How to Set Up & Create a Bitcoin Wallet: A Step-by-Step Guide

A Bitcoin wallet is essential for securely buying and managing your bitcoin. It's estimated that millions of bitcoin have been lost due to user error since its launch. Therefore, knowing how to set up and create a Bitcoin wallet can significantly decrease the chances of your digital currency joining the ‘lost bitcoin’ pool.

This article explains what Bitcoin wallets are and shows you how to create one in five simple steps.

What Is a Bitcoin Wallet?

A Bitcoin wallet is software or hardware that stores the private and public keys that allow you to access and manage your bitcoin (BTC). 

Your wallet’s cryptographic keys are strings of random characters. Public keys act like account numbers you share to receive BTC; private keys are secret numbers that act like passwords to access your BTC. 

Your Bitcoin wallet allows you to transact on the Bitcoin network and keep a record of your transaction history, essentially acting as your bank account for your cryptocurrency. 

Types of Bitcoin Wallets

Bitcoin wallets can be categorized into hot or cold wallets and custodial or non-custodial/self-custody wallets. Let’s examine each type. 

Hot Wallets

A hot wallet is a Bitcoin wallet that is connected to the internet, making it convenient to use. However, hot wallets are more susceptible to hacking attempts. Examples of hot wallets include desktop, web, and mobile wallets.

Cold Wallets

A cold wallet refers to a Bitcoin wallet that is kept offline and doesn't interact with the internet. Staying offline makes them secure against cyberattacks. However, cold wallets require more technical knowledge and are arguably better suited for advanced users. Examples of cold wallets include paper and hardware wallets.

Custodial Wallets

Custodial wallets are Bitcoin wallets that are managed by a third party. The custodian controls your private keys, which means they have control over your funds. Most custodial wallets are web-based and convenient for storing BTC without much responsibility. However, you won't have control over your BTC. Custodial wallet examples include Wallet of Satoshi and exchange account wallets on trading platforms like Binance and OKX.

Non-custodial Wallets

Non-custodial wallets or self-custody wallets are Bitcoin wallets that give you full control over your assets. They offer direct control of your private keys and don't rely on third parties to manage your BTC. 

You are solely responsible for remembering passwords and securing your BTC without relying on an intermediary. Unlike custodial wallets, self-custodial wallets aren't susceptible to third-party breaches.

Xverse, for example, is a non-custodial Bitcoin wallet. The wallet doesn't store user information or give you access to your private keys, giving you full control over your assets. Xverse allows you to securely buy, send, receive, and manage your BTC and is available as a mobile app and Chrome browser desktop extension.

How to Create a Bitcoin Wallet: Step-by-Step

Now, let’s look at the steps you need to take to create and set up a Bitcoin wallet. We will use Xverse Wallet to illustrate.

Step 1: Download Xverse

Go to the Xverse official website and click ‘Download’ in the top right corner. 

Xverse is available on the App Store for iOS and Google Play for Android. You can also install the Xverse Chrome browser extension for your desktop.

Step 2: Create a new Wallet

Open your Xverse wallet, and you will be prompted to ‘Create a new Wallet.’ Non-custodial wallets like Xverse do not ask for personal information.

Read and accept the Xverse Terms of Service and Privacy Policy.

Step 3: Back Up Your Wallet

Back up your wallet by getting the 12-word secret recovery phrase. 

Xverse is a self-custodial wallet that gives you full control of your assets. The wallet gives you a secret phrase that will help you restore your wallet if you change devices or lose your current one. You can write the phrase offline and store it in a secure location.

Step 4: Choose a Security Mode

Secure your wallet by choosing a security mode. You can either use a Biometric/PIN or a Password. For the latter, ensure you set a unique, strong password.

Step 5: Fund Your Wallet

Select ‘Buy’ and click on “BTC” to purchase bitcoin and deposit it directly into your wallet. 

Most wallets connect to third-party services like exchange platforms for ease of purchasing cryptocurrency. On Xverse, you can use Moonpay or Transak.

Factors to Consider When Choosing a BTC Wallet

Once you decide to use a custodial or self-custodial wallet, here are more features you should look for when choosing a Bitcoin wallet:

Security

Security is critical in wallets and should be a top priority. Bitcoin wallets that require an internet connection are especially susceptible to hackers and malware.

Therefore, choose a wallet with robust security features, such as two-factor authentication, multi-signature options, authentication notifications, backup and recovery mechanisms, etc.

Compatibility and Interoperability

Your wallet should have a flexible infrastructure that can integrate with the Bitcoin blockchain and support other significant cryptocurrencies to cater to user preferences. A good wallet also has seamless cryptocurrency marketplace integration and can give you access to decentralized finance applications and protocols. 

The wallet should also be compatible with mobile and desktop devices for better accessibility.

User Experience

A good wallet should have an intuitive and user-friendly interface for your convenience. Well-designed wallets feature a clean interface with easy navigation and simple transaction processes. They should also offer resources like tutorials and user guides on navigating the platform. 

Customer support is another crucial part of user experience. Your wallet provider should have a responsive customer service system to address issues you may encounter.

Xverse: The Bitcoin Wallet for Everyone

Xverse is arguably the best Bitcoin wallet for beginners and advanced users alike. It has a user-friendly interface and easy access to DeFi applications and marketplaces. 

You can also buy, sell, and manage Ordinals, Bitcoin-native tokens, and Layer-2 tokens like STX-20 tokens on Xverse. The self-custodial wallet is available as a mobile app and Chrome desktop extension.

Download the Xverse wallet today to securely manage your bitcoin!

FAQs

How do I create my own Bitcoin wallet?

To create a Bitcoin wallet, find a reputable software wallet provider like Xverse and download their app. Start the application and click ‘Create a new wallet.’ The non-custodial wallet will not ask for personal information. Back up your account by noting the 12-word seed phrase that will help you recover your wallet in case you lose your device. Finally, select a security mode to protect your wallet further. 

Which app can I use to create my Bitcoin wallet?

You can use the Xverse mobile application on iOS and Android to create a Bitcoin address. Xverse is a Web3 Bitcoin wallet that has a mobile app and Chrome desktop extension where you can manage all your assets. It's a self-custodial wallet that gives you complete control over your private keys and funds.

Is there a free Bitcoin wallet?

Most software wallets, like the Xverse Bitcoin wallet, are free. You can create a wallet and start managing your bitcoin at no cost. On the other hand, Bitcoin hardware wallets aren't free and need to be bought from a provider. 

How do I get a Bitcoin wallet address?

You can get your Bitcoin wallet address by creating a Bitcoin wallet using Xverse. Login to your Xverse Wallet and click ‘Receive.’ A pop-up will show you your Bitcoin, Ordinals, and Stacks address. You can copy the BTC address or scan a QR Code. Xverse is a Web3 Bitcoin wallet that supports BTC, Ordinals, BRC-20 tokens, and Stacks assets.

What is the best Bitcoin wallet for beginners?

Xverse is arguably the best Bitcoin wallet for beginners. The self-custodial wallet has an intuitive and user-friendly interface that anyone can use regardless of experience. It also provides easy access to DeFi applications and partners with major cryptocurrency exchange platforms for your convenience. Beginners can easily manage, buy, and sell their bitcoin using Xverse Wallet.