> For the complete documentation index, see [llms.txt](https://docs.xyb.co/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.xyb.co/xyb-platform-1/xyb-ledger/integrate-with-xyb-ledger/understanding-the-ledger-structure-charts-accounts-wallets/how-to-create-wallets-in-the-ledger-system.md).

# How to Create Wallets in the Ledger System

A wallet is a collection of funds associated with a ledger account. Each wallet is uniquely identified by its address and is characterized by:

* **Currency:** The type of currency the wallet supports (e.g., USD, GBP).
* **Accounting Type:** Indicates the financial category (Asset, Liability, Revenue, Expense, Equity).
* **Decimal Places:** Specifies the precision for balances.

Wallets enable:

* Segregation of funds by purpose (e.g., operational funds vs. reserves).
* Accurate accounting for transactions and balances.

***

## **When to Create Wallets**

Wallets should be created in the following scenarios:

* **Setting Up New Accounts:** Every account needs at least one wallet to store funds.
* **Handling Multiple Currencies:** Separate wallets are required for each currency under an account.
* **Isolating Transactions:** Use distinct wallets for different types of funds or transactions (e.g., revenue vs. expenses).

***

## How to Create Wallets

#### **1. Prepare the Parent Account**

Before creating a wallet, ensure that a parent account (chart or group) is already set up. Wallets cannot exist independently and must be associated with an account.

**Example Command (Create Parent Account):**

```bash
./luca create-chart-account company operational-account
./luca transition /chart/company/operational-account OPEN
```

***

2. **Define Wallet Attributes**

Determine the following attributes for the wallet:

* **Wallet Name:** A unique identifier for the wallet under the account.
* **Currency:** Specify the currency code (e.g., GBP, USD).
* **Accounting Type:** Choose one of the following:
  * **ASSET:** Owned resources.
  * **LIABILITY:** Obligations to third parties (e.g., customer balances).
  * **REVENUE:** Income streams.
  * **EXPENSE:** Costs incurred.
  * **EQUITY:** Owner’s residual interest in assets.
* **Decimal Places:** Define the precision for balance calculations.

***

**3: Create the Wallet**

Use the `luca` command-line tool to create the wallet. Include the parent account, wallet name, currency, accounting type, and decimal places.

**Example Command:**

```bash
./luca create-chart-wallet --create-parent company operational-account default GBP ASSET --decimal-places=2
```

This creates a wallet named `default` under the `operational-account` with:

* Currency: GBP
* Accounting Type: ASSET
* Decimal Places: 2

***

**4: Verify the Wallet**

After creation, verify that the wallet has been set up correctly by retrieving its details.

**Example Command:**

```bash
./luca read-chart-account company operational-account
```

***

**Best Practices**

* **Use Clear Wallet Names:** Names like `default`, `sales`, or `savings` make it easier to identify wallets later.
* **Ensure Accurate Decimal Places:** Use sufficient precision to avoid errors in large transactions (e.g., cryptocurrency wallets may require up to 8 decimal places).
* **Plan Currency and Accounting Types:** Define these attributes during account setup to prevent unnecessary modifications later.

***

#### **Troubleshooting Wallet Creation**

* **Error:** `Parent account does not exist.`

  * Ensure the parent account is created and transitioned to `OPEN`.

  **Command to Create Parent:**

  ```bash
  ./luca create-chart-account company reserve-account
  ./luca transition /chart/company/reserve-account OPEN
  ```
* **Error:** `Invalid accounting type.`
  * Confirm the accounting type matches one of the predefined types: ASSET, LIABILITY, REVENUE, EXPENSE, EQUITY.
* **Error:** `Wallet already exists.`

  * Use the `--modify-if-exists` flag to update the wallet.

  **Command:**

  <pre class="language-bash"><code class="lang-bash"><strong>./luca create-chart-wallet --modify-if-exists company operational-account default GBP ASSET --decimal-places=2
  </strong></code></pre>


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