Why digital wallets now make it easier than ever to invest in cryptocurrency

digital wallets

If I were to ask you whether you use any digital wallets in your day to day life, would you know the answer? What if I were to ask you what you use digital wallets for?

The fact is digital wallets have stealthily crept in to most peoples daily lives without them really know it.

If you have used Apple Pay, Alipay, Samsung Pay, PayPal app or Venmo, then the answer to that question is ‘yes’. But did you know that digital wallets are also becoming ubiquitous in the cryptocurrency space and making it super easy to invest in, access and transact cryptocurrency? Digital wallets for both fiat and crypto are the future of money, making it easier, faster and cheaper to move money and value around the globe. This also means it’s becoming easier to make money from your money!

If you want to know how all of this has come about and will impact you and your money, read on!

What is a digital wallet?

If you search Google for ‘digital wallet’ a whole bunch of sites will come up with definitions that say digital wallets are software payment systems. They store your credit card and debit card information….. They’re a convenient way to pay by phone… Blah, blah, blah. But…we think this is just a small part of the story about digital wallets and how they will impact our money future.

Digital wallets are much bigger than just payment systems. They are financial ecosystems on your phone that allow you to access different financial services and to transfer value via the internet – without the friction of current banking services. Cathie Wood of Ark invest cleverly calls digital wallets ‘money over IP’. The reference is a nod back to when Voice over IP technology revolutionised once expensive phone communications.

Digital wallets are expected to do the same for banking and financial services – which is exactly why you need to know about them!

What can you do with digital wallets?

Payments with digital wallets

Today, you can use digital wallets to directly purchase and pay for items – like with Apple Pay or Samsung Pay. You can also use them to send money seamlessly and instantly to friends and peers, like with Venmo. In fact, recent research from the US found that 42% of millennials have a Venmo account. Millennials seem to prefer mobile payments and will drive a lot of the upcoming growth in digital wallets. China’s mobile payments jumped from $1 trillion in 2014 to $26 trillion in 2018 – driven largely by the coming of age of millennials. Here’s some recent data from Australia’s biggest bank about mobile payments with digital wallets:

CBA contactless payments data

Peer to peer transactions & other financial services

While people are mostly using digital wallets for payment services, digital wallets are more than just transferring fiat currency around.

You can use them to split payments over dinner, earn rewards on purchases, order ahead at your favourite coffee shop or buy and send gift cards.

They are also used widely now in the cryptocurrency space to access, transact, store and invest cryptocurrency. You can access, store, buy, sell, transfer and invest your cryptocurrency right now, with a few taps of your mobile phone screen, using a range of digital wallets.They’re also used to integrate with cryptocurrency exchanges and trade crypto, as well as to enter into smart contracts to lend and borrow cryptocurrency and earn interest.

We expect digital wallets to expand rapidly in coming years to these additional areas:

  • storing value
  • earning interest – Goldman Sachs is already offering higher interest on digital wallet accounts because their cost to serve the customer is lower with these products
  • integrating with and accessing personal financial planning and money management providers
  • accessing tailored insurance
  • accessing stock exchanges and trading platforms
  • tax planning.

Who are the main digital wallet providers in cryptocurrency?

We’ve already talked about Apple Pay, Samsung Pay, PayPal, Venmo. Along with these providers is Google Pay and V.me by Visa. If you’re dealing in fiat currency, these are the most popular digital wallets that you’re likely to come across.

But the cryptocurrency space is where digital apps are exploding because the entire ecosystem is already online – crypto doesn’t suffer from the legacy infrastructure issues of traditional finance when it comes to going digital.

Cryptocurrency digital wallets

Some of the most popular digital wallets for cryptocurrency include

You can read about each of these apps – what they do, how secure they are and what you can use them for – here.

How digital wallets are making it easier than ever to invest in crypto

The intersection between fiat and crypto digital wallets is where it gets really interesting if you’re looking at investing in cryptocurrency and making your money make money. Who doesn’t want more money!

There are already some cutting edge digital wallet providers that provide fiat currency on-ramps to invest easily and directly in cryptocurrency.

You can now buy, sell and store large cap cryptocurrencies in the PayPal app.

If you’re in the US, Coinbase wallet now has a direct integration with PayPal to buy crypto directly from your PayPal account.

eToro combines both crypto trading and fiat trading, along with on ramps between the two, in their eToro app. (On-ramps are just a way to exchange fiat into crypto – the more convenient this is, the more crypto is expected to become a mainstream part of the global money system).

Here are some other fiat on-ramps to crypto that you can use to buy crypto directly in to your digital wallet (some in mobile and some in web browser form):

  1. MoonPay
  2. Sendwyre
  3. Transak
  4. Ramp

The thing to know about these digital wallet on-ramps between fiat and crypto is that their service fees are different. You need to do your own research to find the best fees for your transaction. If you want to see a comparison of some of these services to transfer fiat into crypto in your digital wallet, check out this page.

How does this all impact your finances?

Digital wallets will become a big part of your financial future so its probably time we all get used to interacting with them!

If you invest your money, send money to family and friends, use your mobile to make purchases at the store, do mobile banking, like to earn rewards with your purchases, want to manage your budget, or even your entire personal financial portfolio – chances are in the next few years you’ll be doing it all through digital wallets kept right on your phone.

You’ll also have multiple wallets on your phone that allow you to cheaply and seamlessly exchange fiat currency for crypto in seconds, and then add that crypto into a smart contract allowing you to earn money on your money by lending it out to others.

Your money won’t all be stored in the one bank app in the future. It’ll be moved about to where the best value is. Using digital wallets! And that’s why digital wallets – if you get your head around them now – can help you make money on your money in the future.

Many of these things you can do today if you know your way around the cryptocurrency and decentralised finance space. If you don’t, perhaps look into it. You might be surprised about the financial benefits that digital wallets for cryptocurrency can bring.

If you want to read more about which digital wallets to use with your crypto it’s all laid out for you here.

How to set up MetaMask crypto wallet to use DeFi protocols

MetaMask crypto wallet

MetaMask crypto wallet is one of the most ubiquitous wallets in the crypto ecosystem. The reason is pretty simple – it’s got multi chain capability and therefore loads of DeFi integrations. Here’s a full review of what MetaMask cyrpto wallet is and what to use it for. One thing about MetaMask Wallet is that all of the big DeFI protocols interact seamlessly with it. And you can too, once you’ve got the hang of things. In this post, we’re going to take you through some key concepts to understand and 5 steps to take so that you can set up your MetaMask wallet to interact with DeFi and get on with your passive income earning!

This post is for non-tech heads starting out in crypto and based on some of the tech hurdles we faced when first trying out the Decentralised Finance space.

We’re going to assume that you have downloaded either the app or browser version of MetaMask, and created your wallet already which is a process of setting up your password and seed recovery phase.

Here’s what to do next:

1. Set up your blockchain networks in the wallet

The MetaMask wallet comes with the Ethereum Mainnet set up or ‘turned on’. But if you’re into DeFi you’re probably going to use some different networks to transact because of the high fees on the Ethereum Mainnet. The two alternative networks that are most popular at the moment are Matic and Binance Smart Chain.

If you want to use these other Blockchains and networks the first thing you need to do is manually add these different mainnets to the MetaMask wallet. To do this, you go to ‘settings’ -> ‘networks’ -> ‘add and edit custom RPC networks”. You can simply Google the settings you need to add the network, by searching something like “Matic Mainnet Settings for Metamask”. Make sure you land on the Matic developers pages to get these instructions.  

2. Add your token types

You need to ‘add tokens’ to Metamask for them to show up once you have sent them to your wallet. There’s an ‘add token’ button in the Assets tab that you should use to do this.┬áTap the button, input into the search bar the ticker for the token or coin you want, and click ‘add’. It may take a while for your tokens to show up after you’ve done this so don’t freak out if they’re not there immediately.

3. Add custom token types

Sometimes when you search the ‘add tokens’ list you won’t find your token. If you hold that token, it won’t show up in your Metamask until you add the token type. But can still add the token to the MetaMask wallet manually, so that your balance in that token shows up in the wallet. You’ll need to go to ‘add tokens’ then select the ‘Custom tokens’ menu.

Adding custom tokens

Then you have to go to Etherscan block explorer (or the block explorer for the network your token is on) in your web browser. In Etherscan, search on the token using its ticker (e.g. SUSHI). Once you find it, you grab the smart contract address for that token and paste it into the web URL field back in Metamask wallet. The other fields in your Metamask wallet should autopopulate if you have grabbed the right smart contract address. If so, just follow the prompts to complete the add token process.

Finding the smart contract address to add a custom token

4. Make sure you toggle to the right network before you connect to any DeFI protocol

Once you’ve got your coins and tokens showing up in MetaMask, you’re probably going to want to do something with them. Like lend or stake them in a DeFI protocol or Decentralised Exchange. When you use MetaMask wallet you ALWAYS need to double check you are on the right network for the crypto asset or protocol or exchange you are trying to transact with. You toggle this at the top of your screen.

MetaMask crypto wallet

For example, if you want to interact with PancakeSwap to stake some crypto, then that DeFI protocol is built on the Binance Smart Chain. So you open the PancakeSwap website, then from that browser screen you open Metamask broswer extension and toggle to Smart Chain. Then you jump back to PancakeSwap and hit ‘connect’.

MetaMask crypto wallet
Hit the connect button in the top right corner once you’ve selected your network in MetaMask

5. Converting your tokens between Mainnets

One thing about DeFI right now is that the Ethereum Mainnet is expensive to transact on. So if you’re trialling DeFi with smaller amounts it becomes uneconomic to do so. But, there are options with much cheaper transaction fees. To use these options, depending on what tokens you already hold, you might need to convert your tokens to another form so you can use them on another cheaper network. In effect, you’re moving your tokens between networks.

If you want to move your tokens between Mainnets you’ll need to use purpose built ‘bridges’ like the Matic <-> EthereumPolygon bridge‘.

You can connect your Metamask to these bridges and convert the tokens using the bridges. This will make the tokens ‘move’ from one Mainnet to another in your Metamask wallet. This flexibility means you can transact between multiple Mainnets and their associated DeFI protocols/platforms.

This is one of the cool things about MetaMask once you get the hang of it.

The thing to remember is – always connect to the bridge with your MetaMask wallet showing the right mainnet settings. More often than not you’ll start with the Ethereum network. Then after you’ve converted your tokens, toggle to the other mainnet – Polygon or Smart Chain for example. The tokens you converted should show up under this network after a few minutes.

6. Disconnecting your MetaMask wallet

If you don’t disconnect your Metamask wallet from the different Protocols you use, you’re leaving yourself open to phishing and cyber crime.

But…It’s not always straight forward to find how to disconnect your MetaMask Wallet from a website or protocol when you want to. So here is how you do it.

You simply open your MetaMask browser extension, click on ‘Connected’ at the top left, then click on the three grey dots against the account you have connected. You should then be able to select ‘Disconnect this account’.

How to disconnect your MetaMask wallet

DeFi can be a bit scary for the uninitiated because interacting with the new blockchain and smart contract technology takes a bit of practice. Getting through these starter steps will ready you to use the MetaMask wallet with new DeFi services and hopefully make some passive income from your crypto!