Get a DeFi Wallet Account
You have already purchased Ethereum using your exchange account shown in the previous step. But it is stuck in the exchange. You technically do not “hold” anything on an exchange, because the exchange is holding it for you. You are limited to moving your currencies around within the exchange itself. However, most crypto is not supported by all exchanges. So it's common to have to move your crypto to a Decentralized Finance (DeFi) wallet which allows you to trade your crypto for just about anything.
Therefore, you need to send your Ethereum into such a wallet. Once your crypto is in your DeFi self-custody wallet, you are free to do with it what you want and are no longer limited by what the exchange supports or allows. There are some benefits to this such as if the Coinbase Exchange app or website goes down or blocks you, you cannot access your funds temporarily. But DeFi wallets are directly tied to the blockchain which no single company or group controls. However, this also means you are solely responsible for the security of your DeFi wallet.
You will be introduced to the term “seed phrase”. It is essentially a "recovery password made up of a long list of regular words in a specific order" that you must keep safe. You will also need this seed phrase to access the same wallet on different devices.
It is monumentally important that you do not lose your seed phrase or share it with anyone. If something happens to your wallet (like you lose the device you use to sign in to the wallet or just lose a “cold wallet”), the only way you can recover or sign in to that wallet again is with that seed phrase. There is no helpline or “forgot your password” option. Also if someone gets ahold of your seed phrase, they can gain control of your wallet. To reiterate, there is literally no way you can recover your crypto if you lose your seed phrase.
If you already have a Decentralized Finance (DeFi) self-custody wallet such as MetaMask or Coinbase Wallet (which is different from Coinbase Exchange), you can skip this entire section and go to Send Ethereum to your DeFi Wallet.
Creating a Metamask Wallet
- 2.Complete the steps to create your wallet. Store your seed phrase somewhere extremely safe such as a safe deposit box or high-quality home safe.
Creating a Coinbase Wallet
- 2.Complete the steps to create your wallet. Store your seed phrase somewhere safe.
Quick Tip for either wallet: In the Google Chrome browser, make either of the browser extensions easier to access by clicking the puzzle piece icon on the top right and clicking the thumbtack icon so you can see the Metamask wolf icon or the Coinbase icon. Tapping this icon will give you quick access to your wallet later.