Digital investing is happening now and investors are getting the chance to diversify their portfolio with all kinds of underlying assets. The list is huge and it can come from arts, whiskies, all way to the old friend land, and real estate. Everything is online now, you can expand your research for investment opportunities across the world, depending on the type of investment. Once you buy it, the new assets token can be stored in a decentralized, tamper-proof blockchain platform. It sounds lovely, but there’s a missing piece here. Let’s say if I’ve invested in a high-class fancy real estate property buying a couple of tokens. Where are my tokens, how can I see them and make sure those are mine and not someone else’s? How to know if my tokens are real and independent to the issuing platform. If you’re a little bit familiar with this new technology, you have probably have heard about “Wallet” or “Token/crypto wallet”. The idea is similar to our old friend wallets, but instead of adding your tokens there, as you’d do with your money, you add the block address where your token is stored.
There are two types of wallets: hot wallet and cold wallet. Hot wallets are the common type of wallet, mostly because they’re simple to set up and easy to use. When you create an account on a blockchain token provider, download a mobile/desktop wallet you are creating a hot wallet. They are meant for everyday token users as hot wallets are connected to the internet you can make tokens transactions with a few clicks.
In contrast, cold wallets use a physical medium typically in the shape of a flash drive to store the wallet's private keys. They are only connected to the internet when you want to make a transaction, making them unreachable to hackers or any other malicious parties. You’ll still need a hot wallet to make the token transaction, although the token will be stored in the cold wallet. Which one to use is entirely your discretion, but for this blog content, we will focus on the hot wallet.
In our previous example, I bought my tokens on a real estate investing platform. To do so, I’ve created an account and a wallet (inside the platform), funded my account, bought the token, and submitted my request. I’ve received many emails through this process, but where do I receive the tokens. This happens because the token is allocated in the blockchain database and it’s immutable. No one can take it from there. Well, in this case, how can I make sure it is mine? There’s a service named browse wallet that can help you to access your tokens from your phone or computer. One of the most popular is Metamask.io
Metamask application was developed by ConsenSys, the same group as Ethereum and it is extremely user friendly, especially for Ethereum applications. It is one of the most popular app wallets used and it’s grown 1.800% 1over the last year, being downloaded by over 10 million users. It makes it easy to get your investment portfolio in your hands in one single application. Within Metamask, you can easily combine your wallets in one place and manage your alts investments without the need to access the token provider platforming.
With Metamask you can download the browser to your desktop or your smartphone. You can ensure that the contract key is legit and even make some transactions, as the app combines the features of a regular wallet as well. You can access this browser service with no fees, although, if you choose to make a transaction there, you will have to pay fees based on the transaction. After a couple of clicks, you can combine, in one place, all your investment either in tokens or in crypto, without the hassle of keeping track of many wallets.
With this financial freedom, for sure, you’ll face some responsibility as well. If you lose your wallet private key or 12 seed phrase and see yourself unable to access it, the investment is gone for good. We have seen people lose the password to their wallets and just saying goodbye to a million dollars in crypto. In one specific case, that happens just because they couldn’t remember the key to access the wallet, and they have only 10 attempts to try it. After the 10th, it didn’t go through and the wallet was blocked forever. This is a very terrifying story that ended badly, but keep in mind that this is a new way to invest and it requires new behavior. When comes to digital investing, token, and even crypto, every key is important and you shouldn’t treat it as you do with your not-so-important website profiles.
So, in the Metamask creation account process, you will be given a 12 words phrase, named a seed phrase. There is no hardware involved, just the online application. The wallet belongs to whom has these 12 words phrases. If you lose it, or someone accesses it, there’s nothing to do. Not even the Metamask team can help with that. This is a regular rule for every wallet, not only Metamask. A caveat: write down your phrase and save it in the place where you put your passport. Not as hidden as your birth certificate, but a place that you’ll remember, as every now or then you need to use it. Digital investing is a new way to invest, the wallet is here to help you manage your assets, but you’ll need to adhere to this new way to save your password and seed phrase. Keep that in mind, so you’ll be able to expand your investing potential with no burden.
1 - ww.assetservicingtimes.com/assetservicesnews/digitalassetsarticle.php?article_id=12202&navigationaction=digitalassetsnews&newssection=Digital%20Assets
2 - https://www.businessinsider.com/bitcoin-owner-who-lost-password-made-peace-potentially-huge-loss-2021-1