So you want to get into web3: what it is, what it isn't, and how to get started (part 1 of 3)
A painless introduction to crypto wallets, dApps, and blockchain technology in three parts. This post covers some very basic background and your first step-choosing and funding a crypto wallet.
When you hear the term “web3”, you probably think of cryptocurrency, and you would be correct ✅. However, “web3” isn’t a technical specification, or merely a new-and-improved version of the dumpster 🔥 fire that is web 2.0 (e.g., the “regular” internet) or some scary cyberspace landscape where digital pirates are just waiting to exploit any code vulnerabilities they can find. (Ok, this last one is real, but go with me here. If you pay special attention to the information following the light bulb emoji 💡 in this post, you will be fine. )
Last year, YouGov and Consensys conducted a survey about perceptions of web3 around the world. Consensys summed up the results as follows.
“The results of the survey have revealed a promising shift in the prevailing attitudes towards a vision of the internet that grants individuals greater control over their shared online data and ensures fairer distribution of profits among creators. However, despite this positive trend, there remains a significant gap between awareness of cryptocurrencies and a practical understanding and utilization of web3 technologies. This disparity presents a valuable opportunity for mainstream web3 applications to bridge the agency gap that currently exists in today's internet landscape, characterized by limited privacy, control, and ownership.”
In short, web3 is a vision of a better Internet, one that puts individuals in control of their personal data, removes unnecessary middlemen from various transactions, and wrestles power from the greedy titans of Big Tech. Web3 focuses on four core ideas, each addressing a concern about web 2.0: decentralization, interoperability, trustlessness, and a semantic web. Each is worth exploring in depth on its own, but my goal for this post is to show you how to get up and running with beginner-friendly web3 dApps (decentralized applications).
The vision of web3 is mainly being pursued in the Ethereum ecosystem, on the Ethereum blockchain itself as well as dozens of other EVM-compatible chains. (I am purposely ignoring Bitcoin for two reasons. One, I don’t interact with that ecosystem. And two, I’d argue that Bitcoin’s goals and use cases are different from web3’s.)
Decentralized Applications (dApps)
Since it’s hard to talk about dApps without knowing what the “d” is, let’s briefly discuss what decentralization means. (An example of decentralization you’ve likely heard of—and may even be using—is Bluesky.)
Decentralization means you control your data. Not your bank, not a government, not Facebook. There are many reasons why this is important and useful, but a timely example involves AT&T, who happens to be my wireless provider. Recently, they experienced a significant data breach which they naturally downplayed in a statement, but Malwarebytes has a super easy-to-use tool to help you visualize how much of your data was exposed. (For me, it was literally all of it. My Social Security Number, addresses, birth date, everything.)
Now why does AT&T need constant access to my most sensitive Personally Identifiable Information (PII)? THEY DON’T. They may have needed my Social Security Number when I first opened my account to assess my credit worthiness and verify my identity, but they didn’t need to persist it in their database after it served its purpose.
What if there was a mechanism by which I could share my Social Security Number with AT&T (or another business entity) for valid, agreed-upon business purposes that are not buried twelve pages into the terms of service? There is, and that mechanism is blockchain technology. Specifically, I could share my Social Security Number with AT&T for a limited window of time by way of a smart contract. A smart contract is a computer program whose code is executed on the blockchain. In the Ethereum ecosystem, the code is generally written in a language called Solidity.
Unless you’re a software developer, you will likely interact with web3 by way of dApps the way you currently interact with web 2.0 via a browser.
Crypto wallets
What is a crypto wallet? (For a bit more detail than I provide here, see this short explainer from Coinbase or this one from Investopedia.)
Your crypto wallet performs two essential functions.
It holds the keys to access the data about your assets on the blockchain. It doesn’t actually hold tokens or cryptocurrency the way a physical wallet holds cash.
It serves as a user interface (like a browser) for interaction with dApps.
Types of wallets
There are cold wallets, hot wallets, hardware wallets, and smart wallets. Which one should you choose? If you’re brand new to web3 and crypto, my suggestion is to start with a hot wallet with a browser extension.
Some caveats
💡 Don’t lose a shitload of money because you don’t yet know what you don’t know
Before you choose a wallet, let me make a suggestion. Start small. Buy $50 worth of ETH, store it in a hot wallet, and explore. Later, when you have a clearer understanding of various wallets, tokens, ecosystems, and their pros and cons, you can invest your millions. If you must ignore this advice, at least use a hardware wallet or “cold” wallet.
💡 Don’t lose your private key or recovery phrase.
International capers could ensue. Really. This isn’t like web 2.0 where you can reset your password in a few clicks. Write your private key and recovery phrase on paper, with a real pen, and store it in a safe or other secure location. This becomes more important as you acquire more crypto assets, because no one can recover this data for you.
For wallets I use strictly for testing code or where I am holding a very small amount of value, I store my private keys and recovery phrases in Bitwarden Secure Notes (Bitwarden is a password manager. If you don’t have one already, you should. Bitwarden’s entry-level product is free.)
Some hot wallet options
If this is your very first crypto wallet and you plan to transact on Ethereum or EVM-compatible chains like Polygon, Optimism, or Arbitrum, I suggest Coinbase Wallet or Metamask. If you’ve got FOMO about the recent memecoin craze, you might want Phantom, a popular Solana wallet. I personally use each of these wallets, so I can vouch for their easier-than-average learning curves, good user experiences, and general trustworthiness. These are all “hot” wallets, meaning they are on a device that is connected to the internet, like your phone or laptop. Most hot wallets are free.
Coinbase Wallet
The most versatile of these options, Coinbase Wallet supports both Bitcoin and Ethereum Virtual Machine (EVM)-compatible networks. It integrates seamlessly with Coinbase’s centralized exchange product, the largest crypto exchange based in the U.S. It’s available as a browser extension and mobile application. Coinbase also partners with Ledger, the gold-standard “cold” or hardware wallet provider, to make it easy to take your assets offline should you decide to do so.
Metamask
One of the most popular crypto wallets, Metamask also offers both a browser extension and mobile app and supports more than 650,000 EVM-based assets. Note that Metamask does not support Bitcoin, so if BTC is your asset of choice, this is likely not the wallet for you.
Phantom
Phantom originated on the Solana blockchain, scene of the current memecoin explosion. If you’re curious about DeFi (decentralized finance) applications, Phantom is a solid choice. Like Coinbase and Metamask, Phantom offers a browser extension and mobile app.
Homework
Your homework should you choose to accept it: create a wallet, add a small amount of money ($25 should do it), and explore! Bonus points: check out Metamask’s web3 101 course or, if you chose Coinbase Wallet, complete a quest or two in the mobile app. (Most Coinbase quests result in you earning a few bucks worth of the token in question. The real data geeks should do The Graph’s quest.)
Disclaimer: Nothing in this post should be construed as or replace professional investment advice. I am not a financial advisor.