One of the most powerful use cases for Ethereum technology is the introduction of Dapps, which are decentralized applications built on smart contract technology that offer services without the need for third parties or centralized servers. Most wallets can interact with any Dapp directly through the use of contracts, but certain wallets are built specifically for easier Dapp functionality.
The Extension or CX Wallet
Currently, the most popular Dapps according to DappRadar are related to gaming and betting (not including DeFi Dapps like MakerDAO). These services are web based and can heavily depend on time-sensitive actions, but relying on these interactions through the direct use of smart contracts does not help facilitate mass adoption. The solution: a wallet hosted directly in the browser as an extension that can integrate and interact directly with Dapps.
One example of an extension wallet is MEW CX. It hosts the entirety of its original interface, MEW, in a convenient extension right on the toolbar. It also offers extra features, like QuickSend, the ability to save wallets locally, and State of the Dapps integration. You can use it seamlessly with Dapps hosted on websites, like CryptoKitties or MyCryptoHeroes. You can also use a burner account, which is a temporary wallet, if you only want to window shop some Dapps before fully committing. If you’d like to learn more about using MEW CX, check out this guide from the MEW Knowledge Base. Other examples of browser extension wallets include MetaMask and Dapper.
As an alternative, some browsers like Brave and Opera offer Web3 wallets built right into their browser infrastructure. However, native wallets like these can monopolize their audience, making it difficult to use other browser extensions because of conflicts with permissions. The user is then limited to the functionality of that specific wallet’s features.
The main difference between a browser wallet and a web-based wallet lies in their security offerings, and where they’re hosted. Web-based wallets will generally offer more options for wallet access, including hardware wallets and different Ethereum-based networks, while browser wallets are a one-stop access method that’s only tied to the Mainnet and/or Ropsten Ethereum networks. Some browser extensions like MetaMask, do offer limited hardware wallet capabilities (currently offering Ledger or Trezor connection), but they still require that their users create a wallet in their system before offering access through other methods.
Browser extension wallets are critical for mass adoption, as they offer a convenient and easy way to access real use cases directly without the need for additional knowledge. They are the closest we’ve gotten as a community to providing a sense of user identity through a wallet, without the need for KYC or any actual identifying personal information. They’re also forerunners in the adoption of Web3, which is helping direct the entire internet to a more decentralized, user-centric landscape.
Web3, what’s that?
If we’re going to explore Web3, we should first define the beginnings of the internet – Web1, which mostly consisted of static web page designs with no advertisements. It’s the internet in its infancy, mostly filled with personal web pages.
The vast majority of internet as we know it is what’s called Web2. All social media sites, websites with logins, podcasts, or any content-focused sites are Web2. It hosts advertising as well, setting it apart from the previous generation. Web2 relies heavily on data of all types, including user data, traffic data, and advertising data. This data helps specialize the services for the user, but it also helps monetize them. It enables services to keep an eye on what’s popular and personal for all their users, and they often sell that information to third parties.
Web3 is the future of web interaction, where the user is the focus. It’s decentralized, so personal data remains personal. For example, most banks as they exist now hold all of your personal information and finances. They know everything about your spending habits, debt, where you live, how old you are, what you had for breakfast, the list goes on and on. If something doesn’t seem right, they’ll be quick to shut down your ability to use your own money. In a Web3 financial structure, you’re the only one who has access to your finances. No one can throw last minute fines at you or lock you out of your account, you’re the only one in control.
Web3 was largely just a fantasy until blockchain technologies arrived on the scene, making way for true privacy and power over one’s identity when it comes to web interactions. The Ethereum blockchain powers Web3 development, and browser wallets act as your vehicle to navigate the waters of decentralized finance.
The last part of our wallet series will look at different types of wallets built on smart contract technology, bringing a new approach to wallet recovery and security.