What is a Web3 Wallet? | Web3 Resources

Table of Contents

TL;DR

  • A web3 wallet is a digital wallet with 2 primary functions: to store digital assets and to access web3 applications.
  • Web3 wallets come with public and private keys.
  • The most popular web3 wallet is MetaMask.
  • Web3 wallets keep you in control of your assets, not a bank. However, this means if you lose access to your seed phrase, your assets are gone forever.

Katie is a freelance writer. She gets paid in USD by bank transfer every Friday.

The funds are deposited into her bank via her public account number. All transactions are recorded on her bank statement. She accesses these funds by withdrawing cash at the ATM or purchasing things directly with a credit card.

Jane is a freelance writer. She gets paid in ETH by direct transfer every month.

The funds are deposited into her web3 wallet via her public key. All transactions are recorded on the blockchain. She stores these funds in her non-custodial wallet and uses them to purchase digital assets.

She cashes out her crypto for USD on a third-party broker exchange like Coinbase when she is ready. 

What is a web3 wallet?

A web3 wallet is a digital wallet that stores digital assets like NFTs, fungible tokens, and cryptocurrency. Think of it as your physical wallet, but for the digital world.

Web3 wallets also act as your ticket in to web3 based applications (dApps). You cannot use web3 based applications without a web3 wallet. More on this later.

All web3 wallets come with a public and private key.

  • Public keys: Think of this as your bank account number. Anyone can see it and track transactions back to your public key. If someone is sending you a digital asset, they will do so via your public key.
  • Private keys: Think of this as your PIN number. Anyone who knows your private key will be able to access your funds. Your private key should be kept secure and not shared with anyone, ever.

Most phishing scams are done by hackers asking for your private key.

What are the types of web3 wallets?

what is a web3 wallet - MetaMask web3
MetaMask wallet | MetaMask

There are a few different kinds of web3 wallets. We’ll start with hot and cold wallets.

  • Hot wallets: Digital wallets that areconnected to the internet at all times. They are considered less secure than cold wallets (though they are still very secure).
  • Cold wallets: Physical wallets that resemble a hard drive. The biggest security risk with these is losing the wallet itself.

There are then 3 types of wallets within these categories: mobile, web, and hardware.

  • Web wallets (Hot): These are the most popular kind of web3 wallets. They are web-based and free to use, such as MetaMask.
  • Mobile wallets (Hot): These wallets are installed on your phone as a mobile app. They often have less functionality than a web-based wallet.
  • Hardware wallets (Cold): These are physical wallets that store your cryptocurrency or digital assets. You plug them into your computer to transfer your assets from your digital wallet to the device. Transactions are performed on the wallet itself instead of your computer, making them impossible to hack.

Most beginners start with a web-based hot wallet because they are accessible and easy to use.

But wait, there’s more.

Wallets can also be classified as custodial or non-custodial.

  • Custodial wallets are wallets where you do not own your private key. If you buy cryptocurrency on Coinbase, the largest centralized crypto exchange in the world, and you store your coins in the wallet, that is custodial.
  • Non-custodial wallets are wallets where you do own your private key. Again, MetaMask is a great example.

All of these different types of wallets can store digital assets, like cryptocurrency or NFTs. However, only non-custodial wallets grant you access to decentralized applications in web3.

Why do you need a web3 wallet?

How to connect your web3 wallet to OpenSea
Connecting your wallet to OpenSea | OpenSea

Web3 wallets are the only way to buy and store digital assets on web3. They are also your key to the web3 kingdom – anytime you visit a web3 based application, you will need to connect your wallet first.

Say you want to buy an NFT on OpenSea. The first thing OpenSea will ask you to do is connect your web3 wallet. Your wallet authenticates your identity on the blockchain and allows you to make transactions on the platform.

Remember, a blockchain is a public record-keeping system. All web3 decentralized apps are built on the blockchain.

When you connect your wallet, your transactions become public and are recorded on the blockchain via your public key. Anyone can look up all transactions attached to your public key at any given time.

If you want to access web3, you will need a wallet. Period.

What is a seed phrase?

There is one more important component to web3 wallets: a seed phrase.

A seed phrase is a collection of 12 to 14 randomly generated words that act as an additional layer of protection to access your web3 wallet.

When you install the MetaMask chrome extension, you’ll receive a seed phrase. Keep it safe and don’t give it out to anyone, ever.

If you were to lose your computer, you could still recover your wallet and your funds using the seed phrase you were given. Think of it as a master password.

Your seed phrase unlocks your wallet. Your private key gives you access to the crypto in the wallet.

The downside? If you forget or lose your seed phrase, your wallet can never be recovered. Nobody, not even the company you downloaded the wallet from, knows what your seed phrase is except you.

Risks of using a web3 wallet

The security of web3 wallets is a hot topic. People have gotten millions of dollars worth of digital assets stolen from their hot wallets since they were first introduced to the market.

A few of the risks associated with using a web3 wallet include:

  • Losing your wallet password or seed phrase
  • Phishing attacks that pretend to be a company and get access to your funds
  • Web3 dApps have access to your personal data via your wallet when you connect it, which isn’t a problem – unless the dApps are unauthorized or illegitimate

The best way to protect yourself from cyberattacks is to follow digital security best practices and never share your seed phrase or private key with anyone.

How to get a web3 wallet.

Getting started with MetaMask - how to
Getting started with MetaMask | MetaMask

Web3 wallets have become much more accessible in recent years. It is now easier than ever to get a web3 wallet.

We’ll go through the process for MetaMask, the most popular non-custodial hot web3 wallet out there for cryptocurrency and NFTs.

  1. Go to the Meta Mask website. Click “Download Now”.
  2. Select whether you want a chrome extension (web) or a mobile app wallet. We’ll get the browser extension because it allows you to access web3 applications.
  3. Click “Install MetaMask for Chrome”
  4. A separate window will open prompting you to install the extension. Go through the process to get it on your computer. Once there, a MetaMask window will open. Select “Get Started.”
  5. You’ll now have 2 options. If you’re new to MetaMask, select “Yes, let’s get set up!”
  6. Go through the steps of setting up a password and receiving a seed phrase. Do not share your seed phrase with anyone. Write it down and keep it safe.

Congratulations! You’re all set up. You can now access your wallet at any time by clicking on the chrome extension and entering your password.

How to connect your wallet to web3 based applications.

Connect to OpenSea | OpenSea

Now that you have a web3 wallet, you can use it to enter web3 based applications. We’ll show you how to do it on OpenSea.

  1. Go to the OpenSea website. Click on the profile icon in the top right-hand corner of the screen.
  2. Select the mask you’d like to connect. We’ll go with MetaMask.
  3. You’ll receive a pop-up asking if you’d like to connect your wallet to this website. As always, only connect with sites you trust.
  4. If you trust the site, click “Next” and then “Connect”.
  5. Voila, you’re in!

An OpenSea profile will automatically be created for you after connecting. You can now explore and purchase NFTs that are stored in your digital wallet.

Check out our guide to NFTs for a complete breakdown of how to purchase NFTs on OpenSea.

Web3 wallets have come a long way

They are created to be accessible and easy to use, even for the most non-technical person. If you’re a casual crypto user, or even just crypto curious, then a MetaMask wallet is more than enough to get you started on your web3 journey.