Setting Up a Wallet and Making Your First On-Chain Transaction

June 5, 2024
by Alex Benfield

This is the first crypto cycle for a lot of you, and what an interesting time to join. Many of you have just gone through the process of setting up exchange accounts and making your first crypto purchases. Congratulations, you’ve taken the first big step.

However, there is a lot more to the world of crypto and a lot more that you can take advantage of. I’ve talked a lot about Decentralized Finance (DeFi), but now that you’ve purchased some crypto of your own, you can finally experience it. While that might sound intimidating to some of you, I assure you that it isn’t as complicated as you may think.

Now, it’s time to deepen your understanding and experience by learning how to set up a hot wallet, make your first on-chain transaction, and interact with decentralized applications (dApps) like Uniswap (UNI). This knowledge is crucial for anyone who wants to truly learn and navigate the world of crypto effectively.

Why You Need to Know This

Understanding how to use a hot wallet and make on-chain transactions is essential for several reasons:

  1. Ownership and Control: Holding your crypto on an exchange means you don’t have full control over your assets. By using a hot wallet, you gain full ownership and control of your funds.
  2. Security: Exchanges can be hacked. By transferring your crypto to a secure wallet, you reduce the risk of losing your assets.
  3. Access to DeF: DeFi offers a world of opportunities, from earning interest on your assets to trading on decentralized exchanges. To access these, you need to know how to interact with dApps using a hot wallet.

Step-by-Step Guide

1. Setting Up a Hot Wallet (MetaMask)

MetaMask is one of the most popular hot wallets available. It’s a browser extension that allows you to interact with the Ethereum blockchain directly from your browser.

Step-by-Step Instructions:

  1. Install MetaMask:

– Go to the [MetaMask website](https://metamask.io/) and download the browser extension for your preferred browser (Chrome, Firefox, Brave, or Edge).

– Click on the extension icon to start the setup process.

  1. Create a New Wallet:

– Click “Get Started” and then “Create a Wallet.”

– Set a strong password and agree to the terms of use.

  1. Secure Your Wallet:

– MetaMask will show you a Secret Recovery Phrase (also known as a seed phrase). This is crucial for recovering your wallet if you forget your password or lose access to your device.

– Write down this phrase on a piece of paper and store it in a secure place. Do not share this phrase with anyone.

– Confirm your Secret Recovery Phrase to complete the setup.

  1. Your Wallet is Ready:

– Once you confirm your phrase, your wallet is set up and ready to use. You will see your Ethereum address at the top of the MetaMask interface.

2. Making Your First On-Chain Transaction

Now that your MetaMask wallet is set up, it’s time to transfer some crypto from your exchange account to your new wallet.

Step-by-Step Instructions:

  1. Copy Your Wallet Address:

– Open MetaMask and copy your Ethereum (ETH) wallet address. It’s the long string of characters at the top of the interface.

  1. Log in to Your Exchange:

– Go to the exchange where you have your crypto (e.g., Coinbase, Binance).

– Log in to your account.

  1. Withdraw Crypto to MetaMask:

– Navigate to the withdrawal section of the exchange.

– Select the cryptocurrency you want to withdraw (e.g., Ethereum).

– Paste your MetaMask wallet address in the recipient field.

– Double-check the address to ensure it’s correct.

– Make sure the Metamask wallet is set to the Ethereum Network

– Enter the amount you wish to withdraw and confirm the transaction.

– Depending on the network congestion, it may take a few minutes to a few hours for the transaction to complete.

  1. Verify the Transaction:

– Open MetaMask and check your balance. The transferred amount should appear once the transaction is confirmed on the blockchain.

3. Interacting with a Decentralized Application (Uniswap)

Now that you have crypto in your MetaMask wallet, you can start interacting with dApps. Let’s walk through using Uniswap, a popular decentralized exchange.

Step-by-Step Instructions:

  1. Visit Uniswap:

– Go to the [Uniswap website](https://uniswap.org/).

  1. Connect Your Wallet:

– Click “Launch App” to open the Uniswap interface.

– Click “Connect Wallet” in the top right corner.

– Select “MetaMask” from the list of wallet options.

– A MetaMask popup will appear. Confirm the connection by selecting your account and clicking “Next,” then “Connect.”

  1. Swap Tokens:

– In the Uniswap interface, select the token you want to swap from (e.g., ETH) and the token you want to swap to (e.g., USDC).

– Enter the amount you want to swap.

– Remember that you need to leave behind some Ethereum in your wallet to use as gas.

– Click “Swap,” then “Confirm Swap.”

– MetaMask will prompt you to confirm the transaction. Review the details and click “Confirm.”

– Wait for the transaction to be processed on the blockchain. This may take a few minutes.

  1. Verify the Swap:

– Once the transaction is complete, you can check your MetaMask wallet to see the new token balance.

By following these steps, you’ve taken significant strides in your crypto journey. You’ve set up a secure hot wallet, made your first on-chain transaction, and interacted with a decentralized application. This foundational knowledge will open up many more opportunities in the world of decentralized finance and beyond. As you continue to explore, always remember to stay informed and secure in your crypto practices. Welcome to the future of finance!

Editor’s Note: Crypto is making ordinary investors rich, and it also serves as an inflation hedge. But you need to make your move now before the next leg-up in the crypto bull market of 2024. Every day you wait is literally costing you thousands in profits.

If you’re worried you can’t figure out crypto… don’t be. Our in-house crypto expert, Alex Benfield, will walk you through everything you need to know about crypto, step by step.

To learn more about Alex’s new trading service, Crypto Trend Investor, click here.

This article previously appeared on Investing Daily.