Web3 is changing the digital landscape. In this latest iteration of the internet, users have more control of, and do more with, their data and assets than ever before, through their wallets. Self-custodianship and interaction with everything from your identity to your funds, art, and even in-game items is made possible partly through Web3 wallets.
Read on to learn about what Web3 wallets are, how they work, and why you should consider starting your Web3 journey with one today.
What is Web3?
Whereas Web1 represents the ‘read-only’ (or ‘static’) phase of the web, when users could only read content created by a few people, and Web2 enables content creation on centralized platforms, Web3 takes things one step further. Web3 moves users away from centralized platforms, gives them true ownership of their personal information and digital assets, provides access to decentralized environments, and much more. In the internet’s third generation, users – not platforms – are at the heart of the web experience.
Web3 is characterized by:
- Decentralized services
- True data ownership, since users don’t have to trade their data for the ability to use platforms
- Decentralized governance
- Trustless and permissionless environments
- Self-custody and use of public-key cryptography for secure user authentication
- Blockchain and smart contract technology
Web3 encompasses the metaverse, cryptocurrencies, decentralized identifiers (DIDs), decentralized autonomous organizations (DAOs), applications (DApps), finance (DeFi) tools, and much more, all of which is accessible and interactable through Web3 wallets.
What is a Web3 decentralized wallet?
A Web3 wallet is a software program with various functions, such as:
- Storing the private keys necessary to access blockchain networks and conduct transactions
- Interacting with Web3 applications
- Accessing digital assets such as cryptocurrencies, NFTs, and more
How to set up a Web3 wallet
You can create your wallet by setting up an account on blockchain wallet platforms like Lace, and obtaining a wallet-generated seed phrase used to generate the root private key you need to access the wallet, spend funds, and prove ownership. A recovery phrase is the usual way to set up your wallet with its private keys, so it’s important to keep it in a safe place and, as the name suggests, keep it private.
Once you’ve created your Web3 wallet, you can manage and transact digital assets.
What are the different types of Web3 wallets?
There are different types of wallets you should consider when looking for your way into to Web3:
Cold wallets: securely store your private keys offline, making them less susceptible to hacking, which is particularly important for long-term asset storage. Types of cold wallets include:
- Hardware wallets: external devices that store private keys and plug into computers. These wallets come in simple and advanced models, providing security for cryptocurrency traders, but their compact size poses a risk of loss or theft if not stored securely.
- Paper wallets: though they offer strong security, they are less common than hardware wallets and involve generating QR codes or alphanumeric strings for cryptocurrencies offline. Effective paper wallet use requires trustworthy open-source wallet generators, making these wallets less suitable for quick tasks.
Hot wallets: remain online and suit active DeFi users and Web3 newcomers. Types of hot wallets include:
- Desktop wallets: let you engage with blockchains through a computer program, allowing you to handle digital asset transactions conveniently, with quick access to essential tools. Daedalus is one example of a desktop wallet.
- Browser-based wallets: accessible in the form of a browser extension, a web browser, or both in Lace’s case, these wallets enable seamless interaction with DApps on a specific blockchain.
- Mobile wallets: increasingly popular with DeFi users who trade on the go or handle small crypto amounts, with these apps providing easy access and support for seamless transactions.
Advantages of a Web3 wallet
Web3 wallets hold three major benefits:
- Blockchain security: when engaging with DeFi, security is paramount. Web3 wallets prioritize robust security measures, ensuring that your digital assets remain protected by leveraging the security of the blockchain they’re built on.
- User-friendly interfaces: user-centric Web3 wallets are easy to set up, providing quick access to transaction and storage features. Web3 wallets like Lace prioritize user experience, providing simple interfaces that enable swift wallet setup and asset transactions, even for non-tech-savvy users.
- Self-custody and control: Web3 wallets prioritize user control without significant restrictions on sending or receiving assets due to decentralization. While certain platforms might have limitations, users normally have considerable autonomy over their portfolios.
How to choose a reliable Web3 decentralized wallet
Choosing the right wallet is one of the most important decisions you need to make in your Web3 journey. Below is an infographic of what features you should consider.
Lace is your reliable, secure, and convenient way to explore Web3. Built by Input Output Global, Lace weaves a tapestry of rich Web3 functionalities.
Interested in beginning your Web3 journey with Lace? Add Lace to your browser today.
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