Web3 Wallets

What are web3 wallets?

Web3 wallets are used to store, receive, and send cryptocurrencies (Bitcoins, Ethereum etc), NFTs (Non-Fungible Tokens) and other digital assets. E.g Metamask , Coinbase Wallet , Ledger etc.

Let’s say you want to invest in Bitcoins for the first time. You can download any web3 wallet from an application store (e.g Coinbase, Metamask etc), set up/create an account and generate a private key that cannot be changed. Once you sign into your wallets, you can see any cryptocurrency stored in your wallet. Some wallets will allow users to directly connect to a trading platform, allowing them to buy crypto or other assets.

Types of Web3 wallets

There are generally two types of web3 wallets:

a.) Hot wallets

b.) Cold wallets

Hot wallets

Hot wallets are connected to the internet and cannot be used offline. The digital assets are usually saved online. Private keys are also stored on the internet or cloud. One major disadvantage of hot wallets is that they are prone to malicious attacks.

Hot wallets can be further broken into:

Web-based wallet – It allows users to store and manage digital assets from web browsers. They work like extensions on browsers. E.g Metamask wallet

Mobile wallet – It allows users to store and manage digital assets from their mobile phones. They are usually mobile applications that can be downloaded from any application store etc. E.g Coinbase wallet

Cold Wallets

They are hardware devices that can store cryptocurrencies and other digital assets offline. They are not connected to the internet. Private keys are stored offline. They are less vulnerable to malicious attacks. E.g Trezor , Ledger etc.