With the rapid development of Web3, buying and storing NFTs have become much easier, as wallets can also act as a crypto portfolio tracker that allows you to easily access your purchases whenever you want to. This includes selling, buying more, or even just having a look at your assets.
An NFT wallet is not only for buying, selling, or trading crypto and NFTs, but you’ll also need to have them to store and, support NFT games and keep safe from NFT scams.
Later on in this piece, we’d be addressing the importance of NFT wallets, the types, the core features of an ideal one, and the top-tier NFT wallets in the space.
What Is An NFT Wallet?
An NFT wallet is defined as a cryptocurrency wallet that supports the blockchain protocol NFTs are built on. However, apart from a physical wallet, you don’t technically store NFTs or cryptocurrency in your NFT wallet as your NFTs reside on the blockchain.
Serving as a means of accessing your collectibles on the blockchain, the wallet can be any platform or device with which you can keep or trade digital collectibles.
The term “wallet” here is a figure of speech, referring to a secure place to store your proof of ownership of a digital currency — rather than a physical billfold for storing cash and credit cards. A crypto wallet is necessary for the storage of all types of crypto assets, including NFTs.
How Do NFT Wallets Work?
When you create an NFT wallet, it automatically generates a series of words known as a ‘seed phrase’ (also known as a ‘recovery phrase’). The wallet uses the seed phrase to create a set of private keys. Wallet holders should never share their seed phrase or private keys with anyone, or they will be able to access the assets in the wallet, and the wallet holder will become the victim of NFT fraud.
The seed phrase acts as the master password for the wallet – it allows the holder to access their crypto wallet. If the holder deletes their crypto wallet, they can recreate it and access everything using the seed phrase.
However, suppose a holder loses or forgets their seed phrase. In that case, they will lose access to the wallet and all the assets the NFT wallet contains forever. There have been numerous examples of NFT wallet holders forgetting their private keys and thus cannot access millions of dollars worth of cryptocurrency.
Private keys are like passwords.
They allow wallet holders to access and manage specific items in their wallets. Specifically, the private key lets holders initiate transactions called ‘signing.’
Type Of NFT Wallets?
There are two basic types of NFT wallets that depend on users’ needs for security and convenience.
A cold wallet is a physical device where you can keep your NFTs. Generally, they are used to keeping NFTs for the long term and they are harder to hack because they are completely offline storage.
Once you buy a cold wallet, you’d be given the private key to gain access to the assets in case you misplace or lose the device. A popular example is Ledger Nano.
Cold wallets refer to offline storage such as hardware wallets, paper wallets or air-gapped computers. These wallets are “cold” because they’re completely offline, and are therefore immune to online hacking. Stealing from a cold wallet would require physical access to the wallet — and even then, the thief would need to have access to the victim’s private keys to access its contents.
Cold wallets are considered the gold standard for secure storage and are recommended for long-term storage as well. However, they’re less convenient than hot wallets because you need to plug in your cold wallet to a computer before you can access your NFTs and make transactions.
A hot wallet is perhaps the most common type of NFT wallet around, it is a software version that can be available on mobile phones, laptops, or as browser extensions.
Just like cold wallets, you’ll also have access to the seed phrase of your hot wallet for complete ownership. Examples of hot wallets are the Coinbase wallet, Oxalus Wallet.
Do You Need A Crypto Wallet?
An NFT wallet is necessary for keeping your NFTs safe, and for managing your private keys — the passwords that grant you access to your assets. The wallet doesn’t technically store your NFT, which resides on the blockchain. Instead, it holds information regarding the location of your assets on the blockchain and provides the private keys that prove your ownership of a particular NFT and allow you to make transactions.
With a good wallet, you can:
- Securely control your private keys
- Manage all your NFTs in one place
- Send and receive NFTs from anywhere in the world
- Connect with decentralized apps (DApps) and NFT marketplaces, such as OpenSea
Instead, it provides access to the assets, which are held on the blockchain. It does so by providing a private key to that address, which allows the wallet owner to authorize transactions. If you have the private key, you effectively own anything at that address.
A wallet will take care of all the technical bits for you and provide a nice user interface for buying, selling, and transferring NFTs or cryptocurrency. Moreover, it can also provide increased security with two-factor authentication, and it provides a convenient way to track your assets across devices.
An NFT wallet allows you—either as a creator or collector—to interact with both the NFT marketplaces’ servers and the blockchain. As a creator, you’d need it to sign in to the marketplace, determine the underlying blockchain of your NFT, and create your NFTs.
You would need an NFT wallet to mint your NFTs. But if it is the case that the NFT is lazy-minted, you as the buyer would need your funded NFT wallet to mint the collectibles.
Furthermore, an NFT wallet gives your NFTs more security because you are the one in charge of your seed phrase unlike how a third-party controls custodial wallets. In other words, your NFTs are—to a large extent—safe on an NFT wallet.
To summarize, an NFT wallet is a physical device or computer program that allows users to store and transfer digital assets like non-fungible tokens and cryptocurrency.
But some wallets stand out above the rest. Here’s a summary of the best NFT wallets as well as what to look for when choosing one.