Wallets and Custody of Funds

What is a Crypto Wallet?

A crypto wallet is a tool that stores your private keys—the secret codes that prove you own your cryptocurrency. Think of it like a digital keychain that holds the keys to your crypto "safety deposit boxes" on the blockchain. The wallet doesn't actually store your coins (they live on the blockchain), but it stores the keys that let you access and move them.

Types of Wallets

Hot Wallets

Browser Wallets: Extensions like MetaMask that run in your web browser. Perfect for interacting with DeFi applications and easy daily use.

• Pros: Convenient, easy to use with dApps

• Cons: More vulnerable to online attacks

Mobile Wallets: Apps on your smartphone for on-the-go access.

• Pros: Portable, user-friendly, often include QR code scanning

• Cons: Phone security depends on device security

Desktop Wallets: Software installed on your computer.

• Pros: More features, better for managing multiple assets

• Cons: Vulnerable to malware and computer attacks

Cold Wallets

Hardware Wallets: Physical devices like Ledger or Trezor that store your keys offline.

• Pros: Highest security, immune to online attacks

• Cons: Less convenient for frequent transactions, costs money

Paper Wallets: Your private keys written or printed on paper.

• Pros: Completely offline, free

• Cons: Easy to lose or damage, not practical for regular use

Custody Models

Self-Custody

You hold your own private keys and are fully responsible for security. This gives you complete control but also complete responsibility.

Best For: Users who want maximum control and are comfortable with security practices.

Custodial (3rd party)

Exchanges or services hold your private keys for you, similar to a traditional bank account.

Best For: Beginners who want simplicity and aren't comfortable managing their own security.

Multi-Signature (Shared)

Requires multiple signatures to move funds, often used by organizations or for added security.

Best For: Organizations, high-value holdings, or users wanting distributed security.

Essential Security Best Practices

General

• Start small: Begin with small amounts while learning

• Use reputable wallets: Stick to well-known, audited wallet software

• Keep software updated: Regular updates fix security vulnerabilities

• Verify addresses: Always double-check recipient addresses before sending

• Use strong passwords: Protect wallet files and accounts with strong, unique passwords

Seed Phrase

• Write it down: Store your 12-24 word seed phrase on paper, never digitally

• Multiple copies: Keep copies in separate secure locations

• Never share: Never enter your seed phrase on websites or share with anyone

• Test recovery: Verify you can recover your wallet before storing large amounts

Hot Wallet

• Separate devices: Consider using a dedicated device for crypto activities

• Limited funds: Only keep what you need for regular use in hot wallets

• Regular backups: Backup wallet data regularly

Cold Storage

• Physical security: Store hardware wallets and paper wallets in secure locations

• Test periodically: Occasionally verify your cold storage is still accessible

• Have a plan: Ensure trusted family members can access funds if needed

Botanix Wallet Compatibility

Botanix is EVM-compatible, so you can use familiar wallets such as:

• OKX: Comprehensive wallet with built-in DEX and multi-chain support

• Rabby: Advanced wallet designed for DeFi users with enhanced security features

• MetaMask: Most popular choice for interacting with Botanix dApps

• Trust Wallet: Mobile-friendly option with broad crypto support

• Coinbase Wallet: User-friendly with built-in dApp browser

• Hardware Wallets: Ledger and Trezor support EVM chains including Botanix

Getting Started Safely

1. Choose the right wallet type for your needs and technical comfort level

2. Start with small amounts to learn and test everything works

3. Secure your seed phrase before adding significant funds

4. Practice basic operations like sending and receiving

5. Gradually increase your holdings as you become more comfortable

Common Mistakes to Avoid

• Not backing up seed phrases - This is the #1 way people lose their crypto

• Using exchange wallets for storage - Exchanges can be hacked or freeze accounts

• Sharing private information - Never share keys, seed phrases, or passwords

• Not verifying addresses - Always double-check before sending transactions

• Ignoring software updates - Outdated software has security vulnerabilities

Learn More

Best Practices:

• Kraken Security Guide

• Coinbase Learn: How to keep your crypto secure

Specific Wallet Guides:

• MetaMask Official Guide

• Ledger Academy

Remember: With crypto, you are your own bank. This brings great freedom but also great responsibility. Take time to understand security practices before committing significant funds.