Why are there so many types of crypto wallets? This week, I started playing the game Pixels, which uses the Pixel currency, and I had to download the Ronin wallet to use Pixel in the game.
Related to the first question, why can’t you send crypto from some wallets to others? For example, I bought Pixel coins using the Coinbase wallet, but to move Pixel to my Ronin Wallet, I first need to send it to a Metamask wallet as a middle step. It gets confusing because I can’t transfer Pixel directly; I first have to send ETH to Metamask, then move ETH to Ronin, and only then can I swap ETH for Pixel on Ronin. This process doesn’t seem like a good way to get people to enjoy the game.
Why do some wallets support certain types of crypto while others do not
Why don’t all web 3 applications like the Pixel game just use a single wallet like Metamask for simplicity
Why don’t all web 3 applications use ETH instead of creating new coins like Pixel, which is based on the Ethereum chain
What does a wallet look like from a programming point of view
You should first learn what a Blockchain is. It’s explained everywhere. A wallet acts as a front end and adds features. Since there are different Blockchains and Ecosystems, there are different wallets, each with different features. If you look at products from hardware wallet makers like Ledger, Trezor, and Keystone, it becomes clearer.
Crypto wallets are software that store private and public keys to interact with a blockchain and manage cryptocurrency. Many kinds exist because they have different features, security levels, and work with various blockchains and tokens. For instance, the Ronin wallet is for Pixel, while others like Coinbase and MetaMask support multiple coins. Some wallets are more secure, being either connected to the internet (hot wallets) or offline (cold wallets).
You can’t send crypto between some wallets due to compatibility issues. Different wallets may use various protocols or standards to communicate with blockchains and tokens. The Ronin wallet works on the Ronin blockchain, a sidechain of Ethereum, meaning it only works with tokens that fit the Ronin protocol, like Pixel. To move ETH from the Coinbase wallet to Ronin, you need a middle wallet like MetaMask that supports both Ethereum and Ronin, which also involves fees for each transaction.
Some wallets support certain cryptos while others do not because of design choices or business decisions. Some may only support popular cryptos like Bitcoin or Ethereum, while others take on niche tokens like Pixel or other NFTs. Some wallets also have advanced features like staking or swapping, while others focus on simplicity. Exclusive partnerships may also play a role, like the Ronin wallet and the Pixel game.
Not all web 3 applications use one wallet like MetaMask for simplicity due to various preferences or trade-offs. Some applications may want to build their own wallets for control or customization. Others might want to offer more options or have technical or legal reasons to use different wallets.
Not all web 3 applications use ETH instead of new coins like Pixel due to different goals or challenges. Some applications create their own coins for more autonomy or to provide added value to users. Others might face issues using ETH, such as cost or scalability.
A wallet from a programming view is software that implements algorithms and protocols to generate, store, and manage keys and to sign and broadcast transactions on a blockchain. A wallet can also have a user interface like a mobile app or browser extension for users to manage their assets and blockchain applications. Features might include encryption or backup options.
Looks like you’ve got some answers already, but I want to add to question 6 because it’s important to know. A crypto wallet like Metamask isn’t like a wallet for cash. A crypto wallet doesn’t actually hold your tokens. They stay on the blockchain. The contract for the token on the blockchain keeps track of how much you own. Your wallet has the private key that lets you control the tokens linked to your address. If someone has your private key, they can control your tokens. The wallet creates your private key from your seed phrase. This is why you should never share your seed phrase. If someone gets it, they can use it in a wallet to control your address and all your tokens.
You’ve got the crypto network like Ethereum. RPC endpoints allow access to the network. Crypto wallets connect to the crypto network through RPC and interact with it, issuing transactions and signing messages with your private key held by the wallet.
ChatGPT gave good answers for your first three questions, here’s the rest:
The idea of crypto is to move away from central control. If everyone used the same wallet, we’d go back to square one.
The cynical view is that most apps promote their tokens to make them valuable. They usually can use BTC or ETH unless they aren’t available on the blockchain.
Think of a wallet as a password manager. They are very similar.
@Merlin
I disagree with #4. It’s the RPC endpoints that connect the Internet and the crypto network. So, big RPC providers like Infura hold more power, not the wallets. But you can make your own RPC easily. Tools like Alchemy help with this in a few minutes. So, you could say RPC providers have some power, but so does any infrastructure provider. It’s still possible to set up your own infrastructure, but it requires some tech skills and money.