What is a wallet?
Wallet is your window to the Ethereum world.
– it works just like your classical bank account, i.e. it allows you to hold and send ETH / DAI
– it allows you to interact with Ethereum-based applications (DApps)
Just as bank account numbers are used for transactions between bank accounts, the Ethereum account address is referenced when sending funds to the wallet.
Private key / Seed phrase
The main strength of decentralized wallet and difference between the existing banking system is a fact, that user own private key of his wallet.
– smart contract wallets enable additional security and recovery features for users
– wallet SDKs offer login and recovery features just like classical apps
– hardware wallets provide cold storage and are great for storing large amounts of money
There are many varieties of wallets out there to choose and with various features.
- Web3 wallets
Cons: You have to carry around your private key / seed phrase, what could be risky and dangerous and could be less user’s friendly
Download an extension / app -> write down the 12-word seed phrase and store it safely -> send ETH to your wallet (required in Metamask)
- Wallet SDKs
Cons: It’s security and privacy rely on a service provider, wallets only work for DApps that integrate them and their advanced functionalities could be priced
Create an account by using your e-mail / phone / password / Google or other accounts -> use supported DApps
Cons: Requires identity verification and you have to carry around your card and private key / seed phrase, what could be risky and dangerous
Download an app -> create a wallet -> apply for a card -> exchange ETH for fiat -> spend it wherever Visa is accepted
- Hardware wallets
Cons: Cost money and you have to carry around your device and private key / seed phrase, what could be risky and dangerous
Buy a device -> set it up -> write down the 12-word seed phrase -> store both on safe place
For more wallets and security resources please follow here.