Web3 is the third generation of the Internet and features the advent of ded concepts. Fewer controlling agencies, fewer gatekeepers and more empowerment to Internet users everywhere. Decentralised finance, or DeFi, applications form the cornerstone of the Web3 era. They take the form of normal websites but are powered by blockchain technology. To integrate with this new DeFi architecture, Web3 cryptocurrency wallets are required. Web3 wallets can handle the huge range of possibilities that come with DeFi, from token exchange to lending and staking.
The world of DeFi is ever-changing and as a result Web3 wallets have to keep pace. In this guide, we will point you to the best and most popular Web3 wallets currently available on the market.
Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific
provider, service or offering. It is not a recommendation to trade.
What are Web3 wallets?
Cryptocurrency wallets store digital assets. For most people, that means cryptocurrencies and non-fungible tokens (NFTs). Investors don't always need to have a wallet to purchase these assets. Common exchanges like Coinbase or Uphold offer the option of leaving assets on the exchange. This kind of wallet is referred to as a custodial wallet. The exchange controls the wallet, and the investor trusts the exchange to follow his or her instructions.
Web3 wallets work a little differently. True DeFi wallets are non-custodial and key-based; the owner of the wallet is in direct control of the access key. Investors control their own coins. There is no delegation of control to a centralised agency like an exchange.
Web3 wallets can support assets from multiple blockchains, allowing users to hold a variety of cryptocurrencies in a single location. The wallets are accessible and easily integrate with various decentralised applications (dApps).
Perhaps most importantly, DeFi wallets are anonymous. There is no requirement for KYC (Know Your Customer) verification. Assets can be transferred quickly and anonymously.
Web3 wallets provide users with self-custody and a great deal of flexibility. As the DeFi ecosystem grows, cryptocurrency wallets now need to be capable of not just storing cryptocurrencies but exchanging, collecting staking or yield farming rewards, storing NFTs, and much more.
A quick note – any cryptocurrency wallet doesn't actually store cryptocurrency directly. Cryptocurrencies, by definition, exist only on public ledgers. These are more commonly referred to as blockchains. Wallets store the private access keys to those cryptocurrencies. Put another way, cryptocurrency wallets don't store the cryptocurrency itself, but the information required for access to that cryptocurrency.
There are 2 examples that help to illustrate the ways investors use cryptocurrency wallets on Web3.
Brave Browser features a unique ad system, allowing users to generate Basic Attention Tokens (BAT) for viewing ads. That BAT can then be sent to various external cryptocurrency wallets. It could be stored in the local Brave browser wallet, sent to a cryptocurrency exchange such as Gemini or Uphold, or sent to a Web3 wallet.
Linking Brave to a hardware Web3-compatible wallet, like Ledger or Trezor, allows users to buy, sell and trade directly. There is no need for an exchange, and it offers complete security from browser to wallet and user to user.
Users who are more interested in NFTs than cryptocurrencies can link Web3 wallets, like MetaMask, to popular NFT marketplaces. OpenSea, Rarible and other marketplaces make integration easy, with all the convenience of a real-world art store. Users can browse, buy and instantly receive NFTs securely to their Web3 wallet.
So what are the most popular Web3 wallets? Well, there are hundreds of options to choose from, but these are some of our best picks from the current market.
List of Web3 wallets
MetaMask
One of the most popular wallets, MetaMask, was a Web3 wallet designed to work with decentralised applications built on the Ethereum blockchain. It is compatible with cryptocurrencies based on the Ethereum standard, known as ERC-20 tokens. Thanks to its success, the wallet can now be configured to work on other mainnet blockchains.
MetaMask functions as a browser extension that is compatible with Chrome, Brave and Firefox. It is a local wallet, meaning key information is stored directly in the user's browser rather than on a remote central server. More recently, MetaMask has been released as a mobile app, and now also allows users to build applications on top of it. It is almost like a mini-platform within a wallet.
Ease of use, an intuitive interface and the ability to stake selected currencies directly within the app make TrustWallet a popular choice. It's a fully compatible Web3 wallet that is easy to connect with cryptocurrency exchanges, such as Binance, and compatible dApps, like Uniswap or ENS (Ethereum Name Service).
TrustWallet provides a good entry point for cryptocurrency enthusiasts who may be branching out into the world of DeFi for the first time. It is compatible with the Ethereum blockchain and ERC-20 cryptocurrencies. It is also compatible with Bitcoin.
Argent
Argent is another Ethereum and ERC-20 compatible wallet but differentiates from other options due to its innovative use of smart contracts. One of the primary weaknesses with most DeFi wallets is the lengthy seed phrase. A seed phrase is a unique combination of words that is created when a user first opens their wallet. It works as a vital security feature. However, if the seed phrase is lost, it can be nearly impossible to regain access.
Argent solves that problem through a built-in smart contract that allows users to appoint Guardians. These Guardians can verify a person's identity and vote to reset access to the wallet, providing a secure back-up option for anyone who loses their seed phrase.
WalletConnect
WalletConnect is an open-source protocol for connecting multiple wallets. This can include other Web3 wallets, exchanges, dApps and more. The protocol makes things simple by relying on QR codes. A vast number of wallets and exchanges have integrated WalletConnect support. That includes Web3 wallets like Argent and MetaMask.
Coinbase Wallet
Coinbase is one of the largest and most popular cryptocurrency exchanges currently on the market. Recently the exchange developed its own DeFi wallet. Coinbase Wallet bills itself on security. Despite being a "hot" wallet that is connected to the Internet, Coinbase Wallet isn't hosted on the Coinbase exchange. It's a true non-custodial wallet, with access keys stored locally on the user's own browser.
Coinbase Wallet supports Ethereum, Bitcoin and a few other blockchains. However, it does not support a huge number of tokens. It makes up for that limitation by providing a friendly and easy-to-use interface that is secured with a number of features including 2-factor authentication.
Trezor
Wallets like Coinbase, Argent and MetaMask are examples of digital wallets. The keys to a user's assets are stored online, either locally or centrally. While most of these wallets are highly secure, they aren't the most secure method of storing cryptocurrency assets. For the greatest security measures, a user must turn to hardware wallets.
Also known as cold wallets, hardware wallets like Trezor store cryptocurrency keys offline. Trezor features a 24-word seed phrase with the option to add an additional password. Like most hardware wallets, the combination of seed phrase and password makes hacking into a Trezor wallet nearly impossible. Of course, users need to be careful not to lose the security information as recovering a Trezor wallet is impossible without both pieces of information.
When online, users can store and send cryptocurrency assets with Trezor just like an online hot wallet. Trezor supports over 1,600 coins and tokens.
Ledger is one of the most popular hardware wallets currently available. It works the same way as Trezor and safely stores the private keys for cryptocurrency assets offline in a robust physical device. Ledger wallets can be connected to buy, sell, transfer and trade cryptocurrency, and then disconnected for secure offline storage.
Using an accompanying app, Ledger wallets can be connected to DeFi dApps through other Web3 wallets. Ledger supports over 1,800 cryptocurrencies.
Brave browser is a wallet with a world of opportunity. The Brave web browser allows users to earn BAT (Basic Attention Tokens) for viewing select ads. BAT is then deposited to the built-in Brave browser wallet. That wallet can be integrated with various exchanges like Uphold, or even with a hardware wallet like Trezor or Ledger. BAT can also be spent directly within the Brave browser, sent to content creators such as YouTubers or a user's preferred blog. The idea behind Brave is to create an entirely new, crypto-based Internet ad economy.
Other Web3 wallets include Formatic, Torus, Portis, Authereum and Opera Browser.
Web3 compatible hardware wallets
Most Web3 digital wallets are compatible with hardware wallets, which offer an additional layer of security. For the most secure experience, consider pairing your Web3 digital wallet with a hardware wallet, which ensures your private keys stay secure and offline at all times.
Anyone using Web3 wallets to explore the world of DeFi faces 2 primary issues.
The first issue is security. Most experts recommend using a combination of methods to protect cryptocurrency assets, including both hot and cold wallets. Investors can also take extra steps to secure seed phrases and passwords, which is often the weakest link in securing private cryptocurrency keys.
The second issue is risk. Investing in cryptocurrency is just that – investing. DeFi provides an enormous amount of opportunity for investors willing to do the necessary study and research. However, there is a significant risk involved.
Our Verdict
Web3 wallets are useful gateways into the world of decentralised finance. Along with storing cryptocurrencies, they offer investors the ability to interact with dApps for the purposes of exchange, trading, staking, lending and borrowing. While useful tools, it is worth researching each option thoroughly. Using a combination of both digital and hardware wallets is likely the most optimum solution for added security.
Pros and cons of Web3 wallets
Pros
DeFi integration. Web3 wallets offer unparalleled access to the DeFi ecosystem.
Innovation. There are Web3 wallets that are now also serving as platforms for dApps.
Non-custodial. Users can remain in control of cryptocurrencies at all times.
Regulation. Web3 wallets are not governed by any regulatory authority. They require no KYC documentation.
Cons
Security. A combination of hot and cold wallets is required for advanced security.
Accountability. There is a constant risk of losing seed phrases and passwords. Without them, there are often limited recovery options.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly
volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of
future performance. Consider your own circumstances, and obtain your own advice, before relying on this information.
You should also verify the nature of any product or service (including its legal status and relevant regulatory
requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may
have holdings in the cryptocurrencies discussed.
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