What is a Crypto Wallet?

“A wallet is not a wallet” - some Web3 philosopher.

To unlock Web3’s potential, you need a crypto wallet.

Similar to how browsers serve as your gateway to the internet, wallets serve as your gateway to interacting with crypto apps, also known as dapps.

Illustrating the role of traditional and digital wallets as you know them today may be helpful in understanding the nature of a crypto or Web3 wallet.

Traditional wallets are physical — you keep them in your purse or pocket and they store credit cards, cash, your driver’s license, maybe even a photo of a loved one. Digital wallets like your phone’s wallet, while intangible, also hold a variety of objects: credit card information, digital cash, concert tickets, boarding passes, and more.

Crypto wallets are a form of digital wallet designed for Web3. They help you manage permissions with whom you share your data, store cryptocurrency, NFTs, and more.

All wallets at their core—physical or digital—hold your authority so you can exercise it wherever you go.

How do you exercise your authority in Web3?

Your wallet is a means for storing and managing your identity, represented by digital keys. You need these keys to do anything on a blockchain—connect to a dapp, send or receive crypto, buy or sell NFTs, etc. Think of your wallet as a Web3 permissions manager, where you grant access to the apps that you want to use.

The moment your crypto wallet is created, a unique phrase is generated, known as your ‘Secret Recovery Phrase’ (SRP) or ‘seed phrase’. And yes, this phrase may seem cryptic, but really, it’s just a cryptographic master password that you need to keep secret. This is the seed from which your digital public addresses and private keys sprout—one pair for every account you generate in MetaMask.

The public address is the first way you identify yourself on the blockchain. It’s like your bank account number, whereas your private key (derived from your SRP) is more like the pin code to get into your bank account—you wouldn’t want to share that with anyone, and want to keep it safe, right?

Your crypto wallet manages both these keys to allow you to transact easily on the Ethereum blockchain. To take security to the next level, a hardware wallet adds an additional layer of security by storing your keys offline. You’ll learn more about these keys in the next lesson.