How to set up and use a Bitcoin wallet

What you will end up with

A wallet you created, a recovery phrase you wrote down and checked, a small amount of bitcoin you received and spent, and that same wallet restored from those twelve words on a second device. The last step is the only one that proves the rest of it worked.

This post is about using a wallet. Deciding which one is a separate question with its own post: how to choose a wallet covers custodial against self-custodial, hot against cold, and what actually separates one signing device from another. Pick one there, then come back.

Written in August 2026 against the specifications wallets implement rather than one app's menus: BIP-32, BIP-39 and BIP-84. Every wallet words its buttons differently, so match the intent below rather than hunting for the exact label.

Before you start

• A wallet app you have already chosen, installed from the developer's own site or from a store listing linked off it. A convincing lookalike is the cheapest attack there is.
• Paper and a pen. Not a phone, not a notes app, not a password manager.
• A second device, for the restore test at the end.
• A small amount of bitcoin: something you would be annoyed but not damaged to lose.
• Half an hour, uninterrupted, somewhere nobody is filming.

The tradeoff you are accepting

Self-custody means nobody can freeze your coins and nobody can help you. Those are the same sentence. There is no password reset, no support line and no fraud department: lose the paper and the money is gone, in a way that has no precedent in the rest of your financial life.

What you buy is the removal of every company from the path between you and your money. What it costs is a filing problem you did not have before, and the discipline to treat a piece of paper as seriously as the amount written on it. If that trade sounds wrong for the amount you hold, an exchange account is a legitimate answer, and the risk you carry instead is worth understanding first.

Steps

Create the wallet

1. Open the app and choose create a new wallet, not import or restore.
2. Set a PIN or device password when asked. This protects the phone, not the coins: anyone holding your recovery phrase can rebuild the wallet elsewhere without ever seeing the PIN.

Write the phrase down, then prove you wrote it down right

3. The app shows you twelve words in a fixed order. This is a BIP-39 recovery phrase, drawn from a list of exactly 2,048 words, encoding 128 bits of randomness plus a 4-bit checksum.
4. Write them on paper, numbered, in order. The order is part of the secret.
5. Never photograph the phrase, and never type it into anything. Not a notes app, not a password manager, not cloud storage, not an email to yourself. Each of those puts it on a networked machine, and from that moment it is a secret shared with everything else on that machine. No exceptions, and no "just this once".
6. Most wallets then ask you to re-enter a few of the words in position. Do that from the paper rather than from memory. The point is to catch a transcription error now, while fixing it is free.
7. Read the whole list back off the paper once more, comparing four letters per word. BIP-39 words are unique in their first four letters, which is enough to catch abandon written where ability belongs.

If you would rather watch the randomness happen than accept what the app handed you, rolling it on dice is the next level of care.

Receive your first payment

8. Tap Receive, and copy the address or show the QR code to whoever is paying you.
9. Send your small amount to it.
10. Tap Receive again. The address is different, and that is correct. Your wallet derives an unlimited tree of keys from that one phrase, which is what BIP-32 is for: deterministic wallets "do not require such frequent backups", because one backup covers every address you will ever generate. Modern wallets use the BIP-84 path m/84'/0'/0', which is why your addresses start bc1q.
11. Use the fresh one every time. Reusing an address is, in the Bitcoin wiki's words, "abusing the privacy and security of the participants": every input paid to a reused address is publicly joined to every output spent from it, assembling a financial history anyone can read. Your wallet does this for you if you let it.

Send some of it back

12. Tap Send, paste the destination address, enter the amount, and check the first and last four characters of the address against the source you copied it from.
13. Choose a fee. The fee is not a percentage of the amount. It is a price per unit of transaction size, quoted in sats per virtual byte, so moving a large amount costs about the same as moving a small one. Your wallet suggests a rate, which is an estimate of what miners are currently taking.
14. Broadcast it, and understand what happens if the fee was too low: nothing fails. The transaction sits unconfirmed on whichever nodes are holding it, and Bitcoin Core drops anything older than its mempoolexpiry default of 336 hours, two weeks. Until then it can still confirm. You can raise the fee on your own transaction (replace-by-fee), or the receiver can drag it in by spending its output at a high rate (child pays for parent). How fees actually buy block space covers both.
15. What you cannot do is cancel it. A broadcast transaction is not recallable, and a replacement competes with the original rather than deleting it.

Check the confirmations

16. Zero confirmations means broadcast, not settled. An unconfirmed transaction can be reversed, cheaply, by someone who set out to.
17. Each block mined on top of yours is one confirmation. Six is the received convention, and the wiki is honest about where it came from: it "was chosen based on the assumption that an attacker is unlikely to amass more than 10% of the hashrate, and that a negligible risk of less than 0.1% is acceptable". The same page calls six "overkill for casual attackers, and at the same time powerless against more dedicated attackers".
18. In practice: one confirmation is plenty for a coffee, six is for amounts where being wrong would hurt.

Verify it worked: restore on a second device

Everything above is preparation for this. An untested backup is a belief, and this is the step that turns it into a fact.

19. Install the same wallet software on a second device.
20. Choose restore or import existing wallet, and type the twelve words from the paper.
21. Confirm three things match the original: the balance, the transaction history, and the first receive address.

If all three match, the paper is the wallet, and the app on your phone is one convenient way to reach it. Only then should the wallet hold an amount you would mind losing. If they do not match, stop and read the next section before moving anything.

If something goes wrong

The wallet says the phrase is invalid. That is the checksum doing its job: one word is wrong, or two are swapped. Compare four letters at a time against the paper.

It restores but shows nothing. The words are probably right and the derivation path is not, which happens when two wallets default to different paths. Look for an advanced or "custom derivation" setting, and try m/84'/0'/0' first.

You sent to the wrong address. There is no reversal and nobody to appeal to. Check addresses before broadcasting, every time.

Your transaction is stuck. See step 14. Wait, replace, or have the receiver pull it in.

The app vanished from the store, or the company shut down. Not a loss. Install any other BIP-39 wallet and restore from your phrase.

You typed the phrase into something connected. Treat that wallet as burned. Create a new one, verify it, and move the funds. The coins do not know the exposure was accidental.

What a wallet does not do

It does not store your bitcoin. Your coins are entries in a ledger that every node keeps a copy of. The wallet stores the keys that authorise moving those entries, and tracks which entries your keys can move. That is why the recovery phrase is the whole thing and the app is an accessory.

Losing the app is not losing the money. BIP-39 and BIP-84 are open standards implemented by dozens of independent wallets, so a phrase written down in 2026 restores into software written by people who never heard of the app you started with. A company failing is an inconvenience. A lost phrase is not.

It does not make you private. A wallet handing out a fresh address each time helps, and that is all it does. The chain is public, and a wallet that asks somebody else's server about your addresses has told that server which ones are yours.

Two-factor authentication does not apply. There is no server you log in to. There is a key, and whoever holds it can sign. Any guide telling you to enable 2FA on a self-custodial wallet has the model wrong.