Published on July 22, 2022
The Best Web3 Wallets
How to choose the right Web3 wallet for NFTs, crypto, and dApps. We look at MetaMask, Coinbase, Rainbow, and more.
8 min read
There is no denying the growing popularity of cryptocurrencies, NFTs, and other tokens in the Web3 world. And with this surge of popularity and adoption comes the growth of the tools to support blockchain technologies. The constant innovation of Web3 tools is great for NFT collectors and traders, as it means the user experience continuously improves. Crypto wallets are a great example of this! There are many excellent Web3 wallets to consider, no matter which blockchain or application you intend to use. This guide will help you find the Web3 wallet best suited for your needs.
What is a Crypto Wallet?
Arguably the most important feature of crypto and NFTs is the freedom that these digital assets provide to their owners — freedom from higher institutions and the obligations that arise from them. It puts control of finance back into your hands.
In this sense, a wallet is like the utility belt of the Web3 world. Without one, there's not much you can do to interface with blockchain or digital assets. Whereas DeFi, crypto, and blockchain can otherwise be somewhat unclear, wallets function to provide a clear user interface and security to protect your assets. So pretty much, you'll need a crypto wallet to interact with anything related to blockchain tech. Especially if you want to buy or sell NFTs through an NFT marketplace.
Crypto wallets are used to secure, transfer, and store cryptocurrencies such as Bitcoin, Ethereum, and other tokens based on blockchain technology. However, as more Web3 enterprises pop up, the form of the Web3 wallet is also evolving.
Hot 🥵 or Cold 🥶 Wallet?
Crypto wallets can take different forms. First, there are cold, hardware-based wallets such as the devices created by Ledger and Trezor. The advantages here are that your digital assets are stored safely offline. Cold wallets are best utilized for long-term storage when you hold a crypto token or NFT that you want to keep secure for an extended time. It's also safer to keep your more valuable digital assets in cold wallets, as they are much less likely to be compromised by scams. We've got plenty of info on crypto and NFT security for you to check out.
Hot wallets, on the other hand, are software-based. These applications—included under the umbrella term 'decentralized apps' or 'dApps'—are connected to the internet via a browser extension or phone App. This does make them naturally less secure, but it also provides far more flexibility and ease of use for DeFi investors.
A hot wallet can be a desktop wallet, installed directly onto your computer, or a mobile wallet that is installed on your phone like any other App. There are also web wallets, where you interface directly through a website like you might log into your traditional online bank account. Each has its own use cases, with desktop wallets being the most secure from outside hacks and mobile wallets as both the most convenient and least sophisticated. We'll get into more detail below about the most popular hot wallets, but MetaMask and Coinbase are usually acknowledged as two of the most popular Ethereum-based Web3 wallets.
How Wallets Work
Who owns your crypto? That's not a rhetorical question. There's an oft-repeated phrase in the world of Defi, NFTs, and cryptocurrency: not your keys, not your crypto. You might also hear, not your keys, not your cheese! Or, not your keys, not your NFTs. There are many variations of the saying, but they all boil down to the same sentiment—if you don't have complete control of your crypto, it's not really yours.
The path to accessing any Web3 wallet is through two keys: public keys and private keys. Only with the control of both can wallets be kept secure from tampering, hackers, and thieves. Think of a public key like the address or P.O. box for your digital assets. This is the numerical code that can be shared with anyone you want to exchange with, sell to, or buy from.
Private keys, though, are the foundation of security in Web3. These are a code that only the owner should know. When your type of wallet provides you with a private key, it is imperative to keep it secure from any prying eyes, digital or physical. If someone else gets a hold of this key, or you forget and/or lose it, you can say goodbye to your wallet access and anything stored inside of it.
Completing any exchange over the blockchain requires both keys. However, in some cases, investors outsource the control of their private keys to the developers of their chosen wallet or dApp. Why? Wallets aren't just hot or cold. Smart investors must grasp the difference between custodial and non-custodial wallets.
Custodial wallets are ultimately the property of their developers. Crypto exchanges like Binance and Blockchain.com provide custodial wallets. This means that they hold private keys. This saves you the stress of managing this incredibly important and valuable piece of information, making custodial wallets easier to use. Users can simply login into their App like any other similar interface to access their digital assets.
That said, crypto experts are fast to point out that centralized apps and exchanges have been hacked before, and are antithetical to the true purpose of DeFi. Custodial wallets can be a good place to begin your NFT and crypto journey, but non-custodial wallets are growing more popular these days.
Non-custodial wallets give investors control of both their public and private keys. When creating your non-custodial wallet, you will generate your own private key seed phrases. Once it is in your hands, so is the responsibility of keeping it safe. As it stands, it's highly recommended to do research and find a non-custodial wallet to utilize.
So What is a Web3 Wallet?
The difference between a Web3 wallet and a crypto wallet is kind of like the difference between squares and rectangles. All crypto wallets are Web3 wallets, but not all Web3 wallets carry crypto.
In fact, the term Web3 wallet has developed to almost replace 'crypto wallet' as more utility appears. Beyond only storing cryptocurrencies, Web3 wallets can be used to transact and collect NFTs, interact with different blockchain platforms such as Ethereum and Solana, and, in some cases, create multiple wallets within one account to keep your digital assets organized.
Web3 wallet user interface is also designed to demystify your transaction history and asset portfolio. From intelligent investors to Web3 beginners, having this clarity at all times is incredibly important to ensuring your valuable digital assets are safe and where you need them to be.
What Are the Best Web3 Wallets?
As the Web3 space explodes with growth, the list of new dApps, blockchains, and all the different types of NFTs can become overwhelming. So, let's break down the best wallets to get you started on your magical Web3 journey.
MetaMask is arguably the most popular Web3 wallet currently in use. Constructed to flawlessly interact with the thriving Ethereum blockchain, it opens the door to countless NFT and dApps. It also has built-in functionality to keep your private key safe from every linked dApp. MetaMask is also useful for blockchains like Polygon, HECO, Harmony One, and more.
Another popular option is Trust Wallet. Like MetaMask, it provides access to the Ethereum blockchain and other blockchains such as Binance. Trust Wallet is specially optimized for mobile usage, so it's certainly a wallet to check out if you primarily utilize your phone for trading and collecting digital assets.
One of the newer Web3 wallets on the market, Rainbow developers focused heavily on aesthetic design and user interface. Rainbow is all about simplifying everyday Defi & crypto trading and helping the skeptical and newbies alike to discover dApps and NFTs on the Ethereum blockchain (it is important to note Rainbow is only for the Ethereum blockchain.)
Another Ethereum-only Web3 wallet is Argent. Their goal here is to assist users in staking and investing in the best Ethereum projects with ease. They also have a unique approach to security. Instead of being fully dependent on a seed phrase, users can appoint trusted family and friends to assist in account recovery.
This name may be familiar if you've ever purchased crypto. Coinbase Wallet is a separate entity from their coin exchange platform, but does offer unique functionality that is enhanced by the greater Coinbase infrastructure. For example, investors can access both DeFi liquidity pools and find the latest ICOs (Initial Coin Offerings), allowing a savvy user to get in early.
Find the Wallet That Fits You
Whichever wallet you choose, there are options that cater to your needs. Users can also create multiple accounts, using one wallet for one function, such as collecting NFTs, while another is utilized for holding digital assets for the long term. Web3 is all about customization and user optimization, so do some exploring and find the path that's right for you.