One of the first stages in learning about web3, cryptocurrencies, and blockchain technology is getting a wallet. Getting a wallet is a vital part of blockchain technology that we must comprehend.
You will learn all there is to know about a web3 wallet in this article, so consider it the first module in your web3 education. The numerous wallet types, advantages and disadvantages, and web3 wallet alternatives will next be covered.
Web3: What is it?
In his article Into a Modern World, Ethereum co-founder Gavin Wood coined the phrase “Web3,” referring to it as the “Post Snowden Web.” He discussed the necessity for a zero-trust interaction system that puts web users in control of their data.
The blockchain-based version of the internet is known as Web3. Decentralization is one of the main tenets of the internet generation. Additionally, Web3 aims to provide internet users with more authority and control over their data.
The web2 version of the internet that is now available is intended to be improved by web3. Web3 will improve the internet in various ways, including through payments and identities. Web3 applications, also referred to as Decentralized Apps, operate on blockchains or other distributed networks (DApps).
Web3 and cryptocurrency are inseparable since web3 is heavily dependent on bitcoin. Various DApps offer users cryptocurrencies as a financial incentive to take part. In contrast to the web2 platforms we are aware of, users can receive rewards for using a platform.
A Web3 Wallet: What Is It?
An internet wallet that can be used to collect digital assets is known as a web3 wallet. The non-fungible tokens are among these digital assets (NFTs). A web3 wallet, sometimes known as a “crypto wallet,” is a device for gaining access to the web3 market and interacting with Dapps.
Web3 wallets are frequently non-custodial wallets, allowing the wallet owner to store digital assets alone. Additionally, the lack of a third party eliminates the requirement for KYC/AML, protecting the confidentiality and anonymity of wallet owners.
It simply means that the owner of the wallet has complete control over it. On the other side, custodial wallets, which are often secured by centralized authorities like centralized exchanges, cannot be used on a web3 platform.
A web3 wallet development has its own private keys or seed phrase that can be used to access the wallet, and the wallet owner is in charge of keeping the wallet secure. A web3 wallet’s other features include the ability to transfer and receive digital assets, as well as swap tokens.
The web3 wallet used to communicate with the Dapp serves as the user’s identity in Web3. This improves the standard password and email login authentication. Although Web3 wallets are anonymous, individuals can choose to publicly link their identity to a wallet.
What Kinds of Web3 Wallets Are There?
Web3 wallets are primarily used for blockchain transactions and for engaging and integrating with decentralized applications (Dapps). Web3 wallets are divided into two categories: hot wallets and cold wallets.
Any cryptocurrency wallet that has an internet connection is a hot wallet. They are the most popular kind of wallet and are simple to use. Although they are referred to as hot wallets since money is saved online, one common disadvantage of this kind is the wallet’s vulnerability because it is susceptible to hacking and harmful assaults.
Hot wallets can be further separated into two categories;
The MetaMask wallet is a nice illustration of this kind of wallet. The majority of online wallets function as browser plugins. Users can communicate with web3 sites and send cryptocurrency.
Trustwallet, which enables users to store and manage assets on their mobile phones, is a really good example. A mechanism called Wallet Connect also allows users to communicate with web3 platforms using their wallets. A secure connection can be established between two programs, wallets, or devices using the WalletConnect protocol.
The term “cold wallet” refers to wallets that are not online. Hardware exists that stores cryptocurrency offline as an alternative. The safest type of wallet is a cold one because they are impervious to hacking attempts and less vulnerable to malicious attacks. The two most well-known cold wallets on the market are Trezor and Ledger.
Private keys are kept offline in a cold wallet, whereas they are kept online or in the cloud for hot wallets. Because each transaction necessitates a second signature on the wallet, a cold wallet is meant to be resistant to hackers.
Benefits of Web3 Wallet
We now know that a web3 wallet serves as our entryway into the web3 ecosystem. The following are some benefits of using web3 wallets:
Simple to Use
Web3 wallets are simple to use because they are simple to set up, even for those who are unfamiliar with cryptocurrencies. In only a few simple steps, anyone may set up a web3 wallet and begin conducting transactions. Users can quickly check their wallet balance on Web3 and rapidly send and receive assets.
Discretion and anonymity
An important benefit of using a web3 wallet is user privacy. A web3 wallet address, which is a string of letters and numbers where cryptocurrencies can be shared to and from, is all you need to interact with any web3 platform. When using web3 apps, the wallet address also acts as an identity.
Users are accountable for safeguarding assets. Users are encouraged not to share their private keys with anyone because Web3 wallets offer the highest level of protection, and even the wallet creators cannot access the wallet.
Users have complete control over their wallets, and because they hold private keys, any items inside the wallet are theirs. Users using Web3 wallets have the freedom to send their assets to whomever they want, whenever they want. Because no one has control over the network, there is no censorship.
Drawbacks of Web3 Wallet
Despite the many benefits of web3 wallets, several drawbacks are also present, and these are outlined below;
Because users are their bank, they are responsible for any problems that arise.
Because they are not familiar with the new environment or because of issues with language, some consumers find it difficult to navigate via a web3 wallet.
In the event that private wallet keys are stolen, there is a chance of being hacked or being subjected to malicious links.
What Makes a Web3 Wallet Required?
To completely manage cryptocurrency holdings, one of the main reasons we need a web3 wallet is.
Web3 wallets provide straightforward user interfaces. Users can transmit and receive cryptographic assets via the Send and Receive buttons, which are often the two major action buttons.
Accessibility is another crucial factor supporting the need for a web3 wallet. Access to multiple web3 platforms is made possible by web3 wallets.
Additionally, users can access DApps via web3 wallets because the majority of DApps require crypto assets. Decentralized Finance is a fantastic example of such DApps (Defi). Web3 wallets can, therefore, also be used as Defi wallets.
What are Alternatives to the Web3 Wallet?
There are currently a fair number of various types of web3 wallets available in the market. Although all web3 wallets serve the same objective, each one of them also has a distinctive characteristic that sets it apart from other wallets. For instance, some wallets are web-based, while others are mobile wallets. They are also cold wallets or hardware wallets.
The increasing availability of web3 wallets makes it challenging for users to choose among the many available options. Therefore, we’ll focus on three of the top web3 wallet alternatives available right now.
One of the most widely used web3 wallets worldwide is MetaMask. In an August 2021 press release, Consensys claimed that MetaMask had 10 million MAUs (monthly active users). MetaMask is a web3 wallet that can be used to communicate with various DApps on several blockchains. It comes in both a mobile app and a browser extension version.
Since its launch in September 2016, MetaMask has been the main wallet of choice for connecting with web3 platforms. Additionally, it has played a major role in the adoption of decentralized applications on the Ethereum blockchain.
Another well-liked wallet with an estimated 10 million users globally is TrustWallet. Users can safely store and manage their non-fungible tokens and coins using the Trust wallet. The wallet also supports the assets of other chains and is blockchain-independent. To put it another way, Trustwallet allows you to store any kind of token.
Trust wallet debuted in 2017 and was later bought by the largest cryptocurrency exchange, Binance, after becoming well-known in the industry. As a result, users may quickly buy and sell tokens thanks to Trust Wallet’s built-in support for well-known cryptocurrency exchanges.
Hardware wallets are the most secure sort of web3 wallet, and because of their security, they are regarded as one of the great web3 wallets. You should choose between Ledger or Trezor since they both permit connecting to DApps through web-based wallets.
Both Trezor and Ledger are reliable cold wallets that serve the same purpose of protecting cryptocurrency holdings. They only differ in extra features; for instance, LedgerX Nano offers a Bluetooth connection rather than the standard USB connection. Additionally, Trezor Model T supports touchscreen navigation rather than button-based navigation.
Web3 wallets’ significance to the web3 ecosystem is clear. It is the first item one needs to acquire while preparing to begin trading cryptocurrencies. Web3 wallets enable asset storage while also granting access to Dapps on several chains. Without a third party to oversee operations, users have complete ownership over their assets. Web3, as a separate industry, is still very young. There is room for many wallets with interesting new features, as Web3 wallets are always being improved. Web3 is an excellent area to start a career or contemplate one because there is a huge demand for developers in the industry.