Crypto wallets are how we send and receive cryptocurrency transaction as well as our access point into web3 applications. In this post I provide a basic overview of the function of crypto wallets, and the future of digital identity and social experiences created within wallets.

An important part of interacting with the crypto economy is having a safe way to store your cryptocurrency.

Unlike a physical wallet that holds your money, your crypto wallet is where you store your private keys (password) to access your cryptocurrencies that are stored on the public blockchain. This also allows you to send and receive cryptocurrencies.

Since your cryptocurrencies are stored on the blockchain, you can only access these currencies through your private keys. This proves you own the cryptocurrencies and therefore allows you to make transactions. You never want to lose your private keys, because there is no way to recover access if lost.

There are multiple types of crypto wallets, with different degrees of security and accessibility.

Hardware wallets (cold wallets) store the keys onto a thumb-drive device that is connected to the computer when you want to use the crypto. These are generally safe from malicious users hacking into but are not as functional and can be lost or destroyed.

This story of a man searching a UK dump for a hard drive he accidentally threw away that contains 8,000 bitcoins is a nightmare situation, but hopefully the lad succeeds in his years long search 🙏

As for the best hardware wallets, Ledger and Trezor are popular and trusted. This article also gives a good breakdown of top hardware wallets.

Online wallets (hot wallets) store keys in an app with easy access to make transactions and access applications. There are two types of online wallets that are either custodial or non-custodial.

Custodial wallets are wallets within a centralized institution that holds onto the private keys to ensure the safety of the funds. Examples of such are Coinbase and Binance. With non-custodial wallets, the users have full control over their private key with sole responsibility of protecting their funds.

Popular non-custodial online wallets include Coinbase Wallet and MetaMask. Both are reputable self-custodial wallets that are easy to use.

MetaMask offers the feature to integrate with hardware wallets for an extra layer of security. Coinbase wallet on the other hand can connect with the main Coinbase custodial exchange to store funds that are backed by insurance of a centralized entity if needed.

As for which is better, it depends on how much control the user wants to have over their coins. With non custodial wallets users are putting trust in the centralized entity to protect their money the same way as a bank.

After the recent FTX scandal, many users pulled their money out of centralized exchanges because of concerns of stability and security. Coin holders must make a decision on how much control and risk they want to take on with their wallets.

As shown below, there are lots of different wallets and wallets that are specific to blockchains. I may expand on different wallets and blockchains in a seperate post.

https://twitter.com/Blockworks_/status/1620075660701204482

Going beyond the basic function of crypto wallets, there are many innovative ideas and projects that are expanding the utilities of wallets.

As I got more into web3, my understanding and view on crypto wallets have changed. Crypto wallets are more than how you access your cryptocurrencies, it is now your digital identity that are used across dApps.

https://twitter.com/jay_drainjr/status/1479162409080090626?s=20&t=wIs7g0xY7PjFQNB6Avnzdg

Gaby Goldberg’s post titled “Stop Calling it a Wallet” expands on that thought, in that creators want wallets with more utility beyond transacting cryptocurrencies. 

Crypto wallets solve the issue of web2 data silos. Data on one platform cannot easily integrate into others. Consolidating your data into one wallet application that is interoperable between multiple applications is a more streamlined user experience. This data is also owned by the user and not stored on platforms. To quote A16z crypto investor Jay Drain Jr:

We’ve barely scratched the surface of what wallets can achieve but with the right composition of UX, infrastructure, and community, there’s endless potential for the crypto wallet to empower consumers to manage their digital identity in ways that were never possible with Web2 products.

If you are interested in the new conceptualizations of crypto wallets for digital identity, I recommend reading his complete piece here.

We will see many innovations in wallets in the coming years, with some focusing on creating fun social media-like experiences, gaming experiences, and some creating a secure identity/reputation validation.

As I further explore the technical infrastructure needed to build these applications, I may write more technical posts about what is happening under the hood.🤓 Platforms like Ceramic Network and Arweave are transforming how data is used and permanently stored. Wallet infrastructure will play a key role in developing the user experiences envisioned. 

It is exciting to imagine a user experience comparable to an email inbox or a Tumblr feed within a wallet. 

I’d love to hear some feedback on on Twitter (@alexgfisher124) as for what wallets you have experience with and what your thoughts are on the future of crypto wallets. 🙂

Crypto wallets are important for sending and receiving cryptocurrencies as well as accessing web3. Wallets are where cryptocurrencies are stored, transacted and is also how to access dApps. There are many different options for wallets, and the best ones are different based on your use cases.

Someone that is looking to buy and hold large amounts of cryptocurrencies would benefit from using a hardware wallet that is less likely to be penetrated by malicious users. Someone that is actively trading crypto or NFTs might like the ease of use of online wallets, especially as they become more robust in features.

I hope this gives a quick overview of the basic functions of crypto wallets and the outlook for the future use cases of wallets.

This is new technology that will go through lots of growing pains as it matures so it is important to do your own research on the best options for what you want to use cryptocurrencies for.

And don’t forget, keep your private keys private!

🤝

• Gaby Goldberg: Stop Calling it a Wallet

• Jay Drain Jr. : The Crypto Wallet: Unlocking Digital Identity

• Fawzi Itani: Crypto Wallets Are the Next Form of Social

• Empire Podcast: Wallet Wars: Rise of the SuperApp | Qiao Wang

Crypto wallets are how we send and receive cryptocurrency transaction as well as our access point into web3 applications. In this post I provide a basic overview of the function of crypto wallets, and the future of digital identity and social experiences created within wallets.

An important part of interacting with the crypto economy is having a safe way to store your cryptocurrency.

Unlike a physical wallet that holds your money, your crypto wallet is where you store your private keys (password) to access your cryptocurrencies that are stored on the public blockchain. This also allows you to send and receive cryptocurrencies.

Since your cryptocurrencies are stored on the blockchain, you can only access these currencies through your private keys. This proves you own the cryptocurrencies and therefore allows you to make transactions. You never want to lose your private keys, because there is no way to recover access if lost.

There are multiple types of crypto wallets, with different degrees of security and accessibility.

Hardware wallets (cold wallets) store the keys onto a thumb-drive device that is connected to the computer when you want to use the crypto. These are generally safe from malicious users hacking into but are not as functional and can be lost or destroyed.

This story of a man searching a UK dump for a hard drive he accidentally threw away that contains 8,000 bitcoins is a nightmare situation, but hopefully the lad succeeds in his years long search 🙏

As for the best hardware wallets, Ledger and Trezor are popular and trusted. This article also gives a good breakdown of top hardware wallets.

Online wallets (hot wallets) store keys in an app with easy access to make transactions and access applications. There are two types of online wallets that are either custodial or non-custodial.

Custodial wallets are wallets within a centralized institution that holds onto the private keys to ensure the safety of the funds. Examples of such are Coinbase and Binance. With non-custodial wallets, the users have full control over their private key with sole responsibility of protecting their funds.

Popular non-custodial online wallets include Coinbase Wallet and MetaMask. Both are reputable self-custodial wallets that are easy to use.

MetaMask offers the feature to integrate with hardware wallets for an extra layer of security. Coinbase wallet on the other hand can connect with the main Coinbase custodial exchange to store funds that are backed by insurance of a centralized entity if needed.

As for which is better, it depends on how much control the user wants to have over their coins. With non custodial wallets users are putting trust in the centralized entity to protect their money the same way as a bank.

After the recent FTX scandal, many users pulled their money out of centralized exchanges because of concerns of stability and security. Coin holders must make a decision on how much control and risk they want to take on with their wallets.

As shown below, there are lots of different wallets and wallets that are specific to blockchains. I may expand on different wallets and blockchains in a seperate post.

https://twitter.com/Blockworks_/status/1620075660701204482

Going beyond the basic function of crypto wallets, there are many innovative ideas and projects that are expanding the utilities of wallets.

As I got more into web3, my understanding and view on crypto wallets have changed. Crypto wallets are more than how you access your cryptocurrencies, it is now your digital identity that are used across dApps.

https://twitter.com/jay_drainjr/status/1479162409080090626?s=20&t=wIs7g0xY7PjFQNB6Avnzdg

Gaby Goldberg’s post titled “Stop Calling it a Wallet” expands on that thought, in that creators want wallets with more utility beyond transacting cryptocurrencies. 

Crypto wallets solve the issue of web2 data silos. Data on one platform cannot easily integrate into others. Consolidating your data into one wallet application that is interoperable between multiple applications is a more streamlined user experience. This data is also owned by the user and not stored on platforms. To quote A16z crypto investor Jay Drain Jr:

We’ve barely scratched the surface of what wallets can achieve but with the right composition of UX, infrastructure, and community, there’s endless potential for the crypto wallet to empower consumers to manage their digital identity in ways that were never possible with Web2 products.

If you are interested in the new conceptualizations of crypto wallets for digital identity, I recommend reading his complete piece here.

We will see many innovations in wallets in the coming years, with some focusing on creating fun social media-like experiences, gaming experiences, and some creating a secure identity/reputation validation.

As I further explore the technical infrastructure needed to build these applications, I may write more technical posts about what is happening under the hood.🤓 Platforms like Ceramic Network and Arweave are transforming how data is used and permanently stored. Wallet infrastructure will play a key role in developing the user experiences envisioned. 

It is exciting to imagine a user experience comparable to an email inbox or a Tumblr feed within a wallet. 

I’d love to hear some feedback on on Twitter (@alexgfisher124) as for what wallets you have experience with and what your thoughts are on the future of crypto wallets. 🙂

Crypto wallets are important for sending and receiving cryptocurrencies as well as accessing web3. Wallets are where cryptocurrencies are stored, transacted and is also how to access dApps. There are many different options for wallets, and the best ones are different based on your use cases.

Someone that is looking to buy and hold large amounts of cryptocurrencies would benefit from using a hardware wallet that is less likely to be penetrated by malicious users. Someone that is actively trading crypto or NFTs might like the ease of use of online wallets, especially as they become more robust in features.

I hope this gives a quick overview of the basic functions of crypto wallets and the outlook for the future use cases of wallets.

This is new technology that will go through lots of growing pains as it matures so it is important to do your own research on the best options for what you want to use cryptocurrencies for.

And don’t forget, keep your private keys private!

🤝

• Gaby Goldberg: Stop Calling it a Wallet

• Jay Drain Jr. : The Crypto Wallet: Unlocking Digital Identity

• Fawzi Itani: Crypto Wallets Are the Next Form of Social

• Empire Podcast: Wallet Wars: Rise of the SuperApp | Qiao Wang