What Is a Crypto Wallet?

A cryptocurrency wallet is essentially a secure place to store your digital money.

More specifically, it’s an app or device that stores the private keys to your cryptocurrencies, which are like passwords that give you access to your crypto funds.

When you hear “wallet,” don’t think of a physical wallet holding coins – think of it as a keychain that holds secret keys to your assets on the blockchain. Using these keys, a wallet lets you send, receive and manage your crypto.

Crypto wallets come in a few forms, but they all serve the same purpose: keeping your crypto safe and accessible to you.

Some wallets are software apps, which can be on your phone or computer. Others are hardware devices (like a USB stick) that stay offline for extra security.

The key point is that you need a wallet to manage cryptocurrency, just like you need a bank account to manage money.

If you’re a beginner, setting up a wallet is one of the first steps to start using crypto confidently.

Types of Crypto Wallets

There are several types of crypto wallets available.

The right one for you depends on how you plan to use your crypto and how much responsibility you’re comfortable taking for security.

Here are the most popular categories:

• Hosted Wallets (Custodial Wallets): These are the easiest to use for beginners. A hosted wallet is often provided by a crypto exchange or platform. It’s called “hosted” because a third party (the company) holds your crypto and the private keys on your behalf, similar to how a bank holds your money. The upside is convenience - if you forget your password, the company can help you recover access, so you won’t lose your crypto. The downside is you’re trusting someone else to secure your funds, and you might not have access to the full range of decentralized crypto features. Hosted wallets are great for getting started quickly with buying or holding crypto, especially if you prefer a safety net.
• Self-Custody Wallets (Non-Custodial Wallets): A self-custody wallet puts you in complete control of your crypto. These can be mobile apps or desktop programs (like DB Cherry) that do not rely on any third party to keep your keys safe. Instead, the wallet generates your private keys and you are responsible for safeguarding them. The big benefit is freedom – you can access all aspects of crypto (for example, interacting with DeFi or NFTs) and you truly own your assets. However, with great power comes great responsibility: if you lose your private key or recovery phrase, no one can help you recover your funds. Likewise, if someone else obtains your keys, they gain full control of your crypto. Non-custodial wallets are ideal for users who want more control and are willing to take on the responsibility of securing their wallet.
• Hardware Wallets (Cold Wallets): These are physical devices (about the size of a USB thumb drive) designed to keep your crypto completely offline. A hardware wallet stores your private keys on the device, which only goes online when you plug it into a computer or use it via Bluetooth. Because they are offline (“cold”), hardware wallets provide top-notch security. Even if your computer is hacked, your crypto on a hardware wallet can’t be stolen remotely. The trade-off is that they cost money (usually $50-$150) and are a bit less convenient for daily use than software wallets. Many people don’t start with a hardware wallet, but it’s something to consider as you accumulate more crypto and want to secure it long-term. Think of it like a safe or vault for your digital assets.

Hot vs. Cold Wallets: You’ll also hear the terms “hot wallet” and “cold wallet.” A hot wallet simply means any wallet connected to the internet (like a mobile app or exchange wallet), while a cold wallet is kept offline. Hot wallets are convenient for frequent access and transactions, but they can be more vulnerable to hacks since they’re online. Cold wallets are very secure against online attacks but are a bit less handy for quick transactions.

Many crypto users use a combination: a hot wallet for everyday small amounts and a cold wallet for larger holdings they want to store safely. Tip: If you’re leaning toward self-custody, pick a wallet app with good reviews and active development.

How to Set Up Your First Crypto Wallet

Setting up a crypto wallet might sound technical, but many modern wallets (including DB Cherry) make the process straightforward.

Here are the general steps to get your first wallet up and running:

1. Choose a reputable wallet platform: Decide whether you want a hosted wallet (through an exchange or service) or a self-custody wallet app. Your considerations should include security, ease of use and whether the provider is well-established and compliant with regulations. DB Cherry, for instance, is designed to be beginner-friendly while still providing strong security, bridging traditional finance and crypto in one app.
2. Install or sign up: If you chose a wallet app, download it from the official app store or website. If it’s an exchange/hosted wallet, you’ll need to create an account with your email and a secure password. Follow the on-screen instructions to set up your wallet. For hosted wallets, this typically means verifying your email and possibly your identity (KYC) and then you’re set. For self-custody wallets, the app will usually generate a new wallet for you on the spot.
3. Secure your wallet during setup: This is the most important step. During setup of a non-custodial wallet, the app will show you a recovery phrase (12 or 24 random words). This is essentially your master backup key – write it down on paper and keep it somewhere safe. Do not skip this step or store the phrase digitally. If you’re creating an account on a hosted wallet, make sure to use a strong, unique password and enable any recommended security features. Enable two-factor authentication (2FA) via an authenticator app for extra safety. Taking time to secure your wallet now will save you from headaches or losses later.
4. Add crypto to your wallet: Once your wallet is set up and secured, you’re ready to add some cryptocurrency to it. If you’re using a platform like DB Cherry that supports buying crypto directly, you could link your payment method (such as a debit card or bank account) and purchase crypto in-app. If your wallet doesn’t support buying directly, you can acquire crypto on an exchange and then transfer it to your new wallet’s address for safekeeping. Many beginners start by buying a small amount of Bitcoin or Ethereum. Once you have crypto in your wallet, you can view your balance, send crypto to others or receive more using your wallet address.
5. Learn the basics: Take a moment to familiarize yourself with the wallet’s interface. For example, find where your public address is (this is the address you share to receive crypto). Try a small test transaction if possible, like sending a tiny amount to a friend or between your own accounts, to get comfortable. Check what features the wallet offers – some apps like DB Cherry also include features like peer-to-peer payments, swapping between currencies or even paying bills with crypto. Knowing how to navigate your wallet will build your confidence.

Choosing the Right Wallet for You

If you’re just starting out, you might wonder which wallet is best. The truth is, the best crypto wallet for beginners is one that you find easy to use and can trust for security. A few pointers for choosing:

• If you want simplicity and support: a hosted wallet with a beginner-friendly, reputable company is a good start. DB Cherry’s wallet, for instance, is designed to be sleek and accessible, combining the ease of a traditional finance app with the power of crypto. It offers features like peer-to-peer transfers and fiat top-ups , all in one place – so you can manage regular money and crypto side by side, seamlessly.
• If you want full control from day one: consider a popular self-custody wallet app. Make sure you’re ready to diligently back up your recovery phrase. Just remember the mantra: Not your keys, not your coins – meaning if you control the keys, you fully own the coins, but you’re also fully responsible for protecting them.
• Hardware later on: As a beginner, you likely don’t need a hardware wallet immediately. But if you start accumulating larger amounts or just want the peace of mind of cold storage, you can always add a hardware wallet to your setup later. Many users eventually use a hardware wallet for savings and a mobile wallet for day-to-day use.

Ready to Get Started?

Now that you know the basics of crypto wallets – what they are, the different types and how to set one up – you’re well on your way to becoming a confident crypto user. Setting up your first wallet is a big first step in your journey. Take your time to choose one that fits your needs. If you follow the security steps (strong password, backup your recovery phrase, etc.), you’ll have a solid foundation.

In our next articles, we’ll dive into how to protect those private keys and recovery phrases (absolutely critical knowledge), as well as how to actually buy your first crypto and top tips to stay safe in the crypto world. With your wallet in hand, you’ll be ready to buy, store and use crypto safely.