What is a Web3 wallet?

January 29, 2023

Web3 refers to the next generation of the internet, where instead of centralized servers and intermediaries controlling data and communication, think Facebook and TikTok, it is decentralized and controlled by users through the use of blockchain technology. This allows for greater security, transparency, and autonomy in online interactions and transactions. But how do you make transactions and do you have to own crypto currency to do so? Below we will take a closer look at what Web3 has to offer and what a Web3 wallet is and its uses in the metaverse ecosystem.

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What is Web3?

Many may have only recently heard of Web3 and some terms that have come along with it, like crypto currency, metaverse, NFT, utility apps, and more but Web3 has been around for more than a decade already. Let’s take a look at the history of Web3. It began to take shape in the early 2010s with the emergence of blockchain technology and the creation of the first cryptocurrency, Bitcoin. In 2013, the Ethereum project was launched, which introduced the concept of smart contracts and the ability to create decentralized applications (dApps) on top of the blockchain. This was a major step forward in the development of Web3, as it allowed for the creation of new types of online interactions and transactions that were not possible on the traditional internet. Since then many other blockchain projects and platforms came about and in recent years the development of Web3 technologies has accelerated, with a growing number of companies and organizations exploring the potential of what this new space has to offer.

What Are Web3 Wallets?

Web3 Wallets fulfill several functions within the Web3 space. First of all, they are essential to accessing the Web3 space. Basically it is a digital wallet used to store your digital assets. So cryptocurrency holders and holders of other digital assets want to keep their assets safe and this is where the Web3 wallets come in! There are a number of  platforms with user-friendly interfaces through which you can connect and then interact on the blockchain. 

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How Do Web3 Wallets Work?

Although there are several different versions of wallets, essentially they have the same function. The key words are “private key” and “seed phrase”, which need to be stored safely (like any password) because in your digital wallet is where you have all your digital assets stored and you can view them. As a user you are in complete control of all your assets and nobody else, i.e. no middle-man, has access to your tokens. You can also use a Web3 wallet to swap tokens or send and receive digital assets. 

Types of Web3 Wallets

There are several types of Web3 Wallets out there and it is best to do some research before deciding which wallet best suits your needs. Here a few popular ones:

  1. Hardware wallets: These are physical devices that store a user's private keys offline, providing a high level of security for storing and managing cryptocurrencies and other digital assets. Examples include Trezor and Ledger.
  2. Desktop wallets: These are software programs that are installed on a user's computer and allow them to store, manage, and send digital assets. Examples include Exodus and Atomic Wallet.
  3. Mobile wallets: These are software apps that are installed on a user's mobile device and provide similar functionality as desktop wallets, but with the added convenience of being able to access and manage one's assets on the go. Examples include MyEtherWallet and Trust Wallet.
  4. Web wallets: These are online platforms that allow users to store, manage, and send digital assets through a web browser. Examples include MetaMask and Coinbase Wallet.

Advantages of Using Web3 Wallets

The first things that come to mind when talking about Web3 wallets is safety and security, two very important factors, followed closely by the user experience. As already mentioned there are several different wallet options and the interfaces have been created for easy set up. Definitely another advantage of Web3 in general, is the community which stands behind everything, so if you have any questions about the different wallets there is a lot of information out there. 

Disadvantages of Using Web3 Wallets

Like with most things, it is best to also be aware of the disadvantages you may find and the same goes for when using a crypto wallet. First of all, as it’s a new ecosystem you are dealing with there is a learning curve of understanding terms and functionality, especially given the different types of wallet options out there.  The fact that you are in complete control of your wallet, means that if you do something wrong it’s on you. For example you send funds to a wrong address or forget your password. Scams are also something to be aware of. Although very safe, they are not hack proof so make sure you never give your private key or phrase to anyone. 

Should You Use a Web3 Wallet?

If you are interested in being part of Web3 and interacting in the metaverse then you will need to use a Web3 Wallet as it is the way to manage your crypto assets, be it coins, tokens, NFTs, etc. If you plan on making transactions on decentralized platforms, such as trading crypto exchanges or using decentralized finance (DeFi) applications, then a web3 wallet is likely going to be necessary. Which wallet you choose is up to you, just be sure to keep your private key safe!

Final words

There are many new things to learn when it comes to Web3 and blockchain technology. A Web3 wallet, also known as a "smart contract wallet," is a type of cryptocurrency wallet that allows users to interact with decentralized applications (dApps) on the blockchain. There are a wide variety of wallets available, most of which are free to download. It is best to research and read up on which type of wallet or platform will suit your needs best. 

FAQ's

Why Do You Need a Web3 Wallet?

Any transaction you want to do in Web3 needs to pass through a Web3 wallet on the blockchain.

Is Coinbase a Web3 wallet?

Yes, it’s an online platform where you can store, manage and send digital assets through a web browser. It hosts a wide variety of blockchain assets, including Bitcoin and Ethereum among others.

Is MetaMask a Web3 wallet?

Yes, same as above only difference being that MetaMask only supports crypto and digital assets on the Ethereum platform.

What is the best Web3 wallet?

According to online findings, the most popular Web3 wallet is Metamask. It has an easy to use interface and gives users more control over their private and public keys.  

Is Web3 only crypto?

Web3 is a term that is often used to refer to the decentralized web and lets you use decentralized apps (dApps) so although you need crypto to use some, not all dApps do. 

Is Binance a Web3 wallet?

No, it’s a cryptocurrency exchange not a wallet. Even though it supports some decentralized features such as staking, it is not the same as a Web3 wallet.