Whilst crypto wallets started out as applications for sending and receiving cryptocurrencies, the rise of NFTs and DeFi projects has seen many wallets adapt and specialise in providing secure access to users’ NFTs. In simple terms, a crypto wallet provides ‘private keys’ or passwords that allow the holder to access funds and assets stored on the blockchain. If you want to begin collecting NFTs - a wallet will be an essential tool to get started.
Firstly, it is important to recognise that the wallet itself does not hold cryptocurrency or NFTs. These are stored on the blockchain. Perhaps the term ‘wallet’ can be a little misleading, as rather than a traditional leather wallet filled with old coins and a myriad of untouched membership cards, a crypto wallet does not directly contain your assets. Like how a debit card does not directly store your money but rather acts as a key to an ATM machine, a crypto wallet provides a gateway to the blockchain where your funds are located. A crypto wallet contains “private keys'', digital passwords permitting the holder to transact on the blockchain.
These wallets allow secure access to your NFTs, too, keeping them safe. A wallet signifies ownership. Whoever has the keys that the wallet provides- controls the assets. Software wallets are available across web extensions, desktop applications and mobile applications and many wallets, such as the popular MetaMask, offer all three.
As well as an account password, most crypto wallets will provide you with a sequence of unique words called a seed phrase which creates your keys and allows you to restore your account. As well as a private key, a public key is also generated by your wallet which in turn is used to generate an address on the blockchain. The assets or currency never leave the blockchain when exchanged; only the address changes.
The private key is used to approve transactions and provides access to private funds. Even if the hardware the wallet is stored on is lost or broken, you still have your private key so that the account is not lost. It is essential to keep your private key safe as this provides access to your NFTs and crypto funds and signs off transactions and wallets to ensure these are kept as safe as possible. For instance, MetaMask, amongst many others, requires a 12-word seed phrase to recover private keys.
Many wallets offer special features to maximise security, such as two-factor authentications. Popular crypto wallet Enjin offers its own built-in keyboard to protect from keyloggers and custom ARM instructions to protect sensitive data instantly. If you wanted to transfer an NFT to someone, you could simply give them the private key. However, this would be impractical and unsafe. Therefore, wallets allow the safe, straightforward handling and storage of NFTs. This is why a crypto-wallet is an important part of an NFT enthusiast’s arsenal.
Another reason to set up a wallet is the convenience it brings. NFT shopping can become a breeze with a well-designed wallet that can hold all your crypto assets under one roof. A good wallet allows you to easily navigate your assets and keep everything in one neat place. Usefully, many crypto wallets have built-in Dapp browsers, like Trust Wallet and MetaMask, which can be used to shop for your latest NFT. This means that the purchase and storage can all be completed through one app, making life easier.
Once your NFTs are available in your wallet, you can trade directly from there. On wallets such as Trust Wallet you can directly list your NFT for sale through the wallet’s Dapp browser making trading seamless and quick. Within a wallet you can admire your NFTs, scrolling between them easily. Therefore, a wallet is a great way to present and keep your art collection in one place.
What wallet should I choose?
When deciding on a crypto wallet to get started with, it can be daunting to see the countless wallets to choose from. There are so many options out there as different blockchains require different wallets, and often, specific marketplaces for digital collectibles will choose only a select number of wallet options to be supported by their site for ease. Right now, the most widely supported wallet across NFT marketplaces is MetaMask, so this could be a good place to start.
While most wallets, like MetaMask, are built for the Ethereum blockchain, you will need a wallet that supports this if you are looking to purchase an NFT built on an alternative network. Do not fear; many wallets are built to interact with alternative blockchains, such as Kukai, built for the popular Tezos blockchain. Each blockchain requires custom technology for a wallet to be able to work with it.
The outlined arguments are why it is important to research what blockchains you are looking to purchase NFTs on and ensure you have a wallet that supports them. While Ethereum is the most common NFT blockchain, with many of the prominent marketplaces like Rarible using it, there is an increasing number of new blockchains entering the market. Ultimately, to purchase an NFT, you are going to need a wallet that supports the right blockchain and that is supported by the selected marketplace. They enable safe, secure and seamless transactions and make a great home for all your crypto assets.