What is a web3 wallet? Your complete guide in 2025

Written by Alchemy Team

Reviewed by Lisa Ma

Published on April 16, 202512 min read

---

What is a web3 wallet?

Before getting into what a web3 wallet is — think about what your physical wallet does. It holds your cash, ID cards, maybe a photo or two. Web3 wallets do all that in the digital realm, but so much more.

Web3 wallets have set a new industry standard in creating new ways to own and monetize our content, identity, and assets as we move towards the next generation of the internet. Simply put, web3 wallets are a way to use hardware or software not only to access funds, but to effortlessly interact with decentralized applications (dApps), serve as a gateway to bankless financial services, collect NFTs, create onchain identity , collaborate with communities, and provide substantially more use cases beyond the scope of the traditional wallets we have today.

Just like how people have a physical wallet to store paper money, these wallets help store access to digital assets and enable users to interact with dApps, all without a middleman.

How web3 wallets work

Web3 wallets might seem like magic, but they're actually built on a simple cryptographic concept: key-pairs.

• Public key: This is essentially the wallet's address – like an email or mailing address that anyone can know and use. It's mathematically derived from the private key (more on that in a sec).

• Private key: A secret code – a complex string of numbers and letters that proves ownership. Think of it like the password to end all passwords. Unlike regular passwords though, you can't reset this one if forgotten!

• Seed phrase: The private key’s recovery mechanism. A human-readable back-up (usually 12-24 random words) that can be used to regenerate your private key. Must be stored securely but accessibly — if lost, there will be no way to regain access to the wallet.

When you perform an action with your web3 wallet, here's what happens:

1. Transaction request: You initiate an action (sending crypto, minting an NFT, etc.)

2. Transaction creation: Your wallet creates a digital message with all the transaction details (recipient, sender, amount, etc.)

3. Digital signing: Your private key signs this message, proving it came from you

4. Broadcast: The signed transaction is broadcast to the blockchain network

5. Validation: Network validators confirm the transaction is legitimate

6. Confirmation: The transaction is added to the blockchain permanently

The whole process usually takes seconds or minutes, depending on network traffic – a far cry from traditional bank transfers that can take days!

The evolution of web3 wallets

As the entry point for users to onboard and interact onchain, web3 wallets have undergone massive shifts since their inception.

1st generation: basic crypto storage (2011-2015)

Back when Bitcoin was still under $100, wallets were downright primitive. Command line interfaces were super common. Simply sending Bitcoin required serious technical knowledge, and mistakes could mean losing everything. Nobody was thinking about dApps or NFTs.

2nd generation: multi-chain support & browser extensions (2016-2021)

As the ecosystem expanded, wallets evolved to support multiple blockchains and integrated browsers for interacting with decentralized applications. Ethereum launched, bringing smart contracts that could do way more than just transfer coins. Suddenly wallets needed to handle multiple types of assets and interact with decentralized applications.

MetaMask's launch in 2016 was a game-changer. No more copying and pasting long strings of code – you could actually browse dApps like normal websites. Still, seed phrases remained a huge pain point, and explaining gas fees to newcomers? Nearly impossible.

Today: smart wallets (2022-now)

Now we're seeing the next evolution with smart wallets leveraging account abstraction. It's tech jargon, but what it means is simple: wallets are getting smarter about hiding all the complex blockchain operations from users. They’ve enabled a ton of things like —

• Social recovery: Allow wallet recovery through trusted contacts instead of seed phrases

• Programmable features: Set spending limits, create multi-signature requirements, and other features

• Batched transactions: Executing multiple operations in a single transaction to save on fees

Want to see what smart wallets can do? Try the demo, check out the docs, and start building!

Types of web3 wallets

There are basically 3 main types builders will encounter: custodial, non-custodial (self-custodial), and smart wallets. Each has its place depending on what you're trying to build.

Custodial wallets

In practice, this means:

• You log in with a username and password, just like any website

• If you forget your password, no problem – just reset it

• They usually require identity verification (KYC) because they're handling your money

• From a developer perspective, you'll typically need to use their specific APIs

They're great for beginners but come with tradeoffs we'll get into later. Some popular examples of custodial wallets include Coinbase, Binance, and Kraken.

Non-custodial wallets

Non-custodial wallets (sometimes called self-custodial) put you in complete control. There's no middleman between you and the blockchain – which is both liberating and terrifying.

These wallets revolve around:

• A public key that creates your wallet address (what people see)

• A private key that never leaves your device (your ultimate proof of ownership)

• A seed phrase – those infamous 12-24 words that can recover your wallet

Some popular examples of non-custodial wallets include MetaMask, Phantom, and Trust Wallet.

Smart wallets

Smart wallets represent the newest evolution, powered by account abstraction. They're essentially programmable wallets with rules enforced by smart contracts.

• Eliminate single points of failure through multi-signature validation and configurable security policies

• Simplify onboarding and transaction flows dramatically to feel more web2-like with gasless transactions and batched

• Provide multiple recovery methods beyond seed phrases, dramatically reducing the risk of permanent asset loss

• Programmable access controls like spending limits, whitelisted addresses, and time-locked restrictions

Get started with smart wallets. Try the demo, check out the docs, and start building!

How to choose the right web3 wallet

Picking a good onchain wallet in 2025 is way more complicated than it used to be. These aren't just digital key-holders anymore - they've turned into full-blown gateways to everything in the decentralized world. Your wallet choice matters hugely because it's the first thing users interact with when they use your app.

The whole wallet landscape got shaken up when account abstraction finally took off last year. Now we've got all these new options that actually manage to be secure AND user-friendly (something that seemed impossible back in 2023!). After helping thousands of teams integrate wallets into their product, choosing the right wallet comes down to three main questions:

1. Who's your audience? Are they crypto natives who already have web3 wallet, or are they complete web2 users who don't know Ethereum from Elrond? The gap between these groups is massive and should drive your decision.

2. Which blockchains matter to you? Some wallets only work with Ethereum, others only with Solana, and some support multiple chains. Make sure your wallet choice aligns with the networks your app needs to interact with.

3. What features do your users need? Do you really need multi-sig capabilities? Will your users benefit from social recovery? When will they need these things in the user journey?

Smart wallets provide advanced security with better UX

Smart wallets use account abstraction to offer security features and UX improvements that old-school wallets just can't match. They've been gaining serious traction for good reason. Smart wallets can be broken up into two different types: external smart wallets and embedded smart wallets.

External smart wallets

These smart wallets are powered by established brands in web3 and will involve integrating them into your app through SDKs.

1. Safe (formerly Gnosis Safe)

Key Features:

• Multi-signature security requiring customizable approval thresholds

• Transaction batching for gas optimization

• Social recovery options for improved key management

• Role-based permissions for team access

• Cross-chain support across major EVM networks

Best For: Teams, DAOs, and projects managing shared treasuries

Developer Integration: Comprehensive SDK with well-documented APIs

Supported Networks: Ethereum, Polygon, Arbitrum, Optimism, Base, and 10+ additional EVM chains

2. Argent

Key Features:

• Guardian-based social recovery system that eliminates seed phrase dependency

• Daily transaction limits for enhanced security parameters

• Integrated DeFi dashboard for yield opportunities

• Zero seed phrases required for account recovery

• One-click staking across multiple networks

Best For: Users seeking enhanced security without seed phrase complexity

Developer Integration: Clean API with expanding documentation

Supported Networks: Ethereum, StarkNet, zkSync Era, Optimism

3. ZenGo

Key Features:

• Biometric authentication for wallet recovery mechanisms

• MPC (Multi-Party Computation) technology eliminating single points of failure

• Web3 firewall (ClearSign) for transaction protection

• 24/7 in-app support for user assistance

• Built-in crypto rewards program

Best For: Security-focused users who prefer modern recovery methods

Developer Integration: Limited but improving documentation

Supported Networks: Bitcoin, Ethereum, Polygon, Binance Smart Chain, Avalanche, Solana

Embedded smart wallets

However, it's worth highlighting a popular implementation that's driving significant growth onchain — embedded smart wallets.

Embedded smart wallets represent the cutting edge of wallet technology, offering several key advantages:

• Invisible integration: These wallets operate seamlessly within your application's interface

• Brand consistency: Maintain your app's look and feel without redirecting to external interfaces

• Simplified onboarding: Users can create wallets with familiar authentication methods (email, social login)

• Gasless transactions: Sponsors can cover gas fees for improved user experience

• Enhanced conversion rates: Removing traditional wallet friction points significantly increases user adoption

For developers, embedded smart wallets offer the ability to create truly native experiences while maintaining the security benefits of account abstraction. These solutions can be implemented through several SDKs designed specifically for developers looking to build wallet functionality directly into their applications.

Implementation considerations:

• Requires server-side infrastructure for key management

• Balance needed between custody assistance and security

• May require additional regulatory considerations depending on implementation

Non-custodial wallets

Non-custodial wallets give users complete control over their private keys and assets, making them the standard choice for users who prioritize true ownership.

5. MetaMask

Key Features:

• Most widely adopted Ethereum wallet with 30M+ monthly active users

• Extensive dApp compatibility across the ecosystem

• Built-in token swaps through aggregation protocols

• Portfolio dashboard with comprehensive asset tracking

• Hardware wallet connectivity for enhanced security

Best For: General onchain users requiring broad compatibility

Developer Integration: Excellent documentation and widespread support

Supported Networks: Ethereum, Polygon, Arbitrum, Optimism, and all EVM-compatible chains

6. Phantom

Key Features:

• Leading Solana wallet with expanding multi-chain capabilities

• Well-designed NFT gallery with metadata display

• In-wallet token swaps with competitive rates

• Staking interface for Solana validators

• Connection to hardware wallets for additional security

Best For: Solana ecosystem builders and NFT collectors

Developer Integration: Strong Solana integration tools

Supported Networks: Solana, Ethereum, Polygon

7. Rainbow

Key Features:

• Thoughtfully designed user interface with intuitive navigation

• Exceptional NFT support and visualization tools

• Trading and bridging functionality with optimized routes

• Real-time gas fee monitoring and recommendations

• Community-oriented features and personalization options

Best For: Design-conscious users and NFT enthusiasts

Developer Integration: Good documentation with responsive support

Supported Networks: Ethereum, Polygon, Optimism, Arbitrum, Base

8. Trust Wallet

Key Features:

• Multi-chain support extending to 65+ blockchain networks

• Strong mobile-first approach with intuitive design

• Integrated DEX and DApp browser functionality

• Staking support for proof-of-stake assets

• Recently released browser extension for desktop access

Best For: Mobile-first users requiring multi-chain flexibility

Developer Integration: Comprehensive SDK with Binance ecosystem advantages

Supported Networks: 65+ blockchains including Ethereum, Solana, Binance Smart Chain, Polygon

Custodial wallets

Custodial wallets manage keys on users' behalf, offering familiar login experiences and recovery options similar to traditional web applications.

12. Coinbase Wallet

Key Features:

• Backed by established US exchange with regulatory compliance

• Username/email recovery options for simplified access

• Integrated fiat on/off-ramps with banking connections

• Streamlined interface designed for mainstream adoption

• Support for major NFT marketplaces and collections

Best For: Beginners and those prioritizing recovery options over self-custody

Developer Integration: Well-documented API with established standards

Supported Networks: Bitcoin, Ethereum, Solana, and 160+ cryptocurrencies

13. Binance Wallet

Key Features:

• Integration with high-liquidity exchange infrastructure

• Cross-platform synchronization across devices

• Extensive token support with emphasis on BNB Chain

• Trading functionality accessible directly through wallet

• Staking and yield-generating features for passive income

Best For: Active traders within the Binance ecosystem

Developer Integration: Comprehensive for Binance-focused projects

Supported Networks: Bitcoin, Ethereum, BNB Chain, and major networks

14. Kraken Wallet

Key Features:

• Security-focused architecture from established exchange

• Regulated custody solution with compliance emphasis

• Insurance protection covering certain deposit types

• Clean interface with guided user experience

• 24/7 support availability for issue resolution

Best For: Security-conscious institutional users and beginners

Developer Integration: Limited but reliable API

Supported Networks: Bitcoin, Ethereum, and 120+ cryptocurrencies

15. OKX Wallet

Key Features:

• Multi-chain functionality from established exchange platform

• Unified access to DeFi, NFTs, and GameFi applications

• Integrated cross-chain bridge reducing friction

• Multi-language support for international users

• MPC technology option for enhanced security models

Best For: Global users requiring language support and trading integration

Developer Integration: Developing documentation with MPC capabilities

Supported Networks: Support for 50+ blockchain networks

Web3 wallet security for users

Web3 wallets hold valuable digital assets and are a prime target for hackers and scammers. Just as you wouldn't leave your physical wallet unattended in a public place, your digital wallet deserves serious security consideration. Here are essential practices to keep your crypto assets safe:

Essential Security Practices

• Safeguard private keys at all costs: Your private keys are the ultimate access to your wallet. Store them in secure, offline locations, and never share them with anyone – no legitimate service will ever ask for them.

• Enable two-factor authentication (2FA): Add an extra security layer whenever possible, particularly for custodial wallets. Authenticator apps are preferable to SMS-based 2FA, as they're more resistant to SIM-swapping attacks.

• Keep wallet software updated: Security vulnerabilities are constantly discovered and patched. Running outdated wallet software is like leaving your door unlocked. Enable automatic updates when available.

• Consider hardware wallets for significant holdings: Hardware wallets like Ledger or Trezor store private keys offline, making them virtually immune to remote attacks. They're worth the investment for anyone holding substantial crypto assets.

• Be vigilant against phishing: Sophisticated phishing attacks target crypto holders constantly. Always verify URLs, be suspicious of unsolicited messages, and access wallets only through official websites or apps – never click links from emails or messages.

• Use separate wallets for different purposes: Maintain a high-security "cold" wallet for long-term storage and a separate "hot" wallet with smaller amounts for regular transactions. This compartmentalization limits potential losses.

• Verify transactions before signing: Double-check addresses, amounts, and contract interactions before approving any transaction. Smart contract interactions can be particularly dangerous if you don't understand what you're approving.

• Backup your seed phrase properly: Write seed phrases on paper or stamp them in metal (never store them digitally), create multiple copies, and store them in secure, distributed locations – preferably fireproof and waterproof.

Common Wallet Security Pitfalls

• Taking screenshots of seed phrases: This leaves your recovery phrase vulnerable to cloud backup breaches or malware.

• Storing keys in cloud services: Never store private keys or seed phrases in email, cloud storage, or password managers that sync online.

• Sharing screen during wallet setup: Be cautious about video calls or screen sharing when setting up wallets or conducting transactions.

• Ignoring small test transactions: When using a new wallet or address, send a small amount first to verify everything works correctly before sending larger amounts.

• Clicking suspicious links: Avoid connecting your wallet to unfamiliar websites, especially those promising free tokens or giveaways.

By following these security practices, you can significantly reduce the risk of unauthorized access or loss of your digital assets.

Frequently asked questions (FAQs)

What is a web3 wallet?

A Web3 wallet is a digital tool that lets you interact with blockchain networks. Unlike regular financial apps, Web3 wallets do a bunch of things at once: they store your crypto and NFTs, connect you to dApps, verify who you are digitally, and let you make transactions without middlemen like banks.

Think of a Web3 wallet as your personal gateway to the decentralized web – kind of like how a browser is your gateway to the regular internet, except your wallet also holds all your digital stuff.

What's the difference between custodial and non-custodial wallets?

The difference comes down to who controls the private keys – the cryptographic codes that prove ownership and authorize transactions.

Custodial wallets:

• Someone else (usually an exchange like Coinbase) holds your private keys

• You log in with a normal username/password like any website

• Forgot your password? You can reset it.

• The company could potentially freeze your assets or get hacked

Non-custodial wallets:

• You control your private keys – period

• No company can mess with your assets

• Protected by a seed phrase (those 12-24 random words)

• Lose your seed phrase, lose access to your assets

• True ownership but way more responsibility

Put simply: custodial wallets are like keeping your money in a bank, while non-custodial wallets are like keeping your money in a personal safe where only you have the combination.

What are some popular Web3 wallets?

There's a ton of wallet options out there. Here are the ones many people use:

Popular non-custodial wallets:

• MetaMask: The most widely used Ethereum wallet (browser extension and mobile)

• Phantom: Leading wallet for Solana (browser extension and mobile)

• Trust Wallet: Mobile-focused wallet supporting multiple blockchains

• Ledger: Hardware wallet for maximum security, paired with Ledger Live software

• Rainbow: User-friendly Ethereum wallet with excellent NFT support

Popular custodial wallets:

• Coinbase: America's largest crypto exchange with integrated wallet functionality

• Binance: Global exchange with extensive wallet features

• Kraken: Established exchange known for security

The "best" wallet depends entirely on your specific needs, technical comfort level, and the blockchains you plan to use.

How do I create a Web3 wallet?

Setting up a wallet isn't rocket science, but it does vary depending on which one you pick:

For browser wallets (MetaMask, etc):

1. Go to their official website (double check the URL!)

2. Download the extension for Chrome or whatever

3. Follow the setup steps to create a new wallet

4. Secure your seed phrase

5. Set a secure password

For mobile wallets:

1. Get the app from the App Store/Google Play

2. Hit "Create New Wallet"

3. Write down seed phrase somewhere safe

4. Set up a PIN or face/fingerprint login

For hardware wallets:

1. Buy direct from the company (not from Amazon or some rando)

2. Download their companion app

3. Follow the setup instructions

4. Store seed phrase securely

5. Install whatever blockchain apps you need

The most critical step in any wallet creation is properly securing your seed phrase – this is your ultimate backup and should be treated with extreme care.

How do I use a Web3 wallet?

You might use your web3 wallet for a ton of different things. Here’s a few things you might do:

Receiving crypto or NFTs:

1. Find your wallet address (a long string of characters)

2. Share this address with the sender (or connect to an exchange for withdrawal)

3. Wait for network confirmation (can take anywhere from seconds to minutes depending on congestion)

Sending crypto or NFTs:

1. Select the asset you want to send

2. Paste in the recipient's address – triple-check this! One wrong character and your stuff could vanish forever

3. Enter amount and check the fees (sometimes they're ridiculous during busy times)

4. Confirm and wait

Connecting to dApps:

1. Go to the site

2. Click "Connect Wallet"

3. Choose your wallet

4. Approve the connection popup

5. The site can now request transactions, which you'll may need to approve one by one

Managing digital assets:

1. Open your wallet to view your portfolio

2. Check balances across different tokens

3. Look at your NFTs in the gallery section

4. Check transaction history if you need to see past activity

Interacting with smart contracts:

1. When using dApps, you'll often interact with smart contracts

2. Your wallet will display the contract address and requested action

3. Review permissions carefully, especially for token approvals

4. Approve or reject the transaction

User journeys begin with their wallet

Wallets are much more than just software tools – they're the starting point of every user's journey into web3. They're simultaneously a user's identity, their bank, their passport to digital experiences, and their key to the decentralized internet.

Think about it: before a user can experience your amazing NFT marketplace, join your DAO, or try your DeFi protocol, they need a wallet. It's their first interaction with your ecosystem, and often their first impression of web3 entirely.

Too many projects treat wallet integration as an afterthought, only to realize too late that a poor wallet experience was killing their conversion rates. The wallet is the front door to your application – make sure it's not locked, jammed, or unnecessarily complicated.

Need help selecting or integrating the right wallet for your specific project? Our team has worked with hundreds of projects to optimize their wallet strategy. Reach out, and we'll help you navigate these waters!