- A decentralised wallet is a cryptocurrency wallet that enables users to hold their private keys on their own, ensuring they have complete control over their digital assets.
- Decentralised wallets give users more independence, facilitating P2P transactions without relying on any other entity.
A decentralised wallet is a type of crypto wallet that specialises in providing easy access to decentralised finance (DeFi) applications. These self-custody wallets give users direct access to their private keys.
What is a decentralised crypto wallet?
A decentralised wallet is a cryptocurrency wallet that enables users to hold their private keys on their own, ensuring they have complete control over their digital assets. The main goal of such a wallet is to completely eliminate any involvement of a third party to permit peer-to-peer (P2P) transactions.
Keeping crypto in a decentralised wallet is like keeping cash in their pocket – there are no intermediaries like banks, transactions remain private, and you have complete autonomy.
When users keep their money in a bank, it’s similar to storing their cryptocurrency on centralised exchanges like Coinbase or Binance. The digital wallets these exchanges provide are centralised, meaning users don’t have control over their private keys.
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What are the benefits of decentralised wallets?
Decentralised wallets offer several benefits:
They give full control over crypto funds, reducing risks related to third-party breaches and hacks. To maintain a high level of security, users must store their private keys safely.
Only decentralised wallets can interact with decentralised exchanges (DEXs) and other dapps, opening the door to DeFi opportunities and Web3 services.
With decentralised wallets, users can access DeFi and Web3 without having to pass through KYC processes and share personal information.
Decentralised wallets give users more independence, facilitating P2P transactions without relying on any other entity.
Decentralised wallets are still legal to use while providing the highest level of anonymity and independence.
Top 5 decentralised wallets
Before diving into the top decentralised wallets, it’s important to mention that self-custodial wallets can be either “hot” or “cold.” Hot wallets are online-based (though only the software is online; the private keys remain with you), while cold wallets, like USB drives, are completely offline.
To improve security, users can back up their wallet with a seed phrase.
Here are the top 5 decentralised wallets:
1. MetaMask
MetaMask is the most widely-used DeFi wallet. It is available as a browser extension or mobile app on Android and iOS devices. It supports ERC-20 (Ethereum-based) tokens and non-fungible tokens (NFTs). It also supports other networks, such as Polygon, BNB Chain, Arbitrum, and Avalanche. However, this wallet has no compatibility with Bitcoin. MetaMask offers additional functionality, enabling users to buy, swap, and bridge tokens.
2. Trust Wallet
With a user-friendly interface, Trust Wallet supports Bitcoin, Dogecoin, Litecoin, Solana, and over 70 other networks. It also comes as a mobile app and browser extension.
3. Coinbase Wallet
Coinbase is the largest US-based cryptocurrency exchange. This crypto exchange offers a centralised wallet in addition to a decentralised hot wallet supporting thousands of tokens to access DeFi and the Coinbase ecosystem as well.
4. Ledger Nano S Plus
This is a hardware wallet that allows you to keep crypto offline. It can integrate with many software wallets, including MetaMask.
