What is a Web3 Wallet? Do you need it?

If you’re interested in technology, you’ve probably heard the term “web3” over the past few years. Web3 offers a wide range of digital services, including what is known as the web3 wallet. But what is a web3 wallet and should you be using 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). Web3 focuses on integrating the newest concepts and technologies, such as decentralization, cryptocurrencies and blockchains, into the World Wide Web.

Decentralization is a key element here, which you may have heard of before. Decentralization is very popular today in the field of cryptocurrencies, especially in the field of decentralized finance (DeFi). This corner of the crypto industry offers financial services that have a decentralized structure, meaning that the data and power of the platform is distributed to 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 rather than authority figures. The central idea is that when platforms are owned by everyone, they become more transparent and safer. It can also provide an incredible ecosystem, as its operation does not depend on third parties. Rather, it uses its own token-based systems using blockchain technology.

So where do web3 wallets come in and what can they offer you?

What is a Web3 Wallet?

graphic of a blue wallet surrounded by bitcoin tokens

Because web3 has obvious ties to cryptocurrencies, you might think it’s just like 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 only cryptocurrencies. Web3 wallets, on the other hand, can contain other digital assets, such as NFTs (non-fungible tokens). They are essentially more versatile in the fields of CeFi and DeFi, especially if you are interested in more than just cryptocurrencies.

Like cryptocurrency wallets, you can get a web3 wallet as a deposit or not. But most of the web3 wallets you will come across are non-custodial, meaning you are in control of your private keys and are responsible for their security. A popular example of a web3 custodial wallet is MetaMask, a software storage option that can store both cryptocurrencies and NFTs that fall under the ERC-721 standard.

This type of web3 wallet uses a trust model, where you don’t need to rely on a third party to protect your sensitive information.

Need a Web3 wallet?

The coinbase wallet application appears on the smartphone screen

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 crypto wallet will suffice.

However, if you are also interested in other forms of digital assets, namely NFTs, it is better to choose a web3 wallet. If you’re looking to set up a web3 wallet, there are many great options out there, including Trust Wallet, MetaMask, Coinbase Wallet, Exodus, and Enjin Wallet. If you want a web3 hardware 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 cryptocurrencies may also support NFT. Before opening a new wallet, it’s worth checking if this is the case.

You can benefit from a Web3 wallet

While not everyone needs a Web3 wallet, they are certainly useful if you are interested in a variety of digital assets, and not just cryptocurrencies. So if this sounds like you, check out some of the examples mentioned above to see if any of them match your preferences.

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