Ascend from crypto-curious to crypto-savvy by the end of this article.
In Part 2 below, we’ll cover a few more web3 wallet notes and a checklist guide for choosing the best wallet for you.
- What Crypto Wallets Will Do in the Future (Hot Take)
- The Differences Between Custodial vs. Non-custodial
- What It Means To Have Hot And/or Cold Wallet
- How Do You Want To Use Your Wallet? (Checklist Guide)
- Crypto Wallet Security Watch-outs
Mom always had my best interest in mind, but those lessons learned the hard way growing up have stuck with me well into adulthood. And it’s about time I returned the favor 👇
Picking up where we left off in Part 1…
Mom: Remember when you thought being a pro gamer had a future?
Rebellious Child: That’s a ~200-billion-dollar industry now 🎮…
Looking into our crystal ball 🔮, we see a future where crypto wallets can store rich data like your Starbucks loyalty program to past events you’ve attended — like, songs, books, essays, and mortgage contracts — the possibilities are near endless. It’ll be far superior to how we do things today and way more affordable.
Real Use Cases Are Developing
This may sound like an intrusion on your privacy. However, blockchain data has an emerging idea called zero-knowledge proof, where two people can verify information like date of birth without the platform knowing what the user’s birthday is 🤯.
Mom: Like how I claim you on my tax returns, right?
Rebellious Child: I moved out ten years ago; please stop that.
Custodial = a third party (like an exchange) holds the private keys to your proverbial crypto car. Think along the lines of leasing vs. owning the car. Custodial wallets are generally easier to use and are more convenient. However, they are less secure because the third party controls the private keys. There is no way to protect your funds if something goes wrong with the exchange.
Not your keys, not your wallet.
It is important to choose a wallet that is right for your needs. A non-custodial wallet might be better if security is your primary concern. A custodial wallet might be better if convenience is your primary concern.
Non-custodial = you have control. You have the keys to the proverbial car. There is no third party in charge of your money.
If you lose it, it’s gone forever. Sianarah. Kapeesh? This puts a lot of power in the hands of the user, both good and bad. People like to use centralized financial services like American Express because they offer amazing consumer protection. But that protection comes at a cost, like sky-high interest rates.
Non-custodial wallets are more secure because the user controls the private keys. However, they are less convenient and can be more challenging to use.
Speaking of non-custodial wallets. We’ve got you covered — try out our Zelus wallet. It’s super easy and quick to set up (less time than it takes to walk your 🐶 dog around the block).
Like custodial and non-custodial wallets, there are hot and cold crypto wallets. The term “hot wallet” refers to a wallet for regular, day-to-day transactions of NFTs, swapping cryptocurrency, and other web3 activities. Hot wallets can be both online-only or hardware wallets, like a Ledger.
Cold wallets are strictly for storing your most valued crypto assets long-term. It’s also a wallet that has no direct interaction with smart contracts (only wallet to wallet).
Similarly, cold wallets can be used as an online or hardware wallet. Typically, it’s associated with hardware wallets because when it comes to storing your high-value crypto assets, folks prefer to use a crypto hardware wallet for safekeeping.
Hot wallets are considered more convenient because you don’t have to deal with keeping track of or fear losing the hardware device.
Cold wallets also boast an added security layer because if someone steals your private keys, they would still have to sign transactions on your behalf. And only someone holding the physical wallet would be able to do that.
Pro tip: It’s common for web3 users to use a hot wallet for reloading on crypto or acquiring an NFT, and then quickly transfer the assets from their hot wallet to their cold wallet for safe keeping.
Mom: That’s a good question 🤔
Rebellious Child: Here is a quick checklist guide to help you find your starting point.
First things first, consider how you want to use your wallet. Ask yourself these questions:
- What drew you to this article or crypto in general?
- What are your primary goals for web3?
- Do you want to day trade?
- Do you want to collect NFTs?
- Do you want to play metaverse games?
Once you’ve decided what matters to you on your crypto journey, we can recommend a few choices.
In case you didn’t already know, we have a free Crypto 101: How to buy, sell, trade, and use your crypto from Zelus.
For NFTs, we recommend convenient, reliable wallets like ours Zelus (Obvi). You can quickly and easily view, store, watch, and listen to your favorite NFTs with the peace of mind that they’re safe and sound.
If you have a super high transaction volume, perhaps a custodial wallet would keep your blood pressure lower by opting for the added protection layer. Or, if you want to store your crypto assets over a long period without touching them, then a cold wallet might be for you.
Ex. If Polygon is a Layer 2 on Ethereum (Layer 1), Polygon is sort of like the offspring or child of Ethereum.
Unfortunately, most wallets haven’t made it easy when it comes to multiple-chain compatibility.
Mom: I have a Zelus wallet, but is it secure like my safety deposit box at the bank?
Rebellious Child: Well, you chose your web3 wallet wisely, but for many, it’s a crap shoot.
The most important thing to remember about crypto wallets is that they are not 100% secure. Hackers have been known to target crypto wallets to steal funds.
This is why choosing a wallet with security features like biometric authentication, third-party audits, offering bug bounties, and secret recovery phases is incredibly important.
And, actually, it might not be a horrible idea to print out your 12-word recovery phase and promptly head to the bank to place it in the safety deposit box. Best of both worlds.
If you liked this article, you will love what we’re Tweeting on the daily 👉 Twitter.
— ♥ the Z-team at Zelus
P.S. Share your experience explaining the ABCs of web3 to someone!