What is a crypto wallet?

Last Updated:
November 29, 2022
Picture of a crypto wallet

Crypto wallets are a vital tool to have when interacting with the web3 world. From buying NFTs to investing in that next big cryptocurrency, you will need to have a crypto wallet.

Introduction

Crypto wallets are a vital tool to have when interacting with the web3 world. From buying NFTs to investing in that next big cryptocurrency, you will need to have a crypto wallet. But what exactly is a crypto wallet and why do you need one? How does a crypto wallet work? Read on to get the answers to these questions, and more!

Bitcoin and Ethereum in a physical coin in front of a laptop with graphs displayed (Unsplash)

 

What is a crypto wallet?

Crypto wallets come in many forms, both digital (eg. MetaMask) and physical (ex. Ledger). Ultimately, no matter if your crypto wallet comes in the form of an icon on your phone or looks like a USB stick, crypto wallets are all designed to hold your private keys and to give you access to your cryptocurrencies (ex. Bitcoin, Ethereum). Crypto wallets are used to hold, send and receive cryptocurrencies in a safe and accessible way. Think about your crypto wallet as the digital version of your actual wallet, except it lets you access your digital currencies and assets instead of bills and coins.

Leather wallet with 3 credit cards (Unsplash)

 

Why are crypto wallets Important?

Crypto wallets provide a useful interface for the holders of cryptocurrencies. Unlike wallets that hold fiat currency, crypto wallets don’t actually store anything because all that data is stored on the blockchain. Crypto wallets instead hold your private keys which then give it access to any cryptocurrency on the blockchain. Crypto wallets give users a summary of their cryptocurrencies in one location, on a user-intuitive interface, without needing to code. Crypto wallets are more than just a virtual version of a traditional wallet. Crypto wallets form part of your identity in the web3 world. For example crypto wallets allow users to interact with decentralized apps (dApps) so its functionality is broader than traditional wallets that only hold currency. When we think about “ownership” in web3, it’s someone’s crypto wallet that comes first to mind.

Tips for using crypto wallets

  • Always keep your private keys safe and never share it with anyone! These private keys let you access your cryptocurrencies and anyone who has these private keys will also be able to access your cryptocurrencies.  
  • Do not confuse your public key with your private key. Public keys are open to anyone and are similar to your bank account number, which can be given to others if they want to send you cryptocurrency. Private keys are akin to your bank account password, and should never be shared. Always keep your private keys stored securely.
  • There are advantages and disadvantages to using a digital or a physical crypto wallet, and this choice depends on your individual trading needs. Factors you can take into consideration include: security features, user interface and user friendliness, fees, number of supported coins and the reputation of the wallet plus how long it’s been on the market.  
  • Do your research to determine which type of crypto wallet best meets your needs. Unless you trade frequently and have a small amount of cryptocurrency, it’s not a good idea to keep your cryptocurrency stored in a crypto exchange. Your cryptocurrency should be stored in a crypto wallet for better security. 
  • If you are interested in buying and selling NFTs, you will need to use a crypto wallet that is compatible with the NFT marketplace that you want to use. Be sure to check the NFT marketplace of your choice first to see which wallets they support.  

Next Steps

Now that you know what crypto wallets are and what they do, dive deeper into the different types of crypto wallets in Metacommerce’s article here [link to the “which crypto wallet is best” article]. Metacommerce is compatible with [list out wallets?] and more details can be found here [do we have a page that has this info?

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