Understanding Web3 Wallets

Web3 Services

Blog_SEO-understanding-web3-walletsImagine a world where your mobile device isn't just a way to access your bank, but a standalone place to store value. A world where transactions aren't slowed down by middlemen, but flow as easily as sending a text message. Web3 wallets offer a decentralized, transparent, and direct method to store value on mobile devices and interact with digital assets.

What are Web3 wallets?

Web3 wallets are tools designed to store digital assets and interact with blockchain technologies. Unlike traditional bank accounts, these wallets allow the storage and management of blockchain-based digital assets, including:

  • Stablecoins: Stablecoins like USDC can be stored, sent, and received using Web3 wallets. Web3 infrastructure allows stablecoin transactions to be settled more quickly and with reduced fees compared to traditional banking payments.
  • NFTs: Non-Fungible Tokens represent unique digital assets, like art or collectibles, and can be securely held in Web3 wallets.
  • Badges and loyalty gifts: Instruments like airline miles or rewards points from your favorite store can be tokenized and managed within Web3 wallets, providing a more direct connection between businesses and their customers. For example, Grab, a popular app in Singapore, is using Programmable Wallets to offer coupons for goods and services associated with high profile events like the Singapore Grand Prix.

Web3 wallets are often confused with traditional digital wallets, but they can have several key features that differentiate them from traditional digital wallets. 



Web3 Wallets

Digital Wallets

Blockchain Support

Designed to support operations on public blockchains.

Designed using legacy integrations provided by siloed enterprises.


Operates on decentralized networks, allowing for user control and ownership.

Tied to centralized financial institutions.

Asset Diversity

Ability to manage a wide variety of digital assets such as cryptocurrencies, NFTs, and other tokenized assets.

Primarily designed to handle fiat currencies, credit cards, and bank-related transactions.


Can interact with various decentralized applications and protocols across different blockchain networks.

Limited to transactions within the affiliated institution or network, less cross-platform support.

Security and Control

Provided through cryptography, allowing complete ownership of funds and assets.

More reliant on security managed by the service provider.

Innovation and Engagement

Enable users to engage with innovative decentralized services, such as DeFi platforms, DAOs, and more.

Generally restricted in scope and functionality, focused on traditional banking and payment services.

Custodial vs Non-Custodial Wallets

Web3 wallets come in various forms, including custodial and non-custodial wallets.

  • Non-custodial wallets: Non-custodial wallets do not entrust the custody of private keys to a third party. Instead, users maintain full control and responsibility over keys and  assets within the wallet.
  • Custodial wallets: Custodial wallets have private keys that are managed by a hosting business or other third party, which can enable account recovery and other features.

How to use a Web3 wallet

To understand how Web3 wallets can help your business, it can be helpful to understand the steps required to get started with most Web3 wallets today.

  • Download and install: The first step involves downloading and installing the desired wallet. Some wallets function as part of a mobile app, while others may be desktop applications or browser extensions. Either way, users are already expected to leave your application or open or download an entirely different app to learn and navigate.
  •  Set up the wallet: Once the wallet is installed, it needs to be set up. This usually involves creating a new wallet within the application, although existing wallet data can be imported using a private key or seed phrase from another wallet if available. This process may or may not be guided, and can take significant time to complete.
  •  Secure the wallet: Upon creating a new wallet, users will be asked to set up a strong password and may also be provided with a seed phrase - a sequence of words that acts as a recovery key for the wallet. This seed phrase is extremely important, as it can restore the wallet if the host device is lost. Web3 wallets implemented with Programmable Wallets from Circle* allows users to use PIN codes to authorize transactions instead, to reduce friction if desired.
  • Receive a public address: Once the wallet is secured, users will be able to view their public address. This is a unique identifier that can be shared with others when transfering cryptocurrency. It's a unique code similar to an email address that designates a specific wallet to receive crypto transactions. Using Programmable Wallets to embed Web3 wallets make it easy for users to get their public address right from within an app. 
  • Send and receive digital assets: The wallet is now ready to send and receive assets on the blockchain. Other wallet holders, exchanges, or applications can use wallet’s public address to transfer crypto or view public information like asset balances of the wallet.

Security measures for Web3 wallets

In addition to steps required for setting up Web3 wallets, there are considerations that must be made to enhance the security of Web3 wallets to protect user funds.

  •  Safeguard private keys: For non-custodial wallets, private keys must be stored securely by the users and never shared with anyone. Writing them down on paper and storing them in a secure location can be one effective method. For users less familiar with Web3 security, Programmable Wallets allow businesses to offer custodial wallets and secure private keys on behalf of their customers.
  •  Regularly update wallet software: Wallet software needs to be kept up-to-date, as developers may need release updates that fix bugs and security vulnerabilities. Circle’s Programmable Wallets are designed with security in mind, offering security best practices for developers to build.
  •  Guard against phishing attacks: Web3 wallet users should be aware of phishing attacks, where scammers try to trick them into providing private keys or connecting to malicious applications. Legitimate platforms and services will never ask for this information.

Programmable Wallets from Circle* are a convenient way for businesses to integrate digital wallets into their existing applications or new products, simplifying the process of setting up and using a Web3 wallet.

The Future of Web3 wallets

As blockchain technology continues to mature and become embedded in everyday applications, Web3 wallets are poised to play a greater role in the internet financial system. As the digital asset industry grows, businesses will need to continue making these wallets as intuitive as possible, removing barriers for new users.

Web3 wallets are a big step forward in the digital world, changing how we think about digital transactions and ownership. Programmable Wallets from Circle allows businesses to unlock greater user control and security, seamless use cases, and easy integration with existing platforms.

If your business is interested in integrating Web3 wallets into your products or services, check out our Programmable Wallets wallet-as-a-service product*. A part of the Web3 Services product line, Programmable Wallets allow you to embed secure wallets in your app in minutes, onboard users with familiar UX, and scale transactions effortlessly.



What is a Web3 wallet?

A Web3 wallet is a digital tool that enables interaction with decentralized applications and blockchain technologies. It allows users to store, manage, and transact with digital assets like cryptocurrencies, NFTs, and more.

What are the different types of Web3 wallets?

Web3 wallets can be divided into two main types: Non-custodial wallets, where users have full control over their keys; Custodial wallets, where a third party maintains control. Programmable Wallets allow businesses to choose between the two to provide what will work best for their use case.

How do I choose the best Web3 wallet for my business?

Choosing the best Web3 wallet depends on the needs of your business. Custodial wallets prioritize security and ease of use, while non-custodial wallets give users greater control and can be designed to connect to more Web3 applications. Programmable Wallets can be used to offer either type and provide additional customization options.

How do users secure Web3 wallets?

Web3 wallets are secured using a private key, which can be controlled by the user or by businesses providing Web3 wallets through Programmable Wallets from Circle.

Can I use my Web3 wallet to store non-fungible tokens (NFTs)?

Most Web3 wallets, including those generated using Programmable Wallets can be used to store, manage, and transact with NFTs, alongside other digital assets.

*Programmable Wallets and Smart Contract Platform application programming interface (“API”) is offered by Circle Technology Services, LLC (“CTS”). CTS is not a regulated financial services company and the API does not include financial, investment, tax, legal, regulatory, accounting, business, or other advice. For additional details, please click here to see the Circle Developer terms of service.

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