Wallets are digital asset storage applications that mimic the features of traditional wallets but are used to hold digital assets like cryptocurrencies and NFTs.
To store, send, receive, and transact in digital assets like cryptocurrencies and NFTs, you’ll need a wallet to store your private keys.
The blockchain serves as a digital ledger for cryptocurrency assets. The private keys allow access to these assets on the blockchain they were created on, provided you have access to the internet.
As soon as a wallet is linked to a specific blockchain, it will display all the digital assets that can be stored within it.
Wallets can be desktop programs like Subwallet or Talisman, mobile apps like Metamask or Nova wallet, or even web-based services like Ledger’s hardware wallet.
For your convenience, two distinct styles of wallets are available.
- Custodial Wallets
- Non-Custodial Wallets
Centralized exchanges typically provide custodial wallet services. Binance, Kucoin, Kraken, GATE, FTX, and many others are all examples of centralized exchanges that offer users access to various financial services. To buy and sell digital currencies, many people use centralized exchanges.
They’re crucial because they make bringing new people into the crypto world simpler. Following account creation, users of a centralized exchange have a custodian on the exchange. This cold storage wallet is where the user’s cryptocurrency is kept. Despite this, it entrusts the exchange with the care of the wallet’s private keys, crossing its fingers that the exchange will continue to be reliable.
This setup has benefits and drawbacks; one advantage is reduced duty to safeguard private keys when dealing with centralized exchanges protected by username/password combinations. Hacks on these exchanges and the fact that you don’t have complete control over your assets (Not your keys, not your coins) are the cons of using custodial wallets. To take a recent example, FTX users were locked out of their custodial wallets as the exchange collapsed.
Non-custodial wallets do not give the duty of securing private keys to a third party. Keeping the private keys safe is the sole responsibility of the owner of the wallet and the assets stored therein. If you lose your private keys, the contents of your wallet are gone forever.
The user retains full ownership of their funds in a non-custodial wallet. At their discretion, they may handle any financial dealings. One gains total independence and control over one’s possessions.
Metamask, Nova Wallet, and Talisman are all examples of non-custodial wallets.
Since not all cryptocurrencies can be traded on centralized exchanges, more assets are stored in non-custodial wallets. To gain access to the blockchain where cryptocurrency assets were created, which is not a CEX, one must use a non-custodial wallet. As a bonus, users of non-custodial wallets have complete autonomy over their funds and can spend or save them however they like. There are two types of non-custodial wallets, distinguished by their utility. Included in this group are: hot wallets and cold wallets.
Simply put, a “hot wallet” is constantly connected to the internet and blockchain. Hot wallets allow users to store their private keys on a computer’s hard drive. Examples of such wallets include mobile apps like Metamask and Nova, web-based wallets like Talisman, and desktop wallets like the Atomic wallet. Unlike cold wallets, hot wallets are always accessible online.
Compared to “hot” wallets, “cold” wallets offer a higher level of security.
They differ from hot wallets because they are not constantly online and linked to the blockchain. Most Bitcoins that exist today are stored in hardware and paper wallets or are physically held by their owners. Its members rely heavily on hardware wallets. Hardware wallets are actual sticks that resemble USB drives.
They are hack-proof because the Private keys never leave our device, protecting the assets stored there. For the best protection of your valuables, invest in a hardware wallet, which can be purchased for $50 to $200. Cold wallets have a few drawbacks, the most notable ones being the high cost of acquisition and the difficulty of use compared to hot wallets.
While hardware wallets are better suited to storing more significant assets, hot wallets are better suited to storing smaller tokens for more frequent transactions. For the safety of their users’ money, CEXs use cold wallets while keeping their tokens, which are used for more routine transactions, in hot wallets.
Several distinct kinds of wallets exist for use with blockchain-based tokens. For instance, Metamask allows users to access their assets on Ethereum, Fantom, and even the Astar network, all of which use the Ethereum Virtual Machine (EVM).
Which wallet best relies on the user, the networks available, and the types of transactions that will be made?
Let’s take a look at some of Polkadot’s accepted wallets.
Ledger is a hardware wallet that provides top-tier protection for its user’s money and valuables. The private keys for a ledger wallet are stored on moderate-sized USB sticks, making the wallet impenetrable to hackers via the cloud. Astar and Moonbeam are two examples of Polkadot networks that support Ledger, allowing you to keep your assets in a safe place.
Metamask is a mobile wallet and an add-on for popular web browsers. Metamask is compatible with EVM chains and can store and trade the corresponding assets. The Metamask wallet is used by Polkadot’s EVM-enabled chains like Astar and Moonbeam to store and transact assets.
Polkadot.js is the native wallet for the Polkadot and Kusama networks. You can get it as an add-on for Firefox, BRAVE, and Google Chrome. Parachain assets on the Polkadot and Kusama networks can be stored in the Polkadot.JS wallet. Although it is recommended for developers, newer users should avoid this wallet.
The Talisman Wallet is an add-on for Google Chrome that functions as a web-based digital currency wallet. The wallet’s interface and user experience (UI/UX) are attractive upgrades from the Polkadot.JS wallet. For first-time users and non-developers, Talisman is the superior option because it simplifies Polkadot.complex JS’s functionalities. Talisman is a wallet that can store and stake assets on EVM-enabled networks.
Similar to the Talisman wallet, Subwallet is a web-based storage space for digital assets. Subwallet provides an enhanced user experience when dealing with investments on Polkadot, Kusama, and EVM-enabled chains. On Polkadot and Kusama, Subwallet is an option for those who aren’t programmers.
Use a mobile wallet like Nova or Fearless to store and access funds for use on the Polkadot and Kusama networks. Wallets like these make using the Polkadot and Kusama ecosystems more pleasant for people who aren’t developers.
Algem is a decentralized application built on the Astar Network and offers two main features: liquid staking and liquid lending. As their names suggest, these two options let ASTR holders keep their assets liquid while putting them to work. Also, the liquid staking and lending solutions let users use Algem’s liquid nASTR tokens across Astar’s Defi ecosystem to earn staking rewards and make more money. In doing so, Algem supports other Defi protocols by providing liquidity and creating a sustainable and cooperative ecosystem on the Astar Network and Polkadot.