The crypto wallet manager is an interface to handle your assets, transactions and can create a new crypto address for you.
In previous articles we discussed blockchains, crypto exchanges, digital currencies, seed phrases and crypto addresses (similar to the concept of bank accounts) and creating your own wallet address.
The crypto wallet manager is an interface to handle your assets, transactions and can create a new wallet just for you.
A bit of backdrop and repeat... Centralized exchanges such as Binance manage all crypto addresses (also known as wallets) for you. They actually are the owner or custodian allowing their customers to buy, transfer and sell currencies. Even though you cannot access the private key nor seed phrase you virtually have the same possibilities as with a self-owned wallet.
The exchange needs users to undergo security audits like Know-Your-Customer (KYC) and might be bound by local laws to report your transactions. At the moment of writing their is a political wave of demand for more regulation and diminish anonymity.
It's possible to transfer assets from one exchange to another and to your own privately owned wallet.
For completeness, note that anyone can send digital currencies to any wallet so you don't *really* need an exchange (big if) if you have such sources.
This is an important piece of information since you do you need (fiat) assets to trade on any exchange, centralized or decentralized alike.
Any wallet that's created by yourself needs a way to handle transactions. It can be done with code if you happen to be a developer but for the vast majority there are "Wallet Managers". Those are found in abundance but the most commonly used is "MetaMask".
Keep in mind that any wallet manager is 'merely' an interface to your assets. Balances and other data are actually stored on the blockchain.
IMPORTANT: One of the steps of creating a wallet shows your Secret Backup Phrase. This consists of a random string of words. Write this phrase down and keep it somewhere safe! If you ever forget your password or somehow can’t get into your account, the phrase is the only way to recover access to your wallet. It might be smart to store it in 2 or 3 different locations. Never share this phrase with anyone!
Hot wallets are wallets that are connected to the internet. Some of the well-known wallets are Metamask, Trustwallet and Exodus. Because they are connected to the internet they could be considered as vulnerable.
Cold wallets are external hardware wallets that are not connected to the internet. Most popular are Ledger, Trezor and Safepal. They are considered to be the best option for security, but lack convenience when used on a daily basis as you have to connect to your device before you can make a transaction.
Each transaction that alters the state of the blockchain is usually charged for. Those fees are automatically calculated based on the complexity of the transaction across all parties involved. The token contract itself may incur fees, exchanges take a cut (usually 0.3%) and the wallet manager might also add to it.
The "miner", computer in the blockchain network responsible for calculating the transaction is rewarded for doing so. This is called "Mining" - more on that in a later article.