If you’re interested in technology, you’ve probably heard the term “web3” in recent years. Web3 provides a wide range of digital services, including something known as a web3 wallet. But what exactly is a web3 wallet? Should I use one?
What is Web3?
The term “web3” (also known as “web 3.0”) is essentially used to describe the most recent phase or iteration of the Internet. Before web3 came web2 (web 2.0), and before web1 (web 1.0). Web3 focuses on incorporating newer concepts and technologies, such as decentralization, cryptocurrencies, and blockchain, into the World Wide Web.
Decentralization is a key element here, which you may have heard of before. Decentralization is now very popular in the crypto realm, specifically DeFi (decentralized finance). This corner of the crypto industry offers financial services that have a decentralized structure, which means that the data and power of the platform is distributed in a community, rather than being hosted by a small group of decision makers.
Web3 aims to take decentralization and apply it to the entirety of the web so that all platforms are controlled by a community of users, not authority figures. The central idea is that when platforms are owned by everyone, they become more transparent and secure. It can also provide a trustless ecosystem as you don’t rely on third parties to operate. Rather, it employs its own token-based systems using blockchain technology.
So where do web3 wallets come into this and what can they offer you?
What is a Web3 wallet?
Because web3 has clear ties to cryptocurrency, you may think it is identical to a crypto wallet. In fact, the two terms are often used interchangeably. And, while the crypto and web3 wallets share similarities, they are not the same.
As the name suggests, a cryptocurrency wallet is designed to store just that, cryptocurrency. Web3 wallets, on the other hand, can hold other digital assets, such as NFTs (non-fungible tokens). They are essentially more versatile in the CeFi and DeFi realms, especially if you are interested in more than just cryptocurrency.
Just like crypto wallets, you can get a web3 wallet in both custodial and non-custodial form. But most web3 wallets you’ll come across are non-custodial, which means you have control over your private keys and are responsible for keeping them safe. A popular example of a non-custodial web3 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 employs a trustless model, where you don’t need to rely on any kind of third party to keep your sensitive information safe.
Do you need a Web3 wallet?
Whether or not you need a web3 wallet depends on what type 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, then you are better off with 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.
You may find that the wallet you are currently using to store your cryptocurrency also supports NFTs. It is worth checking if this is the case before opening a whole new wallet.
You could 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, rather than just cryptocurrency. So if this sounds familiar, check out some of the examples mentioned above to see if any of them fit your preference.