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- 1 A decentralized wallet is a key to embracing full-fledged decentralization.
- 2 It gives total control of assets to users along with access to several decentralized services.
Blockchain is a groundbreaking technology, but it has a good scope of work. It’s the underlying technology that works with the help of many tools like smart contracts, tokens, and wallets. Though decentralized, crypto has been available to people through major centralized platforms majorly.
Lately, the emphasis on decentralization has been increasing. Now, the community wants to embrace the crypto the way it is. They don’t want the inclusion of any third-party entity no matter how reliable they are. That’s why, the adoption of a decentralized wallet has been going up. For its large-scale usage, it’s important to know all about it.
Decentralized Wallet: Into a Nutshell
In simple words, a decentralized wallet gives total control of assets to the users. It excludes any kind of intermediary and allows the owners to take hold of the private keys. It truly implements the peer-to-peer architecture and facilitates asset storage and exchange.
However, it may not store or execute tokens from different networks. In essence, it works like a non-custodial wallet. These wallets give easy and exclusive access to the crypto holders. They are interoperable across different DeFi protocols and work as per the blockchain they belong to.
Users with a private key or seed phrase can only access this type of wallet. This means that even the government and authorities can not access it. They can’t even freeze the account or stop the token holders from using the tokens. The biggest exchanges in this space are centralized.
However, the number of decentralized wallets is growing as the overall adoption of decentralized finance is growing.
Two Types of Decentralized Wallets
Hot Wallet– These wallets remain online and ensure access to assets at any time. They run on mobile devices or PCs and can be downloaded easily. They’re easily accessible and affordable but they’re susceptible to hacks.
Cold Wallet- These crypto wallets are only for storing private keys. They are used for protecting digital assets from cyber threats only. Though they ensure total safety, they’re more costly than most hot wallets.
Advantages of Using Decentralized Wallets
Decentralized wallets deliver security and accessibility both. They rule out the possibility of intermediaries and all types of counterparty risks. The users enjoy greater control over their portfolios along with access to other decentralized services. They facilitate access to web-based protocols and other dApps too.
With all the trailblazing features, decentralized wallets bring privacy and innovation in several domains. A unique blockchain address gives it a very useful and secure profile. By delivering different services, it enables people to make the most of DeFi technology.
These wallets maintain a higher level of security with no third-party inclusion and safekeeping of private keys. They also make the rising opportunities in the DeFi field easy to use for everyone. Using such a wallet, the crypto users use Web3 services. Moreover, they don’t have to go through KYC to own the wallet.
Guide to Choosing a DeFi Wallet
Before deciding on the wallet, the users need to determine the blockchain they mostly use. For example, Metamask is a decentralized wallet that doesn’t support the Solana blockchain. To make Metamask work on Solana, they have to use other applications like Phantom, Sollet, Solflare, etc.
Some decentralized network needs their wallets to function. They may also come with exclusive features like play-to-earn. Crypto users can use DeFi wallets for different purposes. They are mostly free-to-use and come with a 12 or 24-word phase key.
Also, they can support certain assets like NFTs or meme tokens. Some others may come with specific decentralized finance applications. These programs make the interaction with different DeFi protocols very easy. They even deliver services like staking, yield farming, lending, borrowing, etc.
Most Popular Decentralized Crypto Wallets
MetaMask– Developed in 2016, Metamask has been a dominant name in the industry. It uses Ethereum’s network and supports various other blockchains.
Trust Wallet– Trust Wallet is another prevalent name in the crypto sphere. It is also compatible with multiple chains and gets downloaded on Android and iOS devices.
Coinbase Wallet– Coinbase has become a popular choice recently. It supports millions of cryptos while being available as mobile apps and browser extensions.
Ledger Devices– Ledger is a popular USB hardware wallet that comes with an app too. It has a wider user base in a very short period.
Trezor Devices– Another popular USB hardware wallet that offers some advanced features too.
Upshot
With a decentralized wallet, crypto enthusiasts can do a lot. They come with a range of features that token holders look for. Furthermore, they establish a reliable environment in which transactions are secure. With this application, digital asset users experience a higher level of ease in their trade.
However, when it comes to choosing one particular DeFi wallet, users need to do some research of their own.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
