For beginners in the crypto space, congratulations for venturing into the crypto world. You all made an amazing decision.
This article will serve as a guide to accompany rookies that are willing to understand concepts that concern the web3 wallet. So, if this is what you’re here for, you are at the right place.
Before delving into several concepts that you’ll encounter with the web3 wallet, let’s understand first, what a web 3 wallet is.
What is a web3 wallet?
A web3 wallet specifically store cryptocurrency, NFT’s and other digital assets. It has a user-friendly interface and can connect and easily interact with DApps (decentralized applications) on a variety of blockchains.
A very good reasons why a web3 wallet is advised for crypto traders is because of their safety. Nobody would like to build assets only to have it stolen from them. Web3 wallets provide security for its users assets while giving them complete control over their funds.
Concepts you should get familiar with before downloading a web3 wallet
Blockchain is a database system that’s decentralized. Typically, it is for sharing records with openness, accuracy and immutability across all its participants. It records the state of any type of information. This information can be money transactions but it also records any other form of information that could chage their state as time progresses.
A blockchain is maintained across various computers that are linked together via an open peer-to-peer network. Anybody can easily join this network. What this also means is that anyone can not only write but read information on the blockchain.
To ensure that a new recorded information is correct and not corrupt, older entries wouldn’t be manipulated or changed. Usually, a consensus mechanism makes it pretty difficult to cheat. Consensus mechanisms that are currently being used are Proof-of-Stake and Proof-of-Work. This whole process is termed “securing the network”.
The mind-blowing thing that has given people a shocker is that no central authority is required to ascertain that the information that’s recorded is valid. Thus, no bank would need to confirm any transactions from you to a friend.
Even as a newbie, there is a high tendency you must have heard about Ethereum and Bitcoin. If you’ve actually heard anything about both, then, you must have come across the term, “decentralization”. Although, this concept is not complicated, you need to pay a close attention to actually understand what it means. Thus, before explain what decentralization means, you should first understand what centralization entail.
What is centralization?
Centralization is simply an organizational structure where only one central entity has the ability to make decisions. Moreover, systems that are centralized are less accessible or open so in a way it limits one to certain information.
For clarity, let’s make an instance using social media platforms. All your information including your messages, videos and pictures are saved on servers that are centralized which are owned by the providers of that platform. They control access to all your information. So, even if they choose to use your data for something you don’t approve of, you may never know.
The same thing goes for our banks and monetary systems. if they feel the need to block a transaction you made, they’ll do so and there is little or nothing you can do about it.
If you’ve been paying close attention until now, you’ll remember that at the beginning of this article, it was said that a web3 wallet can connect easily with decentralized application. After the definition of decentralization is given, you’ll better understand what was meant by that.
According to Wikipedia, “Decentralization is the process by which the activities of an organization , particularly those regarding planning and decision making, are distributed or delegated away from the central, authoritative location or group”
Thus, systems that are decentralized have provides a better access to information. They are independent of any entity. Since there is no single point of failure, it would be difficult to take down a decentralized system.
Smart contracts are actually the technology that enables the web3 or better still, the web3 wallet. Blockchains are able to compute complex automated actions through smart contracts. Actions like these are written to the blockchain and once that happens, it cannot be undone.
What this mean is that smart contracts are very trust worthy as they do not require third parties. This is same for the web3 wallet.
NFT is short for non-fungible token. It is a unit of data that’s stored in a smart contract on a blockchain. To claritfy this, we’ll be breaking this definition into keypoints.
So, the NFT is –
- A unit of data (Token ID)
- Stored in a smart contract
- On a blockchain
What this shows is that things that are digital are unique and thus, can’t be interchanged. NFT’s are also a clear representation of deeds or assets.
What makes NFT’s popular in today’s world is because they can create digital files unique. These include images and videos. This allows artists to sell them as tradeable and scarce assets.
How to start!
Now that you have a good knowledge of basic concepts about web3 wallets, let’s submerge!
To engage in any activity “crypto wise”, you have to download and set up your web3 wallet. Centralized and decentralized wallets are available but as you already know, web3 wallets are decentralized so they are safer.
There are several web3 wallets you can choose from like the-
- Metamask wallet
- Coinbase wallet
- Trust wallet
- Argent wallet
- Rainbow wallet
As soon as you’ve created a wallet, you’ll immediately receive –
- A seed phrase also known as a secret recovery phrase
- A public-private Keypair
The address you’ll use to identify your wallet is your public key while your private key is a kind of code that should only be known by you.
Losing your seed phrase or private key means you’ll lose all your digital assets. So, it is very important to write it down somewhere to never forget.
You can only share your public key. Under no circumstance should you share your private key. Like mentioned before, it should be only known by you.
The web3 wallet was created to give crypto traders enough comfort and security. If you are a rookie, this article will certainly do you a lot of good and in less than no time, you’ll be making waves in the crypto space.