Essential Knowledge for Newcomers in the Crypto World - Web3.0 Wallets

What are Web3.0 Wallets?

Web3.0 wallets are digital wallets specifically designed for the decentralized finance (DeFi) world. They can not only store, send, and receive cryptocurrencies and non-fungible tokens (NFTs), which are commonly known as cryptocurrencies, but also are key tools for accessing and interacting with the Web3 world, including blockchains, decentralized applications (DApps), and other crypto assets.

Compared with traditional wallets, Web3.0 wallets offer more advanced functions, especially the ability to interact with decentralized applications and smart contracts. Web3.0 wallets are also divided into centralized wallets and decentralized wallets. The main difference lies in the control of money. The control of decentralized wallets is in your own hands, and the wallet is just a display tool. For centralized wallets, the control of money is in the hands of the wallet tool, such as the wallets of cryptocurrency exchanges. As long as you think the exchange is completely trustworthy, you can rest assured to put your money in, which is the same as in our real banks. Essentially, banks are also centralized wallets, and bank cards are just a certificate.

Web3.0 wallets come in various forms, such as browser plugins, mobile apps, and hardware devices. There are many brands involved here, but from the perspective of security, they include cold wallets, hot wallets, etc. Later, I will introduce to you the differences among these wallets.

How to Download Web3.0 Wallets?

Web3.0 wallets are the gateway to the world of cryptocurrencies. So first, you need to have an application with relatively good security and usability that you are accustomed to. Remember, be sure to look for well-known and long-established wallet brands. Relatively speaking, their security is better. Carefully look at the app's reviews. If there are negative reviews related to security, be sure to stay away promptly.

Cryptocurrency wallets generally have web versions, desktop versions, mobile versions, etc. See which one you use frequently. Before downloading, be sure to pay attention to understanding these in advance:

Download from the official website: Download the wallet software for the operating system that suits your usage habits through the official website of the blockchain wallet. During the download process, be sure that your mobile phone or computer device is connected to a secure network to prevent downloading malicious software or viruses.

If someone provides you with an installation package or a third-party software provider found through a browser search, generally, it is recommended that you do not use it. For this non-official one, it is unknown whether a Trojan program will be implanted inside the program. After all, it involves money, so it's better to be safe.

After the download is complete, follow the software's instructions for installation. During the installation process, you may need to set a password or import the wallet, etc. There is a principle for testing the security of the wallet, which is to see whether the wallet supports offline establishment. If it supports offline establishment of the wallet, you can be much more at ease.

Offline means not being connected to the network. If a wallet supports offline establishment, at least it indicates that during the establishment process, it was not connected to the network, and the probability of stealing your sensitive information is much smaller. It can be considered conscientious. After the installation is complete, users can perform settings and personalization of the wallet software and set it to an interface you are accustomed to.

Create/Import an Account: According to the wallet usage prompt, create or import your mnemonic phrase. It is also recommended to do this offline. Mainly, we are scared by the excessive acquisition of private information by current Internet software.

Precautions for Using Blockchain Wallets

When creating a wallet, set a strong, easy-to-remember password and properly store the mnemonic phrase (seed phrase). This is the only way to recover the wallet. It is recommended to handwrite it. Remember that they are all English words and do not make a mistake.

After writing, import it again to avoid errors. Because Web3.0 wallets are different from banks and there is no customer service. If it is really lost, it cannot be retrieved in the future. The wallet tool does not have the authority to retrieve it.

At the beginning of 2021, Yiren, the founder of Shengcaiyoushu, had bitcoins worth eight figures stolen, which was a pity. The post-analysis showed that it was related to him saving the private key in a cloud note (a way of online storage).

In November 2022, Shen Bo, the founder of Distributed Capital, had his cryptocurrencies stolen, with assets worth 42 million US dollars. According to the analysis, the theft was caused by the leakage of the mnemonic phrase. If you still don't learn a lesson after seeing these, then there's nothing that can be done.

Manage the Wallet: This includes operations such as adding and switching networks, adding and removing tokens, importing and exporting accounts, etc. Later in the usage process, do not click on unfamiliar links. Just like in the real world now, many phishing websites come this way.

These Security Measures You Must Follow

Use a strong password: Set a complex password for your wallet, including upper and lower case letters, numbers, and special characters, and avoid using passwords that are easy to guess.

Properly store the mnemonic phrase: The mnemonic phrase is the key to recovering the wallet and accessing the funds. When creating the wallet, ensure that the mnemonic phrase is stored in a safe place, preferably offline, such as writing it on paper and storing it in a safe.

Use two-factor authentication (2FA): If two-factor authentication is enabled, even if someone knows your password, they cannot access your wallet without the second authentication factor.

Keep the software updated: Regularly check and update the wallet application and device system to ensure that your wallet software has the latest security patches.

Use a secure network connection: Avoid using the wallet on public Wi-Fi or insecure networks. Hackers may intercept your sensitive information through these networks.

Beware of phishing attacks: Be cautious when clicking on unknown links and attachments, especially those that appear to be from banks or wallet service providers. These may be phishing attacks trying to trick you into providing personal information.

Use a hardware wallet: For large amounts of funds, using a hardware wallet is the safest option because they are offline and less vulnerable to cyber attacks.

Back up the wallet: Regularly back up your wallet to prevent loss or damage.

Avoid using simple wallet addresses: Some wallet address generators allow custom addresses, but simple addresses are easily guessed and attacked. Generally, it is safer to use the default, randomly generated long addresses.

The advantage of Web3.0 wallets lies in their security and decentralization, not being controlled by others. But at the same time, users need to have certain technical knowledge and security awareness. In the future, Web3.0 wallets will be as frequently used as the payment tools you often use. So knowledge related to security must be learned in advance.

Frequently asked Questions

1.Is Web3.0 Wallet Secure?

The security of Web3.0 wallets is somewhat guaranteed, but not absolute. It usually adopts advanced encryption technology to protect your assets and information. For instance, the password you set is like a lock, and only by entering the correct password can you open the wallet. However, be careful.

If your password is too simple or you operate in an unsafe network environment carelessly, it may give bad guys an opportunity. Also, the mnemonic phrase is like the ultimate password for the wallet. If the mnemonic phrase is known by others, your assets may be at risk.

For example, if you write the mnemonic phrase on a piece of paper and this paper is picked up by others, then you are in trouble. Therefore, as long as you develop good usage habits, such as setting a strong password, not revealing the mnemonic phrase at will, and using it in a safe network environment, Web3.0 wallets are relatively secure.

2.How to Create a Web3.0 Wallet?

First of all, you need to choose a reliable Web3.0 wallet application or platform, such as MetaMask, etc. Then, follow the instructions of the platform and operate step by step. Generally, you will be asked to set a strong password. This password cannot be too simple.

Something like "123456" won't do. Next, a set of mnemonic phrases will be generated for you. This set of mnemonic phrases is very important, just like a backup of the password. Be sure to keep it well. You can write it on a piece of paper and then put it in a safe place. Don't lose it or let others see it. For example, you can put the mnemonic phrase in the safe at home.

3.What is the Mnemonic Phrase of Web3.0 Wallet?

The mnemonic phrase is composed of a group of random words, usually 12 or 24. It is the key to restoring your Web3.0 wallet. If you accidentally forget your password or change your device, as long as you have this set of mnemonic phrases, you can retrieve your wallet and the assets inside.

For example, the mnemonic phrase is like a master key. No matter what the situation is, as long as you have it, you can open the door to your digital wealth.

4.Which Assets Can Web3.0 Wallet Store?

Web3.0 wallets can store various digital assets. The most common ones are various cryptocurrencies, such as Bitcoin, Ethereum, Litecoin, etc. In addition, it can also store NFTs, which are like unique digital artworks or collectibles. For example, if you buy a particularly rare digital cat NFT online, you can put it in your wallet.

5.What if I Forget the Password of Web3.0 Wallet?

If you forget the password, don't panic. As long as you have kept the mnemonic phrase well, you can reset the password by entering the mnemonic phrase and retrieve your wallet.

But be sure to remember that if the mnemonic phrase is also lost, there is no way to retrieve the wallet and the assets inside. For instance, the mnemonic phrase is your only lifeline. If this lifeline is gone, then you can't retrieve your wealth chest.

6.How to Prevent Theft of Web3.0 Wallet?

To prevent theft, first of all, set a complex password, including letters, numbers, and special characters. Then, don't use the wallet in a public and unsafe network environment, such as free public Wi-Fi. Also, never trust those links and information of unknown origin to prevent your mnemonic phrase and password from being stolen.

For example, if someone sends you a link saying that you can click to receive free cryptocurrencies, this is likely to be a scam. In addition, regularly check your wallet transaction records to see if there are any abnormal situations.

7.Can the Same Web3.0 Wallet Be Used on Multiple Devices?

Some wallets are possible. You can use the same wallet by importing the previously saved mnemonic phrase or private key on a new device. But be careful, each import has certain risks, so make sure the operating environment is safe.

For example, if you have a Web3.0 wallet on your mobile phone and want to use it on your computer, you can achieve it by importing the mnemonic phrase, but make sure your computer has no viruses and malicious software.

8.Is Web3.0 Wallet Charged?

Some Web3.0 wallets themselves are free to use, but when conducting some operations, fees may be charged, such as transaction fees when transferring. The amount of the fee usually depends on the congestion level of the network and the transaction speed you set. For example, when transferring to the Ethereum network, if you want to receive the funds quickly, you may have to pay a higher fee; if you are not in a hurry, the fee will be relatively lower.