Table of Contents - Click to Open:
THE BASICS of WEB wallets
A cryptocurrency Web wallet is somewhat like an Exchange wallet in that they are both convenient to use from any internet connected web browser – from your computer, tablet, phone, etc. This also means that there is no software to download – but there is usually an optional smartphone app. A Web wallet is hosted by a third-party, just like an Exchange wallet, but a Web wallet is not related to any Exchange. The creators of Web wallets are providing free software and free hosting of their wallets.
One of the big differences between a Web wallet and an Exchange wallet is that a Web wallet will usually give you full control of the private keys (but not all Web wallets offer this.) If a Web wallet doesn’t give you access to your keys then it is considered a Custodial wallet. As long as you have your private keys then you don’t have to worry if the wallet provider goes “out of business” – they won’t be taking your funds with them. Even if your favorite Web wallet goes offline for good, as long as you control the private keys and have a backup, then you will still be able to access your funds by importing your keys into some other wallet. Another difference from an Exchange wallet is that most Web wallets don’t have the ability to buy coins using government-issued fiat currency.
SECURITY of WEB wallets
Both Exchange and Web wallets are considered to be more vulnerable to theft than other types of wallets. A Web wallet can be somewhat of a less tempting hacking target then an Exchange wallet since an Exchange will always have far more currency locked up than any single Web wallet will ever have. An Exchange wallet also has more single-point-of-failure targets for hackers to exploit. Both these kinds of wallets represent large and rich attack targets for thieves so you can be sure that lots of bad guys are constantly thinking about how to hack in.
As an extra security feature, some Web wallets will require that not only you sign each spending transaction, but that those transactions also be authorized by the wallet provider.
If proper security precautions are taken then this type of wallet is generally considered more secure than an Exchange wallet.
DON’T LOSE YOUR PRIVATE KEYS AND DON’T LET OTHERS SEE THEM OR THERE IS A VERY GOOD CHANCE YOUR CURRENCY WILL BE STOLEN.
Return to TOC
BACK UP / RECOVERY of WEB wallets
Depending on the type of Web wallet you choose you will have to back up one of the following: a) Nothing (if you have no keys), b) your private/public keys and addresses, c) your Seed phrase.
Return to TOC
FEATURE SUMMARY of WEB wallets
Here are some extra features that are built into SOME Web wallets (but not all these features are available in all Web wallets). You may or may not find all these features useful or desirable.
- 2FA: “Two Factor (two-step) Authentication”. Requires password PLUS phone or emailed code for better account protection.
- DESCRIPTION: Allows you to make notes for each send/receive transaction.
- EXTENSIVE FEATURES: Typically the user interface will give you the most features and will be easy to figure them all out.
- FEE MANAGER: Monitor and control your transaction fees.
- FIAT PURCHASE: Buy currency from within wallet using fiat currency. This is less common.
- HD: “Hierarchical Deterministic” – Always creates new receive addresses and is easy to back up / recover keys via the Seed phrase.
- NICKNAMES: The ability to add “nicknames” to each coin address as a reminder of what funds you expect to be at that address.
- OPEN SOURCE: SOME wallets are Open Source. This means there is a reduced chance of software hacking.
- QR SCANNER: Good for importing keys from paper wallets.
- PAIRING: Share keys/Seed phrase with another wallet (use with care)
- PASSWORD RESET: SOME Web wallets allow you to reset your password if you forget it.
- SPV: Simple Payment Verification ability to ensure transactions are processed properly with less third-party trust required.
- WATCH-ONLY: Safely monitor your account balances without exposing your keys.
Here are more exotic features – Basic users may not find them important:
- TOR: (The Onion Router) For better privacy, may slow down the wallet – use with care.
These features are explained in more details here. [Summary of Important Wallet Features]
Return to TOC
PROS / CONS of WEB wallets
The following pros and cons are generalizations of what makes this wallet type uniquely different from most other wallet types. This pro and con list will greatly depend on if the Web wallet gives you total control of your private keys. “Custodial” Web wallets store your keys, “Non-Custodial” Web wallets do not store your keys.
Pros:
- ANY DEVICE/OS: No special software to download so you can access your wallet from almost any internet connected browser device.
- EASY TO USE: Usually a nice, easy to use, interface.
- NO LOST KEYS: ONLY If this is a custodial Web wallet then you can’t lose your keys because the wallet provider keeps them. But this can be a negative also since the wallet provider can lose your keys.
- PASSWORD RECOVERY: SOME Web wallets will allow you to reset your forgotten password.
Cons:
- NO COLD STORAGE: Usually there is no offline cold storage option. Only provided by some custodial Web wallets.
- COURT SEIZURE: ONLY If this is a custodial Web wallet then your currency could be seized by the court if you or your wallet provider is subject to a lawsuit.
- NO FIAT: Usually can’t buy and sell coins in exchange for government-issued fiat currency
- HOT: Always in “hot” online mode (Security risk, but this is also what makes it so convenient to use)
- THEFT TARGET: A Web wallet host can present a huge and Juicy theft target since they store all client wallets on their server.
- WEAKER PRIVACY: Some Web wallets want your email address, therefore you could be easier to personally identify.
Return to TOC
EXAMPLE of WEB wallets
One example of a highly regarded Web wallet: “Blockchain.info”
| NON-WEB WALLET WALLET
There is another type of wallet which might be considered a Web wallet because it gives you a web browser ability to interact with blockchain, but it doesn’t actually store your keys. So technically it is not really a wallet at all – yet you may hear it referred to as a wallet. It can generate new public and private keys, monitor your current currency holdings, and also initiate transactions. But it doesn’t store your private keys, unlike all other ‘real’ wallets. This special type of wallet requires that you store your private keys in some other way, such as downloading an encrypted copy to your computer, or with a hardware wallet, Paper wallet, etc. An example of this kind of wallet which was specifically designed for Ether currency is the www.myetherwallet.com “wallet”. |
Return to TOC
GET STARTED of WEB wallets
To get started with this type of wallet you will have to set up an account with a Web wallet website. During set up you will have to pick a password – make it a strong one. See our [security tips] for strong password tips. Then back up your Seed phrase (if provided), and transfer currency into your wallet – or have someone else send currency to you. Then you are ready to start spending.
DISCLAIMER: Although we have referenced the websites Blockchain.info and www.myetherwallet.com does not mean that we are certifying that those sites are safe to use. We only reference them because they are well-known websites for this purpose. Do your own research, follow all security procedures, and use them at your own risk.
Return to TOC