Module 2: Wallets, Custody, and Security
Setting Up Your First Wallet
Chapter 5 of 14 · about 6 minutes
5.1 Practice before it matters
Mint was ready to set up a real self-custody wallet. Hash had one condition.
"We're going to do everything twice. First with play money on a test network, where mistakes cost nothing. Then for real. Pilots train in simulators before they fly passengers. You should too."
This chapter walks through setting up a software wallet step by step. It's written to work with most popular self-custody wallets, so the exact button names may differ in yours.
5.2 Step one: get the real wallet
The first danger appears before you've even installed anything. Fake wallet apps and browser extensions regularly appear in app stores, browser extension stores, and search engine ads. They look identical to the real ones. When you enter or create a seed phrase, it's sent to the attacker.
To protect yourself:
- Find the wallet's official website through more than one trusted source, such as its official social media account and a reputable crypto news site.
- Download the app or extension using the link from the official website, not from a search ad.
- In app stores, check the developer name, the number of downloads, and the review history. Fake apps often have suspiciously few reviews or very recent ones.
- Bookmark the official website for future use.
"Search ads?" Mint asked. "Really?"
"Really," said Hash. "Scammers pay to appear above the real result. It's one of the most common traps in crypto."
5.3 Step two: create the wallet
Open the wallet and choose to create a new wallet. You'll typically be asked to set a password first. Remember from Chapter 3: this password only protects the wallet on this device.
Then the wallet will show your seed phrase. Before you reveal it, check your surroundings. Make sure nobody can see your screen, there's no camera pointed at it, and you're not sharing your screen on a video call.
Write down every word, in order, by hand, as Chapter 4 described. Most wallets will then ask you to confirm a few of the words to make sure you've written them down correctly.
Some wallets offer to back up the seed phrase to cloud storage, protected by your account. This is a convenience feature with real trade-offs: it makes recovery easier but ties your wallet's security to your cloud account. If you use it, protect that account very carefully. When in doubt, use a written backup.
5.4 Step three: test the backup
Before putting any value in the wallet, do the restore test from Chapter 3. Note your first address. Then remove the wallet from the app (or install the wallet on a second device) and restore it using only your written seed phrase. Check that the same address appears.
If it does, your backup works. If it doesn't, you've found a problem while it costs you nothing.
5.5 Step four: understand what you're looking at
Once inside, Mint saw a few key elements, which appear in most wallets.
| Wallet element | What it means |
|---|---|
| Account or address | Your public address, usually shortened like 0x12ab...89ef. Safe to share for receiving funds |
| Network selector | Which blockchain the wallet is currently showing and transacting on |
| Balance | What your address holds on the selected network |
| Send and receive buttons | For moving funds in and out |
| Activity or history | Your past transactions, each with a link to a block explorer |
| Connected sites | Which websites currently have permission to see your address and request signatures |
Notice that the balance depends on the selected network. Chapter 9 explains why this matters.
5.6 Step five: practice on a testnet
A testnet is a copy of a blockchain used for testing, where the tokens have no real value. Developers use testnets to try out applications before launching them on the real network, called mainnet. They're perfect for learning.
For Ethereum, the most commonly used testnet at the time of writing is called Sepolia. Most wallets let you show test networks in their settings.
Here's Mint's practice run.
| Step | What Mint did | What Mint learned |
|---|---|---|
| 1 | Enabled test networks in settings and switched to Sepolia | Balances and networks are separate |
| 2 | Copied the wallet address | Addresses are safe to share |
| 3 | Requested free test ETH from a faucet website | How receiving works |
| 4 | Viewed the incoming transaction on a testnet block explorer | Every transaction is public and verifiable |
| 5 | Created a second account in the same wallet | One seed can create many addresses |
| 6 | Sent a small amount of test ETH to the second account | How sending, gas fees, and confirmations work |
| 7 | Tried a swap on a testnet version of a DEX | How connecting to applications and approving tokens works |
A faucet is a website that gives out free testnet tokens. Some faucets ask you to sign in or hold a small mainnet balance to prevent abuse. Use well-known faucets, and remember: a faucet should never ask for your seed phrase. Never.
5.7 Step six: moving to real funds
After the testnet practice, Mint was ready for the real thing. Hash suggested this order:
- Start with a small amount, less than you'd mind losing.
- Withdraw from the exchange to your new wallet using the test-transaction habit from Module 1, Chapter 12: send a tiny amount first and confirm it arrives.
- Check the transaction on a block explorer.
- Make sure you hold a small amount of the network's native coin, such as ETH on Ethereum, to pay gas for future transactions.
- Only then move larger amounts, if your backup and setup are solid.
When Mint's first real withdrawal arrived, the feeling was different from seeing a balance on an exchange. This time, no company stood between Mint and the funds.
"It feels more real," said Mint.
"It is more real," said Hash. "And now it's entirely yours to protect."
5.8 Basic settings to check
A few settings are worth checking in any wallet:
Auto-lock. Set the wallet to lock after a short period of inactivity.
Biometrics or device PIN. On mobile, use your phone's secure unlock.
Connected sites. Periodically review which sites are connected and disconnect any you no longer use.
Hidden or spam tokens. Many wallets automatically hide unknown tokens sent to your address. Leave this on. Scammers send fake tokens hoping you'll interact with them, which Chapter 10 explains.
5.9 Try it yourself
Follow this chapter on a testnet from start to finish: download the wallet from an official source, create it, write down and test your backup, get test tokens from a faucet, send them between two of your own accounts, and view each transaction on a block explorer.
Then answer one question: if your phone fell into a river right now, how would you get back into this wallet? If you can answer it confidently, you've completed this chapter.
Key takeaways from this chapter
- Practice on a testnet before using real funds. Mistakes there cost nothing.
- Download wallets only from official sources found through multiple trusted references. Avoid search ads.
- Write down your seed phrase privately, by hand, and test the backup by restoring it before adding funds.
- Learn the main wallet elements: address, network selector, balance, send and receive, history, and connected sites.
- Faucets give free testnet tokens and never need your seed phrase.
- Move to real funds gradually, starting with a small test transaction and keeping some native coin for gas.
- Turn on auto-lock and device security, review connected sites, and keep spam tokens hidden.