What is a Crypto Wallet?
Understanding the basics of crypto wallets
The world of cryptocurrencies has become increasingly popular over the years. With the rise of blockchain technology, the need to store your cryptocurrencies securely and reliably has become more crucial than ever. As you delve deeper into this exciting and rapidly-growing industry, chances are you will come across the term “crypto wallet.”
To navigate the cryptocurrency space, whether you’re a seasoned trader or a newbie, owning a crypto wallet is a must. But what exactly is a crypto wallet, and why is it important? In this post, we’ll cover the basics of crypto wallets that you need to know.
What is a Crypto Wallet?
Simply put, a cryptocurrency wallet is a digital wallet that allows you to securely store, manage, and transfer crypto assets. Unlike a physical wallet, which holds your cash and cards, a crypto wallet saves the passkeys you use to sign for your cryptocurrency transactions and offers the interface you need to access your crypto. Crypto wallets serve as the infrastructure that connects you to web3, the next generation of the internet that is powered by blockchain technology, which is why they are essential in the crypto space.
So how do they work? For first-time users, a cryptocurrency wallet typically generates a unique private key (similar to the password of your bank account) and a public key (similar to a bank account number) used for transactions. These wallets come in various forms, let’s take a closer look.
Basic Types of Crypto Wallets
Custodial Wallets vs. Non-Custodial Wallets
If you’ve used a crypto exchange before, you might know that some exchanges offer a wallet service. Using these wallets is similar to using a digital banking service where you enter your account name and password to access your assets. This is what we call a "custodial wallet," which is hosted by a third party that stores your keys for you. You may wonder, “Why do I need a crypto wallet when there are already exchanges and custodial wallets available?” While exchanges and custodial wallets offer convenience, saving you the hassle of remembering your private keys and the worry of losing them inadvertently, they are less secure than a non-custodial crypto wallet. Non-custodial wallets such as ONTO Wallet allow you to own and manage your private keys and cryptocurrencies. This significantly reduces the risk of hacks and thefts, as you remain in complete control of your private keys and funds.
Software vs. Hardware Wallets
Hardware wallets, which are similar to a USB drive, store your private keys offline on a physical device and provide an added layer of security compared to software wallets as they are not subject to hacks or online attacks. This type of wallet is generally considered the most secure, as it requires physical access to the device. On the other hand, software wallets such as MetaMask and ONTO Wallet, which include applications for desktops and mobile devices or can be used in-browser, can provide a more accessible and user-friendly experience without compromising on security.
Another type is paper wallets, which are just pieces of paper that have your private keys printed on them. It is regarded as one of the most secure forms of crypto storage because it is not connected to the internet, but the downside is that paper is easily lost, torn, or stolen.
Digital Identity and Ownership
Crypto wallets offer more than just a place to store and manage your cryptocurrencies; they can also serve as your passport to the wider Web3 world. In the crypto space, digital identity is important, and crypto wallets play a key role in determining your digital identity, as well as proving ownership over it. This is particularly true since digital identity is often linked to various blockchain-based technologies such as NFTs and DeFi. By owning your crypto wallet, you are in control of your own digital identity and can utilize it accordingly.
A prevailing trend in crypto wallets today is multi-chain support. The more public blockchains a crypto wallet supports, the larger its potential user base. However, for each new chain, a new wallet address is created, which can be quite cumbersome to manage. Is there a solution? Take ONTO Wallet as an example. Its decentralized identity (DID) framework, ONT ID, enables users to create a digital identity, which can be used to manage all wallets in the app. In other words, no matter how many wallets you create within ONTO Wallet, you only need your unique ONT ID to manage all your assets. With ONT ID, you can also fully control your data and identities.
Which Crypto Wallet is Right for You?
Choosing the right crypto wallet depends on your preferences and requirements. For crypto users, security is always their top concern. Although a hardware wallet could be the most secure choice, it lacks flexibility as it requires physical access. If you are a crypto veteran and prioritize privacy and a user-friendly experience, a non-custodial software wallet like ONTO Wallet would be your best option.
In conclusion, crypto wallets are an essential tool for anyone who wants to embrace the world of cryptocurrencies. Whether you’re buying, selling, or hodling, owning your crypto wallet ensures that your digital assets remain safe, secure, and under your control. So, if you’re new to cryptocurrencies or simply looking for a new wallet solution while having full control of your data and assets, be sure to check out ONTO Wallet.
About ONTO Wallet
ONTO is a DID-based gateway for a seamless Web3 experience. The best all-in-one option for securely managing your identities, data, and digital assets, ONTO allows you to manage your crypto assets (including NFTs), perform cross-chain swaps, readily access a variety of dApps, and learn everything important in real time via ONTO news feed.
With ONTO Wallet, users can create an ONT ID, a decentralized digital identity that enables one-click multi-chain wallet address creation and management and fully protects their private data through an encryption algorithm. Users worldwide can download ONTO Wallet now via onto.app or their mobile app store. Desktop users can also install ONTO Web Wallet for web browsers.