Frequently Asked Questions

Cryptocurrency is a digital currency that allows users to make payments and exchanges of value without the need for bank accounts or national currencies (aka fiat). Payments with decentralized cryptocurrency are not restricted by geographic location and do not require any personal information from the user.

The blockchain is a digital ledger for keeping track of cryptocurrency transactions. Think: an excel sheet that is protected by advanced cryptographic encryption, making sure that nobody can cheat by double-spending and nobody can hack the blockchain record. Data that is added to the blockchain can never be changed or erased. Your crypto assets live on the blockchain, and you manage them using a crypto wallet. More about that: What Does 'Assets On the Blockchain' Mean?

Cryptographic encryption has been around since ancient times. The idea of using cryptography with electronic payments dates back to at least the 1980s. The first fully implemented cryptocurrency Bitcoin was created in 2008 by a developer, or group of developers, working under the name of Satoshi Nakamoto. The technology was open-source and available to anyone who wanted to build tools for Bitcoin or any other blockchain network. To this day, the identity of Satoshi Nakamoto remains unknown.

Bitcoin was the first cryptocurrency and it’s still going strong. After Bitcoin went live and proved that crypto could work, it was only a matter of time before other developers introduced new ideas and launched new crypto networks. The most significant crypto innovation after Bitcoin was Ethereum. It was the first blockchain to have smart contracts, allowing projects to build applications and create tokens on the blockchain, opening the door to infinite crypto variety.

A crypto wallet is a piece of software that helps you interact with cryptocurrency blockchains directly. A wallet can be a mobile app, a Chrome extension, a web application, or a hardware device with programming inside. Wallets help you buy, hold, receive, send, swap, trade, stake, lend, borrow, and sell crypto. Hundreds, if not thousands, of crypto wallets exist, but they differ widely in terms of their features and the security they provide. For an overview of different wallet types, see: Essential Wallet Guide

You need to have a crypto wallet to interact with blockchains directly. Why is that important? Even though you can get cryptocurrency through familiar apps like Venmo, Paypal, or Robinhood, you don’t really own that crypto. These companies are centralized, like regular banks. They are the ones that hold and control your assets. A self custody crypto wallet is the only thing that gives you full control over your crypto, so you can take advantage of everything the space has to offer. More about self custody here: Why Self Custody Matters

Most cryptocurrency exchanges are centralized and custodial. They hold your crypto assets and manage your accounts, while your account balance is essentially an IOU. Self-custody crypto wallets give you and *only you* complete ownership of your crypto. With a crypto wallet, nobody can freeze your account, use your assets without your knowledge, or prevent you from moving your coins when you want. Why Self Custody Matters

Different types of wallets can serve different purposes, so a lot of crypto users have more than one. The best wallet for you also depends on how you like to manage your assets (on desktop or on mobile), and on your personal crypto goals. For a crypto beginner, the easiest option is probably a mobile wallet that is quick and easy to set up. See if MEW's mobile wallet is right for you: Download MEW wallet app

When choosing a crypto wallet, you should consider several things: Has the wallet been around for a while and established a reputation for reliability? Is it a self-custody wallet? Is it open-source? Does it have an active security program or bug bounty? You want to make sure that nobody else has access to your crypto, and that even if your wallet company stops support or disappears, it will never affect your assets. Read more here: Which Crypto Wallets Are Secure

A good self custody wallet app or extension will guide you through several easy steps to generate your crypto account. The most important part is when you get your wallet keys in the form of a 12- or 24-word recovery phrase. After you write down your phrase in a safe place, you are ready to get started – buy, receive, and send crypto. The whole process should take about 5 minutes, and you don’t need to fill out any forms or give any personal information. Create a wallet with MEW

Your wallet address looks like a long series of letters and numbers, with some variation depending on the blockchain. Ethereum addresses all start with 0x and have 42 characters. Usually, you will see the wallet address on top of your wallet interface. To receive crypto, you can copy your address to the clipboard or open a QR code that someone else can scan. Some wallets, like MEW and Enkrypt, support multiple addresses on different blockchains, all backed up by the same key/recovery phrase.

The balance you will see in your self custody crypto wallet directly reflects the current state of the blockchain. Unlike accounts on centralized crypto exchanges, self custody wallet balances can’t be accessed or manipulated by the wallet team. If you can’t see the balance in the wallet or you think there is an error, you can always check your blockchain balance directly by using a blockchain explorer. For more information: Checking your balance on the Ethereum blockchain

With a good crypto wallet, you don’t need a centralized exchange or a separate account to buy crypto. Onboarding providers like Simplex, MoonPay, and Coinbase are available right inside MEW wallet app and Enkrypt. Once you’ve created your wallet, find the Buy button, review the options available to you, and use your card or bank account to purchase. Easy. See our guides for more info

The main aspect of keeping your crypto safe is how you store your keys, in the form of the recovery phrase. The phrase gives direct and immediate access to your wallet, so you need to make sure that it’s stored offline, that no one has ever seen it except you, and that you never type it into a website, message, or email. Start by getting a secure wallet, handle your wallet keys with care, and keep your crypto safe by following best security practices like these: How to Avoid Phishing/Scams

The cryptographic encryption involved in generating wallet keys is extremely powerful and would take a huge amount of computer resources to crack. When crypto gets stolen from wallets, it’s not because it was hacked, but because the wallet key/ recovery phrase was inadvertently exposed to someone other than the owner. There are many ways this can happen – storing your keys on the computer or in the cloud, typing your phrase directly on a website, or having someone else set up the wallet for you, to name a few. Read more about protecting your wallet: How to Avoid Phishing/Scams

NFTs are unique crypto tokens that prove ownership of a specific digital asset, like a certificate of authenticity for a piece of art or the title to a car. NFTs can represent images, audio or video files, collectibles, virtual real estate, fractional investments, video game objects, and much more. Curious to find out more? See: What You Should Know About NFTs

There are many NFT marketplaces that offer NFTs in wide price ranges. The most popular markets are OpenSea, Rarible, and SuperRare, but there are dozens of others. Once you’ve created a wallet, you can connect to any NFT marketplace with your mobile wallet browser or your browser extension wallet, and buy your first NFT. Or, mint a free MEW Universe NFT in MEW wallet by collecting Energy – more about that here: Join us in the MEW Universe

Crypto staking is the simplest and most low risk way to earn rewards on crypto while staying in full control of the assets. To stake crypto, a users deposits a desired amount of the coins into a smart contract on the blockchain. The staked crypto helps maintain the operation of the network, and in return earns a percentage of newly created crypto tokens every time a new block is added to the chain. In a good crypto wallet, staking is as simple as selecting the desired amount and confirming the transaction. Learn more: Staking with MEW

Exchanging or swapping your crypto for other tokens is easy when there are integrated providers right in the wallet. To start with, you should have some crypto in your wallet (ETH is the most practical as a starter currency). Then, it’s just a matter of going to the Swap section, selecting which token you are exchanging, and which token you’d like to receive in return. The wallet calculates everything for you and shows you the anticipated result of the swap. For details: Swap in MEW wallet

Just as you can use a credit card or bank account to buy crypto for fiat (regular money), you can also cash out from crypto by exchanging your tokens for fiat and then depositing into your bank. You can do both – buy and sell crypto – directly from your crypto wallet via integrated onboarding partners. In MEW wallet and Enkrypt this service is provided by MoonPay. There are also more ways to protect your crypto gains than just cashing out. See our guides for details: Sell crypto in MEW

Crypto staking is the process of depositing a cryptocurrency like ETH onto the blockchain for the purpose of supporting decentralized network operations and receiving crypto rewards in return. Think of it as an APY-earning deposit where your assets always stay under your control while providing a public good. Read more about staking here: Staking: The Easiest Way To Earn Crypto Rewards

When you stake ETH, you are helping the Ethereum blockchain run smoothly and stay decentralized. In return, you get a portion of the transaction fees and of the new ETH created with every block. These rewards are not generated by lending your ETH out or using it in investment schemes, as banks do with customers’ deposits. The staking rewards come from the technical work of the blockchain itself. Learn about the way staking works on the Ethereum Foundation site: What Is Staking

There is no minimum ETH to stake. You can choose to stake a full validator, which requires 32 ETH but also provides the highest rate of rewards, or a very small amount of ETH and still begin seeing the rewards accumulate almost immediately.

ETH is staked by depositing it to a contract on the blockchain, where it stays until you decide to withdraw it. In some cases, like with full validator staking, the ETH is locked until you withdraw, and in others, you get liquid tokens for your ETH that can be spent in other web3 applications. Staking takes just a few steps when you do it through MEW – no advanced expertise required. See our blog post for more detail: Stake ETH with MEW Portfolio

After you stake ETH, your staking rewards begin to accumulate automatically and are distributed directly to the wallet from which you staked, at regular intervals. The timing of rewards distribution depends on the specific staking provider, but no extra effort is required – it all happens right in your wallet.

Staking is a low effort and low risk way to earn passive rewards on crypto. It is much simpler than most operations with decentralized finance, doesn’t require any upkeep, and leaves you with full control of the assets even as they are earning rewards. Best of all, staking provides a public good and gives you a literal stake in the cryptocurrency space. More about the benefits and risks of staking: Understanding Staking

Cryptocurrencies are decentralized, so there is no single source of authority for verifying transactions. Instead, users from all over the world pledge their ETH to Ethereum by staking and creating validators. These validators run software that checks and compares transaction history, so they can agree on one ‘truth’ that gets added to the blockchain. The more ETH is staked, the more validators exist, and the less chance that a group of bad actors can take over control of the blockchain and cheat by adding a ‘lie’ – or a fraudulent transaction – into the ledger.

Any interaction with an evolving technology like the blockchain inherently involves risk. Very rarely, validators can incur penalties (known as slashing), and there can be delays in rewards distribution or staking withdrawals. As always, never risk more than you are prepared to lose. More about the benefits and risks of staking: Understanding Staking

Partial staking is staking without a minimum, where the provider collects the smaller stakes and maintains a validator structure. It’s called ‘partial’ because it does not require the full validator amount of 32 ETH. Partial ETH staking in MEW is powered by Coinbase.

Liquid staking issues liquid tokens in place of the staked ETH so that the staker can benefit from the use of the ETH even while it is staked. Liquid staking derivatives (LSDs) can be used in various decentralized financial applications for lending, restaking, and more. Liquid ETH staking in MEW is provided by Lido.

You can withdraw your staking rewards and your full stake at any time. Depending on the staking provider, you may need to submit a request to withdraw and wait for the ETH to become available in your wallet, but there is no lock-up period with any provider in MEW.

Cryptocurrency blockchains, self custody wallets, and decentralized exchanges never close – they are accessible 24/7. There are no weekends, holidays, or hours of operation. If you want to move your assets at 3 AM on Christmas Day, you can do so immediately, without waiting for anything to open or for the transaction to be approved.

NFTs can be created as any form of media, but so far most of them have been images. There is a misconception that owning the actual NFT is the same as copy-pasting the image of the NFT, as you would with a JPEG file, in which case it’s absurd to pay for it. In fact, the digital scarcity and uniqueness of crypto tokens is the reason why crypto works in the first place. There are ways to prove that the NFT token you own is original and unique, rather than a copy of a copy.

The design of Bitcoin and some other cryptocurrencies, called Proof of Work, requires mining. Mining is the constant computational work done by thousands of computers worldwide to support the blockchain, using a lot of energy. That’s why some critics say that crypto is unsustainable. However, most crypto, including Ethereum, uses a different mechanism called Proof of Stake, which uses 99.99% less energy and poses no risk to the environment.

The expression HODL originated as a misspelling of the word ‘hold’ in a social media post by an early Bitcoin investor. Later, HODL became associated with the acronym ‘hold on for deal life’. It communicates the sentiment that if you believe in a cryptocurrency’s long term potential and remain calm in the face of market volatility, you will always hold the crypto as opposed to panic selling.

There are many different ways to hold crypto, but not all of them give you full control and true ownership of your crypto assets. When you use a self custody wallet, you get your wallet keys (in the form of a recovery phrase) which give you direct access and ownership. When you use a centralized exchange, you don’t get wallet keys because the exchange actually manages the assets. No keys – no real ownership of crypto. Learn more: Why Self Custody Matters