The only way for Web3 users to genuinely “possess” digital assets is to store them in a wallet. Therefore, while using wallets, a smooth user experience is crucial and one of the most important determining criteria when it comes to integrating new users. So, to assist your search for the best wallets, in this article, we’ll explain the various wallet types that are available in the Web3 ecosystem. Check out learncrypto.com to find out more about how these technologies —which support cryptocurrencies like Bitcoin and Ethereum— work to insulate digital assets from centralized collapse.
How to Choose the Right Wallet
You might already be aware that retaining digital assets in a Web3 wallet differs from using centralized exchanges for storage. In the latter case, a third party handles the processes of storing the digital assets for you. The importance of this dichotomy cannot be overstated; the distinction between these storage methods was clearly brought to light in the cryptocurrency market meltdown of the previous May.
Numerous centralized entities, previously believed to be trustworthy and secure, had serious financial difficulties and were forced to declare bankruptcy. Because of this, users of these centralized platforms lost access to the majority of the assets they had been assured they could always withdraw.
There are several varieties and sub-varieties of wallets available, and we’ve provided a summary of the benefits and drawbacks of each below:
Cold Wallets
Web3 users with significant amounts of diversified digital assets will usually prefer to keep some, if not most, of their assets in cold wallets. While every type of digital asset wallet is prone to malicious access, by analogy, keeping a cold wallet is closer to keeping your cash in a traditional wallet hidden away in your house while keeping a hot wallet —which we will touch more on shortly— is like carrying that same traditional wallet with you in your back pocket.
Cold wallets, also known as hardware wallets, are, thus, generally considered the more secure option because they are kept offline for the most part, whereas hot wallets are always online and, hence, prone to greater vulnerability. An example of a cold storage solution would be one that comes in the form of a physical USB drive that must be connected to a compatible device in order to be used; this ensures that your private keys and assets are safe and secure while not in use.
Hot Wallets
Unfortunately, because most exchange platforms are heavily reliant on smart contracts, you will probably need to use a hot wallet for most of your transaction and storage needs. Hot wallets are typically web-, mobile-, and desktop-based. The main benefit of using a hot wallet is based on the same principle as its main drawback: they are always online and easily accessible. Hot wallets can be further categorized by their underlying code.
NEAR Wallets
Created by the NEAR Foundation, NEAR wallets were previously maintained on the NEAR Foundation’s website. But, with NEAR’s continued efforts toward decentralization, the next step for the Foundation is to transition its website into a hub page for all NEAR-compatible. This way, NEAR wallet users, will have a greater degree of freedom to traverse the Web3 space. There are currently more than 30 NEAR-compatible wallet providers available on the market.
Aurora Wallets
For those who don’t know, Aurora is an Ethereum Virtual Machine (EVM). Aurora wallets have the same scalability, usability, and transaction speed as NEAR, together with a free membership program.
Conclusion
Stopping systemic, centralized failures from occurring is why the technologies behind digital wallets and cryptocurrencies —like trustless, open-source blockchain technologies, as well as open, audited smart contracts and bridges— were built in the first place. By skipping the middleman and using a wallet directly, Web3 users can protect themselves and their digital assets from centralized platform failures.
