WTF Is... A Crypto Wallet

Crypto wallets keep your cryptocurrency safe and accessible to Web3 applications. They also  allow you to send, receive, and spend cryptocurrencies like Bitcoin and Ethereum. But arguably most importantly, your crypto wallet is your digital identity on Web3. 

There are two main types of crypto wallets: Cold wallets and hot wallets. 

Hardware / Cold wallets are physical devices that you can hold in your hand. A popular example is a Ledger hardware wallet. Hardware wallets do not remain connected to the internet and are less prone to scams and phishing attacks. They provide an extra layer of security as you are required to sign for the transaction on the physical device. So, if you want to be able to interact with Web3 applications quickly — like when you’re buying an NFT — transactions can take a bit more time with hardware wallets. When used for only storage and you do not connect to any sites, this is called a cold wallet.

For More: Founding BFF Ariel Wengroff on crypto security

Hot wallets are software-based because they are an interface connected directly to the Internet and the blockchain. This means that hot wallets are more susceptible to attacks and scams. Make sure you only connect your wallet to Web3 applications you trust. If you’re being safe and careful, hot wallets provide a much easier way to interact with Web3 applications. A popular example of a hot wallet is Metamask. 

Whether you are working with a cold wallet or a hot wallet, there are three main components to every wallet: Your public key, your private key and your seed phrase. 

Your public key is your address that is visible to everyone. This is something that you can share with others and post publicly. You can think of this as the Web3 equivalent of your bank account number. 

Your private key is your signature on the blockchain and should never be shared with anyone. If your public key is your bank account number, your private key is your pin number. Your private key allows you to sign transactions as well as send and receive crypto. 

Your seed phrase is another component of your crypto wallet that should never be shared. It is a series of 12 words that unlocks your account. Never expose your seed phrase and keep it in a very secure place. 

So how do you go about creating a crypto wallet? Founding BFF Elan Halpern breaks that down for us here, using Metamask as an example:

This is not financial advice. If you don't want to spend money investing in crypto or Web3 — you don’t have to. The intent of this article is to help others educate themselves and learn.

Elan Halpern is a Founding BFF and Co-Founder of We3

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