What is a crypto wallet used for?
Now that you know what a crypto wallet is, and have set up your crypto wallet successfully, what next?
Now that you know what a crypto wallet is [link to Metacommerce article “what is a crypto wallet”] and have set up your crypto wallet successfully [link to Metacommerce article “how to set up a crypto wallet”], what next? What if you still have questions about what a crypto wallet is used for? Read on to find out about all the different functions of a crypto wallet (hint: it’s more than just a tool that lets you access your cryptocurrency holdings).
What are the different functions of a crypto wallet?
Think about your traditional wallet. It holds your paper money, some coins and probably a few credit or debit cards or identification cards. Its main and only function is to hold your money. A crypto wallet’s function isn’t limited to just holding the private keys that allow you to access your cryptocurrency on the blockchain. Your crypto wallet has additional functions as well:
1. Writes transaction details on the right blockchain
A crypto wallet writes the transaction details that are required when transferring digital assets and it also creates a digital signature that proves ownership to your set of private keys. Since different cryptocurrencies can have different blockchains, your crypto wallet assists you in writing transaction details on the right network (ex. Ethereum and Bitcoin are not compatible with each other).
2. Proves ownership and track record
Your crypto wallet holds your private keys, which allows you to prove that you own a certain amount and type of cryptocurrency on the blockchain. A crypto wallet’s public address can also be queried by anyone who has it, providing them with a record of all the transactions that have occurred with that wallet. In this way, a crypto wallet not only proves your ownership, it also forms a part of your identity and track record on the blockchain. For example, if you say that you owned 2 ETH in 2017, this information is publicly available as long as your public wallet address is queried in search engines.
Why are these different functions important?
It’s important for a crypto wallet to serve multiple functions. These additional functions are important for your interactions with web3 platforms and allow you to carry the same identity with you across platforms without needing to create new accounts for each platform. By allowing you to keep control of your own online identity, crypto wallets are helping you keep control of and ownership over your own data in a way that isn’t possible in a web2 environment.
Think of your crypto wallet as an enhanced version of your traditional wallet. It has additional functions that help you interact with the right blockchain when making transactions with your cryptocurrency and it also allows you to prove your identity on web3 along with your track record of previous transactions. With these additional functions, your crypto wallet is your gateway to interfacing with web3 platforms and also provides you with more control over your own online identity.