For those that have been in the crypto space for a long time, it is an easy and straightforward process, but for those that are new, the process is daunting and can make many mistakes.
This complete guide will take you through everything you need to know and tips to ensure your first experience in the Cardano ecosystem is as easy and as safe as possible.
There are many different types of wallets and this article will cover as many as possible that have been verified as being safe and secure to use in the Cardano ecosystem.
It is important to realise that all of the Cardano Wallet apps are simply user interfaces to load and view your wallet that is stored on the Cardano blockchain. This means that a wallet that was created on an app such as Daedalus, can be restored on another native wallet app such as Yoroi and vice versa. This gives you as a user the full flexibility to move from wallet app to wallet app depending on what your needs are and your situation.
For example, you may want to restore your wallet on the Yoroi Mobile app as a read-only wallet so you can quickly check your wallet balance at any point in time. You can also have that same wallet installed on your laptop using the Yoroi browser extension, as the laptop might not have a lot of hard drive space, and then finally have a full node wallet running such as Daedalus on a large PC with a lot of disk space and take advantage of the speed you get when having the full blockchain of the network also stored on your computer.
Setting Up a Cardano Wallet for the First Time
With any Cardano wallet, you will be asked to create and store a backup seed phrase or also known as a mnemonic phrase. This is usually a 24-word secret password. It is a human-readable and friendly version of your wallet's secret key. It makes the process of restoring your wallet on different wallet applications easy.
Whatever wallet app you're using, start by choosing from the options to 'Create a new wallet' and start writing down your seed phrase.
If you're migrating your wallet from one app to another you would choose the options to restore the wallet at this point.
Securing Your Cardano Wallet Seed Phrase
When you're creating your wallet and writing down your seed phrase, ensure you're in a secure place. You're not at an Internet cafe, Starbucks or anywhere where people can possibly see what you're doing. If they see your seed phrase, consider it compromised.
If anyone sees your seed phrase and memorises the words and order, they will be able to restore your wallet and take all of your assets.
Best Practises in Storing Your Cardano Wallet Seed Phrase
It is important that this phrase is stored somewhere safe. Ensure that you don't have it stored in a text file in Dropbox or another cloud storage service. If that service gets hacked, the hacker will be able to retrieve and restore your wallet and drain your assets.
You should at least write down your seed phrase on a piece of paper. You can take this a step further and use a piece of metal where you can engrave your seed phrase.
There are also a lot of cold storage wallets that are a secure and fireproof way to store your seed phrase. These are usually made out of high-quality stainless steel that has a very high burn temperature and is designed in a way to look unassuming.
Here are some great examples of cold storage seed phrase devices.
You can take this all one step further and use a hardware wallet to secure your wallet. In the case of a hardware wallet, part of your wallets secret key is stored on the hardware wallet and never leaves your wallet. This means it is never exposed to the Internet and can't be compromised the same way a regular wallet could if a hacker gains access to your computer.
It takes away that one extra attack vector that hackers can use to hack your accounts.
If you can afford a hardware wallet and have a substantial amount of crypto assets, it is highly recommended that you use a hardware wallet.
Wallets that we don't recommend include ones that keep your ADA assets on exchanges. These include:
Although these apps are fantastic onboarding rails for new users and purchasing cryptocurrencies, they are custodial wallets. You, the owner, do not control the seed phrases; therefore, the assets are not truly under your control.
This is a trade-off between security and convenience of not having to maintain a seed phrase and securing that.
If you want to create your own Cardano wallet app, that is very well possible for any developer. The Cardano wallet API is well documented and accessible online via the Cardano-wallet Github.
Key Features to Look for in a Cardano Wallet
Every wallet has different features, and depending on your needs and usage, a different wallet would be more suitable for you.
Power Tips: Restoring your wallet on multiple wallet apps
Any Cardano wallet can be restored on another Cardano wallet app. If you are using Yoroi, you can use that seed phrase and restore it on Daedalus or NuFi. If the wallet you're using supports hardware wallets, you can also restore your hardware wallet on any of these wallet apps.
Power Tips: Getting your Stake key
From time to come, you may need to obtain your stake key from your wallet. Most, if not all, wallet apps will let you retrieve this unique address from your wallet. It is mainly used in the early iterations of NFT marketplaces and website logins to prove the ownership of a wallet.
If you're a Cardano Non-Fungible Token collector (CNFT), you would most likely want a wallet where you can show off your NFTs and share it with your peers. There is nothing like flexing an original collection of SpaceBudz or using it as a pickup line ? (let me know if you have).
Cardano Wallets of the Next Generation: Cardano Web3 Wallets
With the growing decentralised finance (DeFi) space, we will see many wallets evolve to Web3 style wallets. Wallets that can not only store and stake your ADA but also interact with websites and smart contracts.
These are the type of wallets that are needed for DeFi on Cardano.
Nami Wallet, at the time of writing this article, is the only Web3 wallet for the Cardano ecosystem and is doing a brilliant job of filling the void left by the other major wallet providers that are still developing their wallets.
Frequently Asked Questions About Cardano Wallets
Which Wallet is Best for Cardano?
This is completely up to you. Our guide takes you through all the features of the different wallets. You may find that you are using multiple different wallets apps at the same time for the same wallet.
Do I Need a Wallet for Cardano?
Yes, you do. Whether it is a stand along with a non-custodial wallet or an exchange based custodial wallet, your ADA would be stored or assigned to a wallet of some sort.
Does Cardano Have a Mobile Wallet?
Yes, it does. The two wallets that support mobile are CardWallet and Yoroi Wallet.
How Do I Get A Cardano Wallet?
Ensure that you download the wallet from the official source. Google the website if in doubt. Google should be returning the correct and secure website to download the various wallets for Cardano.
What Is The Best Cardano Wallet for Android?
Yoroi is avalable for Android phones. Ensure that you are downloading the right one from Emurgo. There have been several fake versions appearing on the Google Play store that have been created to steal your crypto assets.
Interview with Tiago Serôdio from CardWallet
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