Welcome To Day 2 Of Our 5-Day Series On Earning Digital Currency. |
Welcome back, let's dive right in.
To receive bitcoin, you’ll need your own address where people can send you money. It's as easy as asking someone to pay you via Venmo or PayPal.
All you need is a bitcoin wallet (or two) where you can copy and paste an address (or mobile app handle)—you can share it the same way you share an email address or social media handle. Before we dig deeper, let’s go over some basic terms you’ll need to know: |
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Wallet: Where you store information related to money, like a leather wallet with credit cards or bitcoin addresses connected to key pairs. Crypto wallets, whether mobile apps, desktop apps, pieces of paper with printed info, or hardware devices, are all used to view records and (usually) sign transactions. The same wallet will allow you to generate many unique bitcoin addresses.
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Bitcoin Wallet Address: Your crypto address is like a bank account number. Most crypto wallets can hold information related to many different accounts (wallet addresses). Anyone with your private key can access and sign the same information using another crypto wallet. The digital money is not physically inside the wallet device, but information about the money is stored there. The same private keys could theoretically be used to access the same funds (using the same addresses) with different wallet devices, including computers and phones.
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Hot Wallet: A crypto wallet with an internet connection. For example, if you're holding bitcoin, also called BTC, in a mobile app with instant exchange options, like Cash App, you're storing crypto in a type of hot wallet.
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Cold Wallet: A crypto wallet in the form of a hardware device, separate from your phone or daily use computer, that is generally disconnected from the internet. If you store crypto information in a special hardware device, like a Ledger or Trezor, you're keeping digital assets in cold storage. The hardware you use for bitcoin transactions, whether it’s a mobile phone or specialized hardware like ColdCard, is the signing device, not the wallet itself, the same way people can use many different pens or Docusign accounts to sign the same legal contract. Cold wallets should never come with a private key ready to view. You need to generate a fresh private key using a unique (and secret) seed phrase (12-24 words), using the device. You should write down the seed phrase because you can use it to restore that same wallet information on another device if the first device gets damaged or lost.
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| Now that it’s clear the wallet is not the computer, phone or any specialized device you might use, let’s move on to finding devices that best suit your needs. |
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| Choosing The Right Bitcoin Wallet For You |
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It’s OK to start with a consumer-friendly mobile app custodial wallet on your phone, like Cash App, without the option of a seed phrase or private key (the parent company holds users' keys, as a custodian). Just know that any bitcoin wallet app that doesn’t require you to write down at least 12 words and generate a private key is essentially a bank account. If Cash App decides to impose a daily transaction limit, self-employed lawyers or specialized consultants may find they need high-end clients to pay in installments. On the other hand, if you choose a self-custody wallet option like Electrum (accessed via laptop) or Trust Wallet (a mobile app), you can accept as much as you want, however you want.
If you’re planning to keep bitcoin as a type of crypto savings to hedge against dollar inflation or to use for international transactions without banking fees, you should use wallet software like Electrum, which lets you label each address and transaction with the name of your client/transaction purpose, for tax records. If you’re a content creator planning to turn small bitcoin tips from anonymous fans into dollars to pay bills and other expenses, a custodial mobile app like Strike or Cash App with easy bitcoin-to-dollar-bank-deposit conversion options might work best.
So let’s jump in to the factors you should consider when getting started and exploring your own bitcoin wallet options. |
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| What Types Of Payments Are You Expecting? |
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The bitcoin journalist Mickey Koss says that regular bitcoin transactions with self-custody wallets are well-suited “for large transfers or payments that are not time sensitive.” In his article on Forbes, he also says that curious newbies can turn to service providers like Unchained for help setting up their first cold storage wallets. The service provider Casa will help with Ethereum wallets as well, while Unchained offers bitcoin-only concierge help.
“The most difficult part of bitcoin may just be getting started,” Koss writes, he also recommends the BTC Sessions YouTube channel.
“Providers Unchained allow you to hold your own keys, but in a way that provides some more peace of mind through a dedicated customer service team.” |
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| “Custodial means your wallet management is in the hands of a trusted third party; non-custodial means you’re solely responsible for your wallet’s security,” | | Anastasia Chernikova Author and Former COO of Facebook |
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Business journalist Anastasia Chernikova writes that it’s important to consider the level of your own technical skills when choosing a wallet, in addition to the amount of money you’ll receive.
“[I]t’s crucial to be honest with yourself when deciding how to handle your crypto. If you are new to crypto, you want to seek assistance from a verified company or a simpler, hands-off way to manage your digital currency.”
You can, in theory, use multiple wallets and decide after a year which options are best suited to your needs. When it comes to bitcoin, it’s always a matter of personal preference. |
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| Never Share Your Private Key |
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| If you’re going to try a self-custody wallet, never share the private key or seed phrase with anyone you wouldn’t also give your bank account passwords to. Also, keep multiple copies of your key and phrase so you don’t lose them. If you lose your private key and seed phrase information, you will not be able to recover the funds in your corresponding bitcoin wallet. That’s why some people prefer to get started with concierge help or a custodial option. |
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| Forgive Yourself As You Learn |
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Even the most experienced bitcoin technologist made mistakes with his or her own bitcoin wallets in the beginning. It’s almost a right of passage! And yet, for the bold entrepreneurs who choose to earn bitcoin rather than buy it from an exchange, they have found a way to join the bitcoin economy with less risk. That’s a huge opportunity, especially for people who can’t afford to spend dollars on bitcoin.
Make no mistake—earning bitcoin is a lot of work. However, you’ll get better with practice, and may eventually find that earning bitcoin was an affordable way to try new financial tools. We’ll be back in your inbox tomorrow with tips on how to handle taxes and compliance when it comes to earning bitcoin. |
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