December 21, 2024 • 28 mins
--Originally aired on March 1st, 2022--
On this episode, Will Lucas, AfroTech Brand Manager and host/producer of Black Tech Green Money discusses the differences between various crypto wallet types, and which you should go with if you prefer simplicity over security.
Follow Will Lucas on Instagram at @willlucas
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
So what is a crypto wallet. You've likely you likely
have a wallet, you know, sitting nearby you somewhere, probably
in your pocket, maybe it's in your backpack or you
tell far back. Maybe you know the concept. But your
wallet is likely where you store your physical credit cards,
(00:21):
your ID. Maybe you even have a little cash in
your wallet. The point is we're all familiar with this concept.
You have a physical storage container, usually like leather or
full leather, where you store things that you need access
to but you want to keep them secure and somewhat organized.
Typically these things have to do with storing currency. These
(00:44):
wallets do paying for things or validating who you are,
like in the case of having your ID in it.
A crypto wallet is effectively the same thing, but it's
specifically designed to store crypto and like passwords. There are
hardware wallets, cold wallets, and hot wallets, and we'll let's
(01:08):
not get ahead of ourselves, all right, So let's just
walk this out because I don't want to like jump
too far ahead, because it's very attempting to right now.
But hardware wallets we call them cold wallets, or you
have like online wallets that are called hot wallets. But
first let's talk about the purpose of a crypto wallet
in any case. All right, So, if you've been listening
(01:29):
to this show for any length of time, specifically like
in the last well since twenty twenty two, specifically, we've
been talking a lot about crypto NFTs, things like that,
and hopefully by now I've built up some kind of
appetite in you to invest in yourself in Web three,
whether it be buying an NFT, exchanging your US dollars
(01:53):
or rubles for ethereum or a sheep of coin. But
just like we describe what we're all pretty used to,
the wallet and the crypto wallet, these things store things
that you might need access to, like your currency cryptocurrency.
It allows you to pay for things in Web three,
(02:14):
and it allows you to validate who you are. Your
crypto wallet does. And among the most important things a
crypto while it does, and I just alluded to this,
is regarding the storage of things you may need access to.
Now I set this up in the form of storing crypto,
but there's a level deeper that are wallet stores, and
(02:36):
that's what we call keys. So not like physical keys
today that you know may turn on your vehicle or
let you in your house and one day, I'm sure
we'll get there. But I'm talking about your public and
private keys, the passwords that give you access to your cryptocurrencies.
(02:57):
Now you might be asking, you know, I thought my
crypto was or on or in the wallet. Well, you
may have crypto, but it's not like physically in your
crypto wallet, like your US dollars might be in your
Louis Vatan wallet. In Web three, your currency is basically
just a recording on a ledger. There's no physical coin
(03:19):
or token you can see. It's a record, it's a
line of code. It's an instance that is secured by
the blockchain. It can be altered or forged. It can
it can be stolen. But again let's not get ahead
of ourselves. We're going to talk about that. But the
record does last forever that it was in your proverbial hands.
(03:41):
I want to give again a quick primer on how
the blockchain works, because it's important for this conversation. The
blockchain is a distributed database. Think of it like a
hard drive or a computer that is replicated in a
gang of people all over the world. World have the
same copy, the same version of this hard drive or
(04:04):
computer with the storage device in it, and they're constantly
validating the files on each other. So the computer, the
hard drive that's in you know, Mississippi, is validating the
same storage and records of the computer that I may
have in Las Vegas, or in Atlanta or in New York.
(04:26):
So they're all like you know, validating each other to
make sure they're correct and to verify transactions that happen
on the blockchain. So you can't say, like, you know,
I have a valid copy of don to two on
my node with your computers, like your node, that node
on the blockchain network, because all the other nodes, all
the other computers out there are going to check the
(04:47):
record and say no, no, no, no, no, it's not valid.
And then when they verify that your node has you know,
malicious file on it or you know, an invalid file.
It's not necessarily be malicious, but it's invalid. Your know,
then your computer, your hard drive that's trying to insert
that file, that invalid or malicious file is going to
(05:08):
get banned from the blockchain network because they tried to
insert an invalid transaction. So anyway, the blockchain is a
database that stores information electronic electronically, uh, digitally and it's redundant,
so it's there's same copies all around the world. Then
they're being stored by minors, which we don't have to
(05:30):
get into that today. But what's so cool about the
blockchain is that it's NonStop guaranteeing the purity, fidelity, or
you know, the cleanliness of the data that's being generated,
and you don't have to rely on like a government
or any institution to protect that data. It's you know,
(05:54):
it's a democratized authority. So it's probably about as far
as I'm going to go with explaining what the blockchain
is in this episode, because I really only reference that
to help us understand cryptocurrency not being in our wallets
physically up the record of how much ethereum or light
coin or sheiba i have is stored in this distributed
(06:19):
decentralized ledger miles long spreadsheet, if you will. So your
wallet then stores the keys that unlock your crypto. Your
wallet opens the door for your crypto to be used
in a transaction. So like you're buying an NFT or
a cup of coffee in some innovative, forward thinking coffee house,
(06:43):
your wallet allows others to send you crypto as your
wallet has an address that anyone can see. Again, we'll
get into that private first public concept shortly, and it
can serve as an actual key like instead of using
an email address and password like you might sign in
to like you might use to sign them too, like Instagram.
(07:05):
You could use your crypto wallet to sign into an
online service, for instance, open Sea, which we've talked a
lot about on our episodes about NFTs open cs in
exchange like the Amazon of NFTs, you can use your
wallet to sign in to open see without using like
an email addressing, password, passwords and email justice to log
(07:26):
in are so web too, right, and so the wallet
could also store your dial token, your distributed your decentralized
autonomous organization token, the thing that you use to give
you access to a party at the upcoming Afrotech conference
in Austin. You know that could be stored in your
(07:48):
crypto wallet, the token that you use to get into
the dial like Friends with Benefits is a dial created
by a black man. To get into that party, you
know you're gonna have to bring your crypt the wallet
to get access because your wallet is storing the token
that validates that you have access to said party your wallet.
(08:09):
So as you can tell, your wallet has a variety
of functions, and we just talked about some of the
most critical ons. So what else should we know about
a crypto wallet? Then? Well, how do you get one?
I'm going to say that conversation for a little later
because there's a bit more foundation I want to lay
(08:30):
so you really get a handle on what it is
the wallet is, and what it does and the implications
of having one. I've said this a few times, use
these terms, these phrases A few times. I mentioned keys,
private keys, and public keys, so there's a few times already,
and I want to dig in right now on what
(08:52):
they are because when I say things like a public
key that allows anyone to see you on the blockchain
and your activity on the blockchain, that might scare you.
You're like, you know, why does everybody get to see
that I bought? Said nft? Why does everybody get to
see that I sent John? You know? One? Eight? Like
(09:13):
why is that public knowledge? Well, you know number one, like,
there's no more privacy. That concept of privacy is you
know a web two thing. Again, the world is changing,
So that's a different conversation for a different thing. But
the public key is something that anybody can see, and
you're not at risk of being hacked or someone stealing
(09:36):
your crypto because they have access to your public key.
Your public key is supposed to be used. It's supposed
to be seeable because that's how you can make transactions.
Your public key is is a cryptographic code. It's a
set of numbers and letters that allows you to receive crypto,
(09:59):
or better, it allows the record of an amount of
crypto to move from my point on the ledger, the
global ledger, to your name on the global ledger. So
walk with me for a minute, because I don't want
you to get confused about this concept, and if it does,
just hit rewind and listen again. The public key that
(10:23):
you have if you have a wallet, everybody has one.
If you have a wallet, it's it's like a two
hundred and fifty six bit number. So but you will
likely see more often is the wallet address, which is
a scrambled version of that number. The address is a
set of random characters. They're not Russian say random, but
(10:44):
there are a set of characters that have both letters
and numbers in it. And the address will always begin
with a one, A three, or a BC one. Digging
deeper into that is outside of the scope of this episode,
but it's good to know that. So let's say you
want to send me your address to send you an ETH,
a single ethereum coin. What you could do is on
(11:09):
almost every wallet, cold wallet or hot wallet software or hardware,
there is a copy paste feature that allows you to
copy the set of characters like a forty two you
know character address, which is the public address of your
wallet or in most wallets give you this feature. You
(11:32):
can just pull up the QR code that I can
read with my smart device, my you know, iPhone or whatever,
and the QR code references your address that forty two
character a code. So then just by doing that, I
can send you the ETH that I owe you. The
(11:52):
private key, however, is what allows anyone to put their
hands in your cookie jar. So stick the nubs into
your wallet and snatch your crypto. You don't want that.
Your private key is something you should never share. There's
no reason any reputable transaction on the blockchain requires you
(12:13):
to share your private key. Any transaction you may engage
in should only require your public key. Think of it
as your token or ticket into the door. Or on
the one way door that allows money to put into
your wallet. But by providing your private key to others,
you allow their unfettered access into your chips. You don't
(12:36):
want that. Typically, the private key is another set of
alpha numeric characters, and you unlock access to those characters,
which really don't do often, but should you like to.
These wallets give you a recovery phrase. So I'm going
(12:57):
to dig into a cold wallet that I use really quickly.
Cold means it's hardware. It's like not on the internet.
It's a device, you know. Most of them look like
a USB like little thumb drive. So Ledger is the
one that I use, a Ledger nano X. It's a
cold wallet. More on that soon. But they provide a
(13:17):
recovery phrase which I have stored, and once I enter
that recovery phrase, it unlocks my private key. Again. Without
that recovery phrase, I have no access to my crypto,
no reputable wallet. Again, hot or cold should be storing
(13:38):
my recovery phrase. In fact, when I sign up for Ledger,
they give you a couple like pieces of paper, a
couple of little cards like physical pieces of paper that
I can copy down with a pen. My recovery phrase
and store it in a safe place like why choices
may be a safe deposit box or a fire proof
(13:59):
box or in your gun safe or whatever. And so
your private key is protected by a recovery phrase that
are typically like words like these random words. Alleger gives
you twenty four words that are that are in your
recovery phrase, and they're like super random words like have
(14:21):
house chair bright like these they're just random words or
they seem random words that don't make any sense otherwise,
but they are the recovery phrase that is used to
unlock your private key. So there are types of wallets
(14:41):
that I want to discuss. There are three types that
are most prominent, or really there's three types I should
say that you should be familiar with. Though you'll find
I'm sure your groove with probably one, maybe two of them,
but I'm sure you'll find one that you probably prefer.
First up. I would say it's probably lesser used, but
(15:03):
that's speculation because it's just harder to do it. It's
it's paper wallet. It's a paper wallet. As I mentioned before,
your your crypto, your wallet, I'm sorry, it is just
like a set of alpha numeric characters that are your
private key that unlock your crypto. So a paper wallet
(15:26):
is a sheet of paper that you write down your
characters and using those characters, you can unlock your assets.
It's clunky this way, but it's legitimate. You just need
a sheet of paper that has you can you can
you can memorize them, you know, if you want it.
But it's a piece of paper. A paper wallet is
(15:47):
that records the characters of your private key. Paper wallet
more common because it's easier. Isn't on line wallet. These
are things like the coin base wallet, which I have.
I have one, I don't use it as much anymore,
(16:08):
which will discuss my reasons why. But a coin based wallet,
and there are others, is software. It's an app that
is typically protected by like a two step encryption, So
it's likely gonna need like it's going to send you
a text when you're trying to sign in, or it's
going to require something like Google Authenticator that code when
(16:30):
you try to sign in. But with your online wallet,
they're largely easy to use, which makes them attractive to
many because for people who are looking for simplicity and
don't want to have all the responsibility of maining maintaining
a small device, like a hardware wallet. It typically is
keeping it safe and remembers location. A hot wallet, which
(16:54):
is the software wallet, is attractive, which brings me to
a hardware wallet. The this is called a cold wallet.
A hot wallet again is the software the app that
does it. The cold wallet is hardware. Again, I use Ledger.
I have a nano x is by Ledger. It is
(17:16):
a wallet that is not connected to the internet unless
I plug it in. But it's it's storing my keys offline.
It's stored. My keys are stored on the device. It's
safer provided I don't lose it. But it does require
me to be incredibly more responsible. Does that all makes sense?
(17:42):
It does. Cold wallet is hardware, is offline. It's not online,
you know, unless I plug it in. A hot wallet
software which is like coin based wallet, and there are
many many others, but they are online and they are
third parties managing your crypto, managing your keys. They both
(18:07):
have their own bit of attractiveness. If you are if
you do not want to be responsible for knowing where
your device is, knowing where that paper is, knowing where
that little thumb drive that we call a that I
call a ledger in my in my respects a nano
x or other device that you use. If you don't
(18:27):
want to be responsible for that, something like a Coinbase
wallet might work for you, Which brings me to the
topic of a custodial or non custodiol at this stage.
Because they have so many implications to hot or cold wallets,
hardware or software wallets, custodio and non custodial, it makes
(18:48):
sense to discuss those now because the definitions go hand
in hand with the wallet types. Custodio wallets are like software.
Those are the wallets that we are trusting knowingly or
unknowingly a third party like Coinbase or some other company
(19:09):
to manage our crypto With a custodia wallet, while it
might be encrypted, it's stored on somebody's server somewhere like
maybe AWS, or maybe that company has their own server farm.
But in any case, somebody else the custodian is managing.
(19:29):
They're holding tight to our private keys. The benefits of
this custodia wallet is just what we discussed, convenience, play
and simple. They're a lot easier to use. They're built
for the lowest common denominator, not to say that cold
wallets are not built for the lowest common denominators, but
they are custodio that they're somewhere we get to hold
(19:51):
somebody's hand when we cross the street. Right, so beautifully designed,
but we don't have to hold a lot of responsibility
to get to point B from where we are in
point A. God forbid that coinbase gets hacked, because that
means you are susceptible, and whatever you know, coins I
(20:13):
have left in my coinbase is susceptible. So I don't
leave my crypto in my coinbase app I choose to
be responsible, so I choose to go the non custodial route,
which means that I am fully grown, no longer holding
anyone's hand when I cross the street. I am taking
(20:33):
full ownership of my future. In Web three, my data
isn't stored on some company servers. The only records present
of my private keys are you know the record. Actually,
the only records present about anything about my activity are
either on the blockchain or on my device. There is
(20:56):
no like online service holding on to will look is data?
I own it. It's in my It's right now, sitting
right in front of me, and whoever records, whatever records
I keep on my person or in my house, let
that be my private keys or whatever. There is no
(21:17):
authority or company or app holding onto it but me.
I own it fully and outright, both the benefits and
the responsibility. Lastly, as we've talked a lot about coinbase
and Ledger in this episode, I want to take a
final few minutes here and set the record clear about
(21:39):
the differences between an exchange and a wallet. In most
in the most basic terms, a crypto exchange is like
you ever been in the airport in next to like
Chick fil a. They have a counter where you can
exchange your euros for US dollars or exchange your US
(22:02):
dollars for renmand b. It's an exchange desk, and there
is an exchange rate. So I'm gonna make this up
because I could look. But let's matter of fact, let's
let's do the real work here and find exchange rate
from usd to euro boom okay, So for one US
(22:28):
dollar I can get eighty nine cents in euros. Okay,
one dollar equals eighty nine cents in Europe. So it
kind of works the same, well it does. It works
the same way. So one dollar one. I'm type of
saying one US dollar to one eth. So for one dollar,
(22:55):
well not much. Let's just do it backwards. If I
want one eth, I have to pay two thousand, eight
hundred and twenty eight dollars as of right now. Okay,
that's diet it backwards, because it's gonna be like points, zeros,
years years years, yeos or something if I do it
the other way. You guys are pretty good at math.
So for one for two eight hundred and twenty five dollars,
(23:18):
I can buy one eth at present value that is
the exchange rate, and so on an exchange, I can
trade my US dollars for ethereum or for a bitcoin,
or for doge or for Shiva. And exchange is not
a wallet. But in this case, like Coinbase, a company
(23:40):
who develops an exchange can also develop a wallet. They
are mutually exclusive, but they don't have to be. They
Coinbase could have just said we're gonna think in the
exchange game, we're not going to do a wallet, but
they decided to play in the wallet game. Two. I
mentioned that I also have a coin Base wallet, So
that wallet, whether or not it's developed by Coinbase, is
(24:02):
software or hardware in the case of my ledger that
allows me to store my coins. I can make transactions
using my wallet. I cannot make transactions with dollars that
are stored on the exchange. The exchange is just where
I'm playing the money game. I'm going back and forth
exchanging my dollars for more bitcoin or for more ethereum,
et cetera. But if I want to go buy a
(24:24):
cup of coffee at some cool, you know coffee house,
I need to have my money moved off of the
exchange and into a wallet. I can't also sign in
to a service using an exchange my exchange account. I
need to have my wallet setup. So let's use open Seed.
(24:46):
We use open seed a lot as an example, because
I mean, we're heavy users of open seed, the amazon
of NFTs, and so if I want to sign in
to open seed to buy an NFT, I cannot do
using any you know password or use the name that
I have on Coinbase the exchange. I need to have
(25:08):
a coinbas wallet set up in order to sign in
to open Sea and many many other web three platforms
require you to have a wallet. You got to have
a wallet to sign into these things. So whether or
not you use something like Ledger or coinbase. One of
the features of the wallet is also that they show
(25:30):
you how much you own of a particular coin, and
some may even show you the present value of those things.
So if I own one eth Ledger, the dashboard might
show me that that one eth present value is two
eight hundred and twenty five dollars. So I love doing
(25:51):
these episodes about crypto, blockchain, NFTs and more with you guys,
and I want to know what questions you guys have
because I'm going to be having some really really cool
conversations with even more experts in the field of crypto
on this show, and so I want to know what
you guys have questions about. If you have specific questions
(26:14):
that you want answered, and you know nobody answers questions
like we do, send me your questions DM me I
am on Instagram, I am on Twitter. On Twitter, it's
Will Underscore Lucas. On Instagram, it's just Will Lucas, WI
l l l uc As, follow me, shoot me a DM,
ask me what you got. And I'm going to be
(26:36):
having more interviews and conversations where I will do things solo,
just talking about getting you educated in order to play
well in the game of Web three. Whether it be
about NFTs you have questions, send them to me, crypto currencies,
you have questions, send it to me, blockchain, send it
to me, because I want to make sure we're giving
(26:57):
you value on this show. If you love this episode,
please go to iTunes and drop five stars and there.
It means a lot when you do that. I really
appreciate you guys for taking this. Rye Woods. I hope
to see you in real life and even Brooklyn coming
up that we announced it at the top of this
episode or Austin this November. So afro Tech is back
(27:22):
and we're gonna have a ton of conversations about crypto,
NFTs and more this November. So we're gonna just keep
building this thing up, keep building. You know your expertise
and domain knowledge about the blockchain, so stick with us.
I promise you will not regret it. Black Tech Green
(27:54):
Money is a production the Blavity Afro Tech on the
Black Effect podcast Networking Nightheart Media, and it's produced by
Morgan Debonne and me Well Lucas, with additional production support
by love Vechim Marissa Lewis. Special thank you to Michael Davis,
Jermain Hall, in Secrosavon Young you know like the Wine. Yes,
that's his real name. Learn more about this topic over
(28:16):
at afrotech dot com and if you're enjoying yourself, leave
us the five star rating on iTunes, Go get your money,
peace and love,
So what is a crypto wallet. You've likely you likely
have a wallet, you know, sitting nearby you somewhere, probably
in your pocket, maybe it's in your backpack or you
tell far back. Maybe you know the concept. But your
wallet is likely where you store your physical credit cards,
(00:21):
your ID. Maybe you even have a little cash in
your wallet. The point is we're all familiar with this concept.
You have a physical storage container, usually like leather or
full leather, where you store things that you need access
to but you want to keep them secure and somewhat organized.
Typically these things have to do with storing currency. These
(00:44):
wallets do paying for things or validating who you are,
like in the case of having your ID in it.
A crypto wallet is effectively the same thing, but it's
specifically designed to store crypto and like passwords. There are
hardware wallets, cold wallets, and hot wallets, and we'll let's
(01:08):
not get ahead of ourselves, all right, So let's just
walk this out because I don't want to like jump
too far ahead, because it's very attempting to right now.
But hardware wallets we call them cold wallets, or you
have like online wallets that are called hot wallets. But
first let's talk about the purpose of a crypto wallet
in any case. All right, So, if you've been listening
(01:29):
to this show for any length of time, specifically like
in the last well since twenty twenty two, specifically, we've
been talking a lot about crypto NFTs, things like that,
and hopefully by now I've built up some kind of
appetite in you to invest in yourself in Web three,
whether it be buying an NFT, exchanging your US dollars
(01:53):
or rubles for ethereum or a sheep of coin. But
just like we describe what we're all pretty used to,
the wallet and the crypto wallet, these things store things
that you might need access to, like your currency cryptocurrency.
It allows you to pay for things in Web three,
(02:14):
and it allows you to validate who you are. Your
crypto wallet does. And among the most important things a
crypto while it does, and I just alluded to this,
is regarding the storage of things you may need access to.
Now I set this up in the form of storing crypto,
but there's a level deeper that are wallet stores, and
(02:36):
that's what we call keys. So not like physical keys
today that you know may turn on your vehicle or
let you in your house and one day, I'm sure
we'll get there. But I'm talking about your public and
private keys, the passwords that give you access to your cryptocurrencies.
(02:57):
Now you might be asking, you know, I thought my
crypto was or on or in the wallet. Well, you
may have crypto, but it's not like physically in your
crypto wallet, like your US dollars might be in your
Louis Vatan wallet. In Web three, your currency is basically
just a recording on a ledger. There's no physical coin
(03:19):
or token you can see. It's a record, it's a
line of code. It's an instance that is secured by
the blockchain. It can be altered or forged. It can
it can be stolen. But again let's not get ahead
of ourselves. We're going to talk about that. But the
record does last forever that it was in your proverbial hands.
(03:41):
I want to give again a quick primer on how
the blockchain works, because it's important for this conversation. The
blockchain is a distributed database. Think of it like a
hard drive or a computer that is replicated in a
gang of people all over the world. World have the
same copy, the same version of this hard drive or
(04:04):
computer with the storage device in it, and they're constantly
validating the files on each other. So the computer, the
hard drive that's in you know, Mississippi, is validating the
same storage and records of the computer that I may
have in Las Vegas, or in Atlanta or in New York.
(04:26):
So they're all like you know, validating each other to
make sure they're correct and to verify transactions that happen
on the blockchain. So you can't say, like, you know,
I have a valid copy of don to two on
my node with your computers, like your node, that node
on the blockchain network, because all the other nodes, all
the other computers out there are going to check the
(04:47):
record and say no, no, no, no, no, it's not valid.
And then when they verify that your node has you know,
malicious file on it or you know, an invalid file.
It's not necessarily be malicious, but it's invalid. Your know,
then your computer, your hard drive that's trying to insert
that file, that invalid or malicious file is going to
(05:08):
get banned from the blockchain network because they tried to
insert an invalid transaction. So anyway, the blockchain is a
database that stores information electronic electronically, uh, digitally and it's redundant,
so it's there's same copies all around the world. Then
they're being stored by minors, which we don't have to
(05:30):
get into that today. But what's so cool about the
blockchain is that it's NonStop guaranteeing the purity, fidelity, or
you know, the cleanliness of the data that's being generated,
and you don't have to rely on like a government
or any institution to protect that data. It's you know,
(05:54):
it's a democratized authority. So it's probably about as far
as I'm going to go with explaining what the blockchain
is in this episode, because I really only reference that
to help us understand cryptocurrency not being in our wallets
physically up the record of how much ethereum or light
coin or sheiba i have is stored in this distributed
(06:19):
decentralized ledger miles long spreadsheet, if you will. So your
wallet then stores the keys that unlock your crypto. Your
wallet opens the door for your crypto to be used
in a transaction. So like you're buying an NFT or
a cup of coffee in some innovative, forward thinking coffee house,
(06:43):
your wallet allows others to send you crypto as your
wallet has an address that anyone can see. Again, we'll
get into that private first public concept shortly, and it
can serve as an actual key like instead of using
an email address and password like you might sign in
to like you might use to sign them too, like Instagram.
(07:05):
You could use your crypto wallet to sign into an
online service, for instance, open Sea, which we've talked a
lot about on our episodes about NFTs open cs in
exchange like the Amazon of NFTs, you can use your
wallet to sign in to open see without using like
an email addressing, password, passwords and email justice to log
(07:26):
in are so web too, right, and so the wallet
could also store your dial token, your distributed your decentralized
autonomous organization token, the thing that you use to give
you access to a party at the upcoming Afrotech conference
in Austin. You know that could be stored in your
(07:48):
crypto wallet, the token that you use to get into
the dial like Friends with Benefits is a dial created
by a black man. To get into that party, you
know you're gonna have to bring your crypt the wallet
to get access because your wallet is storing the token
that validates that you have access to said party your wallet.
(08:09):
So as you can tell, your wallet has a variety
of functions, and we just talked about some of the
most critical ons. So what else should we know about
a crypto wallet? Then? Well, how do you get one?
I'm going to say that conversation for a little later
because there's a bit more foundation I want to lay
(08:30):
so you really get a handle on what it is
the wallet is, and what it does and the implications
of having one. I've said this a few times, use
these terms, these phrases A few times. I mentioned keys,
private keys, and public keys, so there's a few times already,
and I want to dig in right now on what
(08:52):
they are because when I say things like a public
key that allows anyone to see you on the blockchain
and your activity on the blockchain, that might scare you.
You're like, you know, why does everybody get to see
that I bought? Said nft? Why does everybody get to
see that I sent John? You know? One? Eight? Like
(09:13):
why is that public knowledge? Well, you know number one, like,
there's no more privacy. That concept of privacy is you
know a web two thing. Again, the world is changing,
So that's a different conversation for a different thing. But
the public key is something that anybody can see, and
you're not at risk of being hacked or someone stealing
(09:36):
your crypto because they have access to your public key.
Your public key is supposed to be used. It's supposed
to be seeable because that's how you can make transactions.
Your public key is is a cryptographic code. It's a
set of numbers and letters that allows you to receive crypto,
(09:59):
or better, it allows the record of an amount of
crypto to move from my point on the ledger, the
global ledger, to your name on the global ledger. So
walk with me for a minute, because I don't want
you to get confused about this concept, and if it does,
just hit rewind and listen again. The public key that
(10:23):
you have if you have a wallet, everybody has one.
If you have a wallet, it's it's like a two
hundred and fifty six bit number. So but you will
likely see more often is the wallet address, which is
a scrambled version of that number. The address is a
set of random characters. They're not Russian say random, but
(10:44):
there are a set of characters that have both letters
and numbers in it. And the address will always begin
with a one, A three, or a BC one. Digging
deeper into that is outside of the scope of this episode,
but it's good to know that. So let's say you
want to send me your address to send you an ETH,
a single ethereum coin. What you could do is on
(11:09):
almost every wallet, cold wallet or hot wallet software or hardware,
there is a copy paste feature that allows you to
copy the set of characters like a forty two you
know character address, which is the public address of your
wallet or in most wallets give you this feature. You
(11:32):
can just pull up the QR code that I can
read with my smart device, my you know, iPhone or whatever,
and the QR code references your address that forty two
character a code. So then just by doing that, I
can send you the ETH that I owe you. The
(11:52):
private key, however, is what allows anyone to put their
hands in your cookie jar. So stick the nubs into
your wallet and snatch your crypto. You don't want that.
Your private key is something you should never share. There's
no reason any reputable transaction on the blockchain requires you
(12:13):
to share your private key. Any transaction you may engage
in should only require your public key. Think of it
as your token or ticket into the door. Or on
the one way door that allows money to put into
your wallet. But by providing your private key to others,
you allow their unfettered access into your chips. You don't
(12:36):
want that. Typically, the private key is another set of
alpha numeric characters, and you unlock access to those characters,
which really don't do often, but should you like to.
These wallets give you a recovery phrase. So I'm going
(12:57):
to dig into a cold wallet that I use really quickly.
Cold means it's hardware. It's like not on the internet.
It's a device, you know. Most of them look like
a USB like little thumb drive. So Ledger is the
one that I use, a Ledger nano X. It's a
cold wallet. More on that soon. But they provide a
(13:17):
recovery phrase which I have stored, and once I enter
that recovery phrase, it unlocks my private key. Again. Without
that recovery phrase, I have no access to my crypto,
no reputable wallet. Again, hot or cold should be storing
(13:38):
my recovery phrase. In fact, when I sign up for Ledger,
they give you a couple like pieces of paper, a
couple of little cards like physical pieces of paper that
I can copy down with a pen. My recovery phrase
and store it in a safe place like why choices
may be a safe deposit box or a fire proof
(13:59):
box or in your gun safe or whatever. And so
your private key is protected by a recovery phrase that
are typically like words like these random words. Alleger gives
you twenty four words that are that are in your
recovery phrase, and they're like super random words like have
(14:21):
house chair bright like these they're just random words or
they seem random words that don't make any sense otherwise,
but they are the recovery phrase that is used to
unlock your private key. So there are types of wallets
(14:41):
that I want to discuss. There are three types that
are most prominent, or really there's three types I should
say that you should be familiar with. Though you'll find
I'm sure your groove with probably one, maybe two of them,
but I'm sure you'll find one that you probably prefer.
First up. I would say it's probably lesser used, but
(15:03):
that's speculation because it's just harder to do it. It's
it's paper wallet. It's a paper wallet. As I mentioned before,
your your crypto, your wallet, I'm sorry, it is just
like a set of alpha numeric characters that are your
private key that unlock your crypto. So a paper wallet
(15:26):
is a sheet of paper that you write down your
characters and using those characters, you can unlock your assets.
It's clunky this way, but it's legitimate. You just need
a sheet of paper that has you can you can
you can memorize them, you know, if you want it.
But it's a piece of paper. A paper wallet is
(15:47):
that records the characters of your private key. Paper wallet
more common because it's easier. Isn't on line wallet. These
are things like the coin base wallet, which I have.
I have one, I don't use it as much anymore,
(16:08):
which will discuss my reasons why. But a coin based wallet,
and there are others, is software. It's an app that
is typically protected by like a two step encryption, So
it's likely gonna need like it's going to send you
a text when you're trying to sign in, or it's
going to require something like Google Authenticator that code when
(16:30):
you try to sign in. But with your online wallet,
they're largely easy to use, which makes them attractive to
many because for people who are looking for simplicity and
don't want to have all the responsibility of maining maintaining
a small device, like a hardware wallet. It typically is
keeping it safe and remembers location. A hot wallet, which
(16:54):
is the software wallet, is attractive, which brings me to
a hardware wallet. The this is called a cold wallet.
A hot wallet again is the software the app that
does it. The cold wallet is hardware. Again, I use Ledger.
I have a nano x is by Ledger. It is
(17:16):
a wallet that is not connected to the internet unless
I plug it in. But it's it's storing my keys offline.
It's stored. My keys are stored on the device. It's
safer provided I don't lose it. But it does require
me to be incredibly more responsible. Does that all makes sense?
(17:42):
It does. Cold wallet is hardware, is offline. It's not online,
you know, unless I plug it in. A hot wallet
software which is like coin based wallet, and there are
many many others, but they are online and they are
third parties managing your crypto, managing your keys. They both
(18:07):
have their own bit of attractiveness. If you are if
you do not want to be responsible for knowing where
your device is, knowing where that paper is, knowing where
that little thumb drive that we call a that I
call a ledger in my in my respects a nano
x or other device that you use. If you don't
(18:27):
want to be responsible for that, something like a Coinbase
wallet might work for you, Which brings me to the
topic of a custodial or non custodiol at this stage.
Because they have so many implications to hot or cold wallets,
hardware or software wallets, custodio and non custodial, it makes
(18:48):
sense to discuss those now because the definitions go hand
in hand with the wallet types. Custodio wallets are like software.
Those are the wallets that we are trusting knowingly or
unknowingly a third party like Coinbase or some other company
(19:09):
to manage our crypto With a custodia wallet, while it
might be encrypted, it's stored on somebody's server somewhere like
maybe AWS, or maybe that company has their own server farm.
But in any case, somebody else the custodian is managing.
(19:29):
They're holding tight to our private keys. The benefits of
this custodia wallet is just what we discussed, convenience, play
and simple. They're a lot easier to use. They're built
for the lowest common denominator, not to say that cold
wallets are not built for the lowest common denominators, but
they are custodio that they're somewhere we get to hold
(19:51):
somebody's hand when we cross the street. Right, so beautifully designed,
but we don't have to hold a lot of responsibility
to get to point B from where we are in
point A. God forbid that coinbase gets hacked, because that
means you are susceptible, and whatever you know, coins I
(20:13):
have left in my coinbase is susceptible. So I don't
leave my crypto in my coinbase app I choose to
be responsible, so I choose to go the non custodial route,
which means that I am fully grown, no longer holding
anyone's hand when I cross the street. I am taking
(20:33):
full ownership of my future. In Web three, my data
isn't stored on some company servers. The only records present
of my private keys are you know the record. Actually,
the only records present about anything about my activity are
either on the blockchain or on my device. There is
(20:56):
no like online service holding on to will look is data?
I own it. It's in my It's right now, sitting
right in front of me, and whoever records, whatever records
I keep on my person or in my house, let
that be my private keys or whatever. There is no
(21:17):
authority or company or app holding onto it but me.
I own it fully and outright, both the benefits and
the responsibility. Lastly, as we've talked a lot about coinbase
and Ledger in this episode, I want to take a
final few minutes here and set the record clear about
(21:39):
the differences between an exchange and a wallet. In most
in the most basic terms, a crypto exchange is like
you ever been in the airport in next to like
Chick fil a. They have a counter where you can
exchange your euros for US dollars or exchange your US
(22:02):
dollars for renmand b. It's an exchange desk, and there
is an exchange rate. So I'm gonna make this up
because I could look. But let's matter of fact, let's
let's do the real work here and find exchange rate
from usd to euro boom okay, So for one US
(22:28):
dollar I can get eighty nine cents in euros. Okay,
one dollar equals eighty nine cents in Europe. So it
kind of works the same, well it does. It works
the same way. So one dollar one. I'm type of
saying one US dollar to one eth. So for one dollar,
(22:55):
well not much. Let's just do it backwards. If I
want one eth, I have to pay two thousand, eight
hundred and twenty eight dollars as of right now. Okay,
that's diet it backwards, because it's gonna be like points, zeros,
years years years, yeos or something if I do it
the other way. You guys are pretty good at math.
So for one for two eight hundred and twenty five dollars,
(23:18):
I can buy one eth at present value that is
the exchange rate, and so on an exchange, I can
trade my US dollars for ethereum or for a bitcoin,
or for doge or for Shiva. And exchange is not
a wallet. But in this case, like Coinbase, a company
(23:40):
who develops an exchange can also develop a wallet. They
are mutually exclusive, but they don't have to be. They
Coinbase could have just said we're gonna think in the
exchange game, we're not going to do a wallet, but
they decided to play in the wallet game. Two. I
mentioned that I also have a coin Base wallet, So
that wallet, whether or not it's developed by Coinbase, is
(24:02):
software or hardware in the case of my ledger that
allows me to store my coins. I can make transactions
using my wallet. I cannot make transactions with dollars that
are stored on the exchange. The exchange is just where
I'm playing the money game. I'm going back and forth
exchanging my dollars for more bitcoin or for more ethereum,
et cetera. But if I want to go buy a
(24:24):
cup of coffee at some cool, you know coffee house,
I need to have my money moved off of the
exchange and into a wallet. I can't also sign in
to a service using an exchange my exchange account. I
need to have my wallet setup. So let's use open Seed.
(24:46):
We use open seed a lot as an example, because
I mean, we're heavy users of open seed, the amazon
of NFTs, and so if I want to sign in
to open seed to buy an NFT, I cannot do
using any you know password or use the name that
I have on Coinbase the exchange. I need to have
(25:08):
a coinbas wallet set up in order to sign in
to open Sea and many many other web three platforms
require you to have a wallet. You got to have
a wallet to sign into these things. So whether or
not you use something like Ledger or coinbase. One of
the features of the wallet is also that they show
(25:30):
you how much you own of a particular coin, and
some may even show you the present value of those things.
So if I own one eth Ledger, the dashboard might
show me that that one eth present value is two
eight hundred and twenty five dollars. So I love doing
(25:51):
these episodes about crypto, blockchain, NFTs and more with you guys,
and I want to know what questions you guys have
because I'm going to be having some really really cool
conversations with even more experts in the field of crypto
on this show, and so I want to know what
you guys have questions about. If you have specific questions
(26:14):
that you want answered, and you know nobody answers questions
like we do, send me your questions DM me I
am on Instagram, I am on Twitter. On Twitter, it's
Will Underscore Lucas. On Instagram, it's just Will Lucas, WI
l l l uc As, follow me, shoot me a DM,
ask me what you got. And I'm going to be
(26:36):
having more interviews and conversations where I will do things solo,
just talking about getting you educated in order to play
well in the game of Web three. Whether it be
about NFTs you have questions, send them to me, crypto currencies,
you have questions, send it to me, blockchain, send it
to me, because I want to make sure we're giving
(26:57):
you value on this show. If you love this episode,
please go to iTunes and drop five stars and there.
It means a lot when you do that. I really
appreciate you guys for taking this. Rye Woods. I hope
to see you in real life and even Brooklyn coming
up that we announced it at the top of this
episode or Austin this November. So afro Tech is back
(27:22):
and we're gonna have a ton of conversations about crypto,
NFTs and more this November. So we're gonna just keep
building this thing up, keep building. You know your expertise
and domain knowledge about the blockchain, so stick with us.
I promise you will not regret it. Black Tech Green
(27:54):
Money is a production the Blavity Afro Tech on the
Black Effect podcast Networking Nightheart Media, and it's produced by
Morgan Debonne and me Well Lucas, with additional production support
by love Vechim Marissa Lewis. Special thank you to Michael Davis,
Jermain Hall, in Secrosavon Young you know like the Wine. Yes,
that's his real name. Learn more about this topic over
(28:16):
at afrotech dot com and if you're enjoying yourself, leave
us the five star rating on iTunes, Go get your money,
peace and love,
Host
Will Lucas
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