What Is a Web3 Wallet & Why You Might Need One?

Gavin Wood, the co-founder of Ethereum, introduced the term “Web 3.0” in 2014. The majority of “Web2” that people recognize and use today is based on placing trust in a few private corporations. Influence belongs to a few corporations, such as Google, Apple, and Facebook. But some believe that the world will change to a modified decentralized version. Let’s learn what Web3 is all about and how it relates to finance with Exolix.

What is Web3?

While Web2 is mostly about corporate-run web servers, Web3 is a popular word to describe the notion of a better internet in the future. At its heart, Web3 employs blockchains, cryptocurrencies, and NFTs to return power to individuals by using a specific way of ownership. 

Let’s proceed to examine what Web3 is exactly. Web3 is based on decentralized control and ownership. Users can own “portions” of the internet by holding fungible assets like Bitcoin and non-fungible tokens (NFTs). 

For example, NFTs allow users to own assets such as art, images, coding, audio, gaming items, credentials, governance privileges, etc. NFTs operate on blockchains such as Ethereum, Polygon, Solana, etc. Ethereum, the most popular of them, is a distributed worldwide network that is most suitable for NFTs because of the development of smart contracts. However, today we see the emergence of new fast and convenient solutions. 

Web3 Main Concepts

1. Web3 is decentralized, which means this significant chunk of the internet will be managed and controlled by decentralized companies, and ownership will be divided among its users.

2. Web3 is a public blockchain, which means that each individual has access to it.

3. Web3 offers native transactions. Instead of using the archaic architecture of financial institutions and payment operators, the flow of funds runs through cryptocurrencies.

4. Web3 does not require trust. Rather than depending on third parties, it runs through incentives and economic systems.

Why is Web3 Significant?

• Ownership

Web3 provides you with the greatest level of control over your digital assets. It enables direct ownership via non-fungible tokens (NFTs). Nobody has the authority to deny you ownership.

• Web3 Development

Despite the undeniable advantages of Web3 in its present state, the environment nevertheless faces significant limitations that must be addressed for it to thrive. The system is constantly evolving.

• User Interface

The technological hurdle to utilizing Web3 is now excessive. People sometimes need to grasp security risks, handle clunky software platforms, and read complicated technical documents. Wallet operators, for example, are striving to address the issue, but more effort is required until Web3 is widely implemented. 

• Knowledge

Web3 presents new concepts that demand the adoption of conceptual frameworks that differ from those applied in Web 2.0. Web3 is not rigid but distinctive. Educational programs that instruct Web2 users about these Web3 concepts are critical to its further success.

Humans are just getting started with Web3, but as we work to create the system that will enable it, the prospects look promising.

What is a Web3 Crypto Wallet?

A Web3 crypto wallet is software that lets anyone securely transfer, receive, or hold cryptocurrencies without the involvement of a third party, such as a financial institution. The same can be applied to a common web crypto wallet, but Web3 is a new wallet generation designed for the future state of the internet. 

What’s the Importance of a Web Wallet to You?

A Web3 wallet is a key to having control over your money. It can keep your crypto in the same way that banknotes are held in a real, physical wallet. 

There are several wallet types available for various blockchains and cryptocurrencies but mostly their features are similar. A wallet is how you access your cryptocurrency. Web3 wallets are also required if you wish to transfer or receive cryptocurrency.

The very first misunderstanding we want to clarify is that a wallet does not directly store either currency or tokens. Your funds are carefully held and safeguarded in crypto-specific blockchain networks such as Ethereum for ETH, Bitcoin for BTC, and so on.

What is a Web3 wallet’s similarity to an online banking app on a smartphone that you rely on to access your fiat currency? The app (or webpage) does not store your money but rather serves as a link for you to handle your money stored within the bank’s system. In the Web3/crypto world the blockchain is the bank.

In the case of Bitcoin, for instance, once you buy some coins, they are securely held within the Bitcoin blockchain. The exact same is true for your ETH coins, which are securely held on the Ethereum network.

What is a Web Wallet’s Main Function? 

Your wallet can work like a bank account for multiple currencies. Assume you have a bank account where you may save your funds in several fiat currencies, such as USD, EUR, GBP, and so on. You can also store numerous crypto tokens in your Web3 wallet if it has several sub-accounts.

A wallet address is the same as the bank transfer details that identify a particular bank account for a certain currency. This implies your wallet will be assigned a unique BTC address, an ETH address, and so on.

A Web3 wallet stores your authentication data for the future Web3 world. Essentially, instead of knowing a variety of passwords to use different apps, you may experience this new universe using your own Web3 wallet. Furthermore, you may use web wallets to hold crypto, receive it, make transactions, and earn income on your holdings. It is the magic key to a more open and fair monetary system.

What are Web3 Wallets Used For?

• Getting access to your cryptocurrency

• Holding your crypto and NFTs safely

• Making financial transactions 

• Utilizing the numerous new Web3 services

How Can You Get a Web3 Wallet?

There are three choices for getting your own wallet:

1. You can go now and join one of the reputable crypto exchanges such as Exolix, Coinbase, Binance, etc.

2. You can install a Software Wallet.

3. You can purchase a Hardware Wallet device.

The Three Web3 Wallet Choices

1. Cryptocurrency Exchange

A cryptocurrency exchange is, as the name implies, a location that allows you to trade cryptocurrency. When you purchase your selected cryptocurrency, you can store it on the exchange and the corresponding wallet address will be linked to your account.

2. Software Wallet

A software wallet is typically designed to equip you with your personal independent wallet address for holdings and transactions. Lately, software wallets have begun to offer an increasing number of services: you can trade cryptocurrency (in collaboration with exchanges), swap them, and even send currencies to other wallets. 

Nevertheless, they provide fewer services than crypto exchanges since they are primarily devoted to storing assets and giving access to Web3 apps. Recently, a new breed of software wallets that are easier to use for beginners and feature even more capability than previously have emerged.

3. Hardware Wallet

The final alternative, which is actually recommended if you have a significant amount of crypto, is to get a Hardware Wallet. A hardware wallet is essentially a little gadget that you can plug into your laptop or smartphone to access your crypto holdings using the most protected method possible because the device is not connected to the internet. 

Ledger is considered one of the most prominent ones, having built and sold more than three million devices since its creation in 2014.

You can perform the very same things with a hardware wallet as you could with a software wallet. 

Key Takeaways

• The web wallet works similarly to a bank account, with distinct bank details (wallet addresses) for each currency you hold.

• A cryptocurrency exchange enables you to hold your crypto assets and provides a variety of services such as staking, loans, swapping, etc. You may also exchange crypto for fiat currency.

• Your coins are not stored in your Web3 (or crypto) wallet.

• Within the blockchain network, your coins are securely kept and completely protected.

A software/hardware wallet enables you to hold your cryptocurrency assets, perform basic operations (send, receive, convert), as well as access a variety of Web3 apps.