a hardware wallet is that it keeps your private keys safe offline, which means it's harder for bad guys to steal them. You can use it to keep your digital money safe for a long time and make sure it's as safe as possible.
What is a paper wallet?
A paper wallet is a piece of paper that has your digital money information printed on it, like your public and private keys. It's like a physical representation of your digital money, which you can keep in a safe place like a lockbox or a drawer at home.
You can create a paper wallet by using a special program that will generate a pair of keys for you, and then you can print them on a piece of paper. This way, you don't need to rely on a computer or the internet to access your digital money, which makes it more secure.
However, you should be careful not to lose your paper wallet, because if you lose it, you may not be able to recover your digital money. So it's important to keep it in a safe place and make sure nobody else can access it.
What is a paper wallet (Explain to 5 year old)?
A paper wallet is like a special piece of paper that has some secret codes on it that help you keep your digital money safe. Just like how you keep your money in a piggy bank or a wallet, you can keep your digital money safe by writing down these codes on a piece of paper.
But, just like how you wouldn't want to lose your piggy bank or wallet with your money in it, you need to be careful not to lose your paper wallet with your digital money codes on it. So, you need to keep it in a safe place, like a secret drawer or a lockbox.
What is a hybrid wallet approach?
A hybrid wallet approach is a way of managing your digital money that combines the benefits of both hot and cold wallets.
A hybrid wallet can store some of your digital money online, like a hot wallet, and some of it offline, like a cold wallet. The part that is stored online is kept in a separate account that you use for everyday transactions, like buying things online or sending money to friends. The part that is stored offline is kept in a separate device or paper wallet that you use for long-term storage and security.
By using a hybrid wallet approach, you can have the convenience of a hot wallet for everyday transactions, while also having the added security of a cold wallet for long-term storage. This way, you can keep your digital money safe and secure, while still being able to use it when you need to.
What is a hybrid wallet approach (Explain to 5 year old)?
A hybrid wallet is like having two different piggy banks for your money. One piggy bank is like a normal piggy bank that you can easily take money out of when you need it, but it's not as safe because it's out in the open. The other piggy bank is like a secret safe that you can't easily get into, but it's much safer because no one else can get to your money.
A hybrid wallet is like having both of these piggy banks for your digital money. You can use one part of the wallet for everyday things like buying toys online or giving money to your friends, and the other part of the wallet for keeping your digital money safe and hidden away. This way, you can use your digital money when you need it, but also keep it safe from anyone who might try to take it.
What is a web wallet?
A web wallet is a type of digital wallet that you can access through a website or web browser, just like you access different websites to play games or watch videos.
When you use a web wallet, you can store and manage your digital money, such as Bitcoin or Ethereum, on the internet. This means you don't have to download any software or apps to your computer or phone, and you can access your digital money from any device with an internet connection.
However, because web wallets are online, they are also more vulnerable to hackers and other security threats. So it's important to choose a reputable and secure web wallet, and to take necessary precautions such as using a strong password and enabling two-factor authentication to protect your digital money.
What is a web wallet (Explain it to a 5 year old)?
A web wallet is like a special box where you can keep your digital money, and you can open the box from any computer or phone that has internet access. So, you don't need to have a special app on your device to use the box. But, since the box is on the internet, you have to be careful and keep it safe from bad people who might try to take your money away.
What is a desktop wallet?
A desktop wallet is like a special box where you can keep your digital money, and it lives on your computer. You have to download and install a special program on your computer to use the box. It's like having a piggy bank on your computer that only you can access. Since it's not on the internet, it can be a little bit safer than a web wallet, but you still need to make sure your computer is secure and protected from viruses and other bad things.
What is a desktop wallet (Explain to 5 year old)?
A desktop wallet is like a magic box on your computer where you can store your digital money. You need a special program installed on your computer to use the box. It's like having a special piggy bank that only you can open on your computer. Since it's not on the internet, it can be safer than other types of wallets. But you still have to make sure your computer is protected from bad things like viruses and hackers.
What is a mobile wallet?
A mobile wallet is like having a magic wallet on your phone. It's a special app that you download on your phone and use to store your digital money. It's like having a real wallet, but instead of holding paper money and cards, it holds digital money. You can use it to send and receive money from other people or to buy things online. It's really convenient because you can carry it with you wherever you go, just like your phone. But you have to make sure your phone is protected and that you don't lose it because then you could lose your digital money too.
What is a mobile wallet (Explain to 5 year old)?
A mobile wallet is like a digital pocket where you can keep your money. Instead of carrying coins and bills in your physical pocket, you can carry your money on your phone or tablet. You can use your mobile wallet to buy things online or in stores, send money to friends or family, and even pay bills. It's like having a bank account on your phone!
What is the best security to follow with digital wallets?
Use a strong and unique password
Choose a password that is difficult to guess and not used for any other account. Consider using a password manager to generate and store complex passwords.Enable two-factor authentication (2FA)
2FA adds an extra layer of security by requiring a second form of authentication, such as a code sent to your phone, in addition to your password.Backup your wallet
Make sure to create a backup of your wallet and store it securely in a separate location. This will help you recover your funds in case your device is lost or damaged.Use a cold wallet for long-term storage
Consider using a cold wallet, such as a hardware or paper wallet, to store large amounts of cryptocurrency for long-term storage. This reduces the risk of theft or loss through hacking or other security breaches.Be wary of phishing scams
Be careful of emails or messages that ask you to provide your private keys or login credentials. Always double-check the authenticity of the sender before sharing any sensitive information.Only use trusted wallets and exchanges
Only use wallets and exchanges that have a good reputation and are well-known in the cryptocurrency community. Be wary of new or unknown wallets or exchanges, as they may be scams or less secure.
What is the best security to follow with wallets (Explain to 5 year old)?
When you have a wallet that holds your cryptocurrency, you need to make sure that it is safe and nobody else can take it. Just like you need to keep your piggy bank in a safe place where nobody else can take your money.
One way to keep your cryptocurrency wallet safe is to use a cold wallet, which is like a secret treasure chest that only you can open. It's locked with a special key that only you have, and you keep it in a safe place, like your secret hiding spot in your room.
Another way to keep your wallet safe is to use a hot wallet, which is like a special wallet that you can carry with you everywhere you go. But you need to be very careful with it, just like you would be careful with your backpack or purse. You wouldn't want to leave it somewhere by accident or let someone else take it.
To make sure your wallet is safe, always use a strong and unique password, never share your password with anyone, and make sure to keep your computer or phone up-to-date with the latest security updates. It's also a good idea to keep your wallet software and antivirus program updated, and to only download software and apps from trusted sources.
What are the benefits of having a cryptocurrency wallet?
There are several benefits of having a cryptocurrency wallet, including:
Secure storage
A cryptocurrency wallet provides a secure place to store your digital assets. By using a wallet, you can keep your coins or tokens safe from hackers and other online threats.Easy access
With a cryptocurrency wallet, you can easily access your digital assets from anywhere in the world. All you need is an internet connection and your private keys.Control
By using a cryptocurrency wallet, you have full control over your digital assets. You don't need to rely on third-party institutions like banks to manage your funds.Privacy
Cryptocurrency wallets can provide a high level of privacy, as they don't require you to provide personal information to use them.Sending and receiving
With a cryptocurrency wallet, you can easily send and receive digital assets from other users. All you need is their wallet address.Diversification
By using a cryptocurrency wallet, you can diversify your digital asset holdings across multiple coins or tokens. This can help to reduce risk and increase potential returns.
Overall, a cryptocurrency wallet is an essential tool for anyone who wants to buy, hold, or use digital assets. It provides a secure, easy-to-use, and private way to manage your digital assets, giving you full control over your finances in the digital world.
What are the benefits of having a cryptocurrency wallet (Explain to 5 year old)?
A cryptocurrency wallet is like a piggy bank for your digital money. It keeps your cryptocurrency safe and secure.
Here are some benefits of having a cryptocurrency wallet, explained in a way a 5 year old might understand:
Keep your money safe
Just like you keep your physical money in a piggy bank or a wallet, you need a safe place to keep your digital money too. A cryptocurrency wallet helps keep your money safe by using special codes that only you know.Easy to use
Cryptocurrency wallets are easy to use. You just need to remember your special codes to access your wallet and use your money.Control your own money
When you keep your money in a bank, they control it. But with a cryptocurrency wallet, you are in control of your own money. You can send it to whoever you want, whenever you want.Access your money from anywhere
You can access your cryptocurrency wallet from anywhere in the world, as long as you have an internet connection. This means you can use your money wherever you are, without needing to go to a bank.
Overall, having a cryptocurrency wallet gives you more control over your money and helps keep it safe.
What does ‘not your keys not your crypto’ mean?
"Not your keys, not your crypto" is a popular saying in the world of cryptocurrency that emphasises the importance of owning and controlling your private keys. In cryptocurrency, owning the private keys associated with your digital assets gives you full control over those assets.
When you buy cryptocurrencies on an exchange, the exchange holds your private keys on your behalf. This means that you are essentially trusting the exchange to keep your funds secure and manage your assets properly. If the exchange is hacked or goes bankrupt, you may lose your funds.
By owning your private keys, you have full control over your digital assets and can store them in a secure wallet that only you have access to. This reduces the risk of loss or theft of your assets, as you are not relying on a third-party exchange or custodian to manage them for you.
The saying "not your keys, not your crypto" is a reminder to cryptocurrency users to take control of their digital assets and keep them secure by owning their private keys.
What does ‘not your keys not your crypto’ mean (Explain to 5 year old)?
"Not your keys, not your crypto" is a saying in the world of cryptocurrency that means if you don't have control over the private keys of your cryptocurrency, then you don't really own it. Private keys are like secret codes that allow you to access and control your cryptocurrency. If someone else has the private keys, they can control your cryptocurrency, and you can't do anything about it.
To explain it simply, imagine that you have a toy that you really love, but you left it at your friend's house. Your friend has the key to their house, and without it, you can't go inside to get your toy.
So if your friend doesn't want to give you back your toy, you can't get it back unless you have the key to their house. The same goes for cryptocurrency – if you don't have the private keys, you don't have control over your crypto.
What is an airdrop?
An airdrop is a marketing strategy used by cryptocurrency projects to distribute their tokens or coins to a large number of people. Essentially, an airdrop involves giving away a certain number of tokens or coins to anyone who meets certain criteria, such as holding a certain amount of another cryptocurrency or signing up for a project's newsletter.
Airdrops can be used by cryptocurrency projects to generate buzz and attract new users or investors. By giving away tokens or coins for free, projects can encourage people to try out their platform or invest in their project.
Airdrops can take many different forms. Some projects distribute tokens or coins to anyone who holds a certain cryptocurrency in their wallet, while others require users to complete certain tasks, such as following the project on social media or referring friends to the project. In some cases, airdrops may be targeted at specific groups, such as people who live in a certain region or who have a particular interest in the project.
Overall, airdrops can be a powerful marketing tool for cryptocurrency projects. By giving away tokens or coins for free, projects can attract new users and investors and generate buzz around their platform. However, it's important for users to carefully evaluate airdrops before participating, as some may be scams or have hidden requirements or fees.
What is an airdrop (Explain to a 5 year old)?
An airdrop is like a treasure hunt where people give you some coins or tokens for free. It's like finding a surprise gift on the street! Sometimes, companies or projects give away these coins or tokens to people who already have some of their coins or who complete certain tasks, like joining their social media group or referring friends. It's a way for them to thank people who support them and to encourage more people to learn about their project.
How do airdrops work?
Airdrops work by distributing free tokens or coins to a large number of people, typically as part of a marketing campaign for a cryptocurrency project. Here are the basic steps involved in an airdrop:
The cryptocurrency project announces the airdrop and sets the criteria for participation. This could be anything from holding a certain amount of a specific cryptocurrency to following the project on social media.
Users who meet the criteria can participate in the airdrop by providing their wallet address or completing other required tasks.
Once the airdrop is complete, the project distributes the free tokens or coins to the eligible participants.
Participants can then hold or trade the tokens or coins as they wish.
Airdrops are designed to generate interest and awareness for a cryptocurrency project, and to attract new users or investors. By giving away free tokens or coins, the project can encourage people to try out their platform or invest in their project. Airdrops can also be a way to reward early adopters or loyal users.
It's important to note that not all airdrops are legitimate. Some may be scams designed to trick people into giving away their personal information or cryptocurrency. Before participating in an airdrop, it's important to do your research and make sure the project is reputable and the airdrop is legitimate.
How do airdrops work (Explain to 5 year old)?
Imagine you're playing with your friends, and your friend wants to give you some toys to play with. But instead of giving you the toys directly, they decide to give them to your parents first. Then, your parents can give you the toys to play with.
That's kind of how an airdrop works. In the world of cryptocurrency, people sometimes want to give away free tokens to other people. But instead of giving them directly, they give them to cryptocurrency wallets. Then, the people who own those wallets can claim the free tokens and add them to their collection.
It's like a big game where people give away tokens, and if you have the right kind of wallet, you can get some for free!
Invite your friends, family and loved ones to have access to life changing information and so that you can claim more NFT rewards and get them to do the same.
You will soon realise the value that each one holds.
Yours in Spirit,
Arcane Wander