Web3 Crypto Wallets: An Introduction
In 1834, the word 'wallet' as we use it today—a case to store paper currency—was coined in the U.S. Fast-forward a couple of centuries and the world of Web3 isn’t so different. If you have any cryptocurrency at all, you need a cryptocurrency wallet. However, these work a little differently than a physical wallet.
What’s more, there are Web3 wallets. These can hold your NFTs and digital identity, alongside your cryptocurrency, of course. Let us bring you up to speed on cryptocurrency wallets, along with what are the most commonly used Web3 wallets today.
Crypto Wallets: Private vs Public Keys
Cryptocurrency wallets function somewhat differently than the wallet in your back pocket because they only hold your assets’ public and private keys. The actual 'storage' for your cryptocurrency would be a blockchain— think BTC being stored on the Bitcoin network. Everyone’s balances are recorded on-chain for public viewing and verification.
Public keys are akin to your bank account number. You can share your public keys to accept cryptocurrency transfers. No issues there. Public keys are even part of cryptocurrency wallet addresses.
However, private keys are the equivalent of your bank account’s PIN number or password. Therefore, you should never disclose your private keys to anyone. They, along with your public keys, prove you’re the owner of a set of cryptocurrency.
So, how do you create a Web3 wallet? Sign up for a software-based one, such as Portkey, or purchase a hardware wallet (a device with Bluetooth and/or USB connectivity).
This brings us to our next point.
An Overview of the Types of Web3 Wallets
Modern crypto wallets are generally seen as Web3 wallets. As mentioned earlier, these programs or devices can hold not just your cryptocurrency, but digital collectibles and identity too.
Here are four of the most common types, and their unique benefits for users.
Custodial Wallets
These are beginner-friendly crypto wallets for individuals who are completely new to Web3, or folks just who want a solution which is extremely easy to use. Perhaps the most common custodial wallets are the ones you get when you register for an account with cryptocurrency exchanges. The registration and login process is usually very similar to a Web2 platform.
Examples of Custodial Wallets
Binance, Bybit, Coinbase, OKX, and Kraken.
Advantages
- You can manage your cryptocurrency swiftly and with minimal fuss, especially on cryptocurrency exchanges as their interface is trading-focused
- Signing up and in to your custodial wallet is easy; just use your email address or phone number to create an account on the wallet’s platform
- If you lose your custodial wallet’s login credentials, recovering them—and access to your assets—doesn’t take too long
Disadvantages
- Because you can log in to a custodial wallet with your social information, it compromises security badly
- Also, you don’t have full control of your tokens when you store them in a custodial wallet. That’s because the platform holds your private keys for you. As the saying goes: Not your keys, not your coins.
Non-Custodial Wallets
Conversely, non-custodial wallets grant you full control of your public and private keys. For the most part, these refer to desktop/mobile apps, browser extensions, or websites.
An example would be the aforementioned Portkey crypto wallet, built on aelf's AI blockchain. After registering, you need to memorise a seed phrase (sequence of 12/24 words) as a second layer of security.
Examples of Non-Custodial Wallets
Portkey, MetaMask, Phantom, Trust Wallet, and Ronin Wallet.
Advantages
- Most non-custodial wallets are free to create and own. Additionally, their user interfaces are easy to navigate.
- Because non-custodial wallets place a heavy emphasis on privacy and decentralisation, the verification process is quick and simple
- Although non-custodial wallets are created by tech or Web3 firms, under no circumstance do they have access to your private keys
Disadvantages
- Seed phrases are a double-edged sword. They provide an additional layer of security for your non-custodial wallet, but if you forget them and your login credentials, your assets are as good as gone.
- Along the same vein, customer support can be limited for non-custodial wallet platforms, meaning that you’ll need to be fairly self-reliant in troubleshooting issues
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How aelf Further Bridges the Gap Between Web2 and Web3
The Portkey Web3 wallet is powered by aelf’s AI blockchain technology, which enables seamless integration for both businesses and developers. Portkey serves as a simplified gateway into Web3, boasting a seamless Web2 experience which is secure and free.
That’s not all. Because aelf powers the Portkey wallet, Web2 projects can easily build dApps on the network by integrating the blockchain’s developer tools.
Whether it’s a mobile game, NFT marketplace, or DEX, aelf is the high-performance and low-cost Layer-1 blockchain forming the backbone of them all.
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Cold Wallets
Think of cold wallets as non-custodial wallets with tighter security. They’re synonymous with the term 'hardware wallet'; the aforementioned devices with Bluetooth/USB capabilities, which can store your cryptocurrency and digital assets offline. (i.e. keeping your assets in cold storage)
Examples of Cold Wallets
Ledger, SafePal, Trezor, Tangem, and Cypherock.
Advantages
- Hardware wallets are truly safe because they aren’t connected to the Internet. Hackers will not be able to detect and therefore, hijack your crypto wallet.
- There are a variety of offline wallets to choose from these days across a wide range of brands, features, and sizes
Disadvantages
- The price of cold storage for your assets could reach several hundred dollars. A portion of your funds reserved for buying cryptocurrency or digital collectibles has to be spared for a wallet first.
- An offline wallet is much less convenient since you have to carry it around for usage. As a result, you risk misplacing it.
Hot Wallets
The term 'hot wallet' can refer to either custodial or non-custodial wallets. The 'hot' means these Web3 wallets are connected to the internet, as opposed to 'cold' wallets which are offline.
The advantages and disadvantages of these software wallets have been covered extensively in the respective sections above. Scroll up to learn more about them!
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In Closing
Whether you’re completely new to Web3 or a years-long cryptocurrency veteran, it’s important to know what wallet options you have for your unique purposes.
One that’s seriously worth considering is Portkey, an Account Abstraction (AA) wallet built on the high-performance Layer-1 aelf network. Signing up with your email address, phone number, or social media account takes just a few minutes. Additionally, there are zero upfront or subscription fees for using Portkey.
Portkey further eases your transition from Web2 to Web3 thanks to its effortless cryptocurrency trading functionality. All you need to do is to link your credit card or make a bank transfer. No bridging or swaps required.
And once your balance is opened, you can start benefiting from Portkey’s multi-chain support. Manage your identities and assets across multiple blockchains with ease, including aelf, Ethereum, and EVM chains.
Ready to leap into Web3 the easy way? Check out the Portkey crypto wallet now!
*Disclaimer: The information provided on this blog does not constitute investment advice, financial advice, trading advice, or any other form of professional advice. aelf makes no guarantees or warranties about the accuracy, completeness, or timeliness of the information on this blog. You should not make any investment decisions based solely on the information provided on this blog. You should always consult with a qualified financial or legal advisor before making any investment decisions.
About Portkey
Portkey: Zero-Barrier Entry Into Web3
Portkey simplifies your connection to the Web3 world with its cutting-edge ZK social logins and ZK social recovery, offering a zero-barrier entry for users. Integrating into the Telegram ecosystem, Portkey seamlessly bridges Web2 users to Web3 through blockchain, leveraging advanced zero-knowledge technologies for privacy and security without compromising convenience.
Built on the high-performance AI layer 1 blockchain platform aelf, Portkey provides a smooth transition and an enhanced user experience, setting new standards in the realm of Web3 digital wallets.
Stay connected with the Portkey community at:
Website | X | Telegram | Discord
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