If you’re interested in technology, you’ve probably heard the term “web3” for the past few years. Web3 offers a wide range of digital services, including what is known as a web3 wallet. But what is a web3 wallet and should you use one?
What is Web3?
The term “web3” (also known as “web 3.0”) is basically used to describe the latest phase or iteration of the Internet. Before web3, there was web2 (web 2.0), and before that, web1 (web 1.0). The web3 focuses on integrating new concepts and technologies, such as decentralization, cryptocurrencies and blockchain, into the World Wide Web.
Decentralization is a key element here, which you may have already heard of. Decentralization is very popular in the cryptocurrency field today, especially in the field of decentralized finance (DeFi). This corner of the cryptocurrency industry offers financial services that have a decentralized structure, meaning that data and platform power are distributed across a community, rather than being hosted by a small group of decision makers.
Web3 aims to apply decentralization to the entire web, so that all platforms are controlled by a community of users and not by authority figures. The central idea is that when platforms are owned by everyone, they become more transparent and secure. It can also provide a reliable ecosystem, as it doesn’t depend on third parties to function. Rather, it uses its own token-based systems using blockchain technology.
So where do web3 wallets come into play and what can they offer you?
What is a Web3 Wallet?
Since web3 has obvious ties to cryptocurrencies, you might think it is the same as a cryptocurrency wallet. In fact, the two terms are often used interchangeably. However, while crypto and web3 wallets have similarities, they are not identical.
As the name suggests, a cryptocurrency wallet is designed to store cryptocurrencies only. Web3 wallets, on the other hand, can hold other digital assets, such as NFTs (non-fungible tokens). They are essentially more versatile in the areas of CeFi and DeFi, especially if you are interested in more than just cryptocurrencies.
Like cryptocurrency wallets, you may or may not get a web3 wallet as a deposit. But most web3 wallets you’ll come across are unguarded, which means you are in control of your private keys and are responsible for their security. A popular example of a custody web3 wallet is MetaMask, a software archiving option that can archive both cryptocurrencies and NFTs that fall under the ERC-721 standard.
This type of web3 wallet uses a reliable model, where you don’t need to rely on a third party to protect your sensitive information.
Do you need a Web3 wallet?
Whether or not you need a web3 wallet depends on the types of digital assets you are looking to store. If you are only interested in cryptocurrency coins and tokens, such as Bitcoin, Ethereum, Tether, and Dogecoin, then a cryptocurrency wallet will suffice.
However, if you are also interested in other forms of digital assets, namely NFTs, it is better to opt for a web3 wallet. If you’re looking to build a web3 wallet, there are many great options out there, including Trust Wallet, MetaMask, Coinbase Wallet, Exodus, and Enjin Wallet. If you want a hardware web3 wallet, consider one of Ledger’s models. Trezor’s range of hardware wallets can also store NFTs in addition to cryptocurrencies.
The wallet you currently use to store your crypto might also support NFTs. It’s worth checking if this is the case before opening a brand new wallet.
You may benefit from a Web3 wallet
While not everyone needs a Web3 wallet, they certainly come in handy if you’re interested in a range of digital assets, rather than just cryptocurrencies. So, if that sounds like you, check out some of the examples mentioned above to see if any of them match your preferences.