wallet

Phonetic: /ˈwɒlɪt/

Part of Speech: noun

Category: web3

A 'wallet' is a something that allows you to manage your cryptographic keys, and the accounts corresponding to them.

Definition source: Education DAO - mapachurro

Sample sentence

The other day I moved everything except my stablecoins to a cold wallet.

Additional definitions

Used to send and receive cryptocurrencies. Different types include software wallets, hardware wallets, and paper wallets.

Source

A collection of keypairs that allows users to manage their funds.

Source

A digital interface that enables users to manage Ethereum-based assets (such as POAPs), execute transactions, and engage with decentralized applications (dApps).

Source

Extended definition

The term 'wallet' entered the crypto tech field in early versions of the original Bitcoin client (~2009). In that context, the 'wallet' was essentially an 'encrypted keystore': an encrypted file that held the seed phrase, and allowed the user of that client to transact on the Bitcoin network using accounts generated from the seed phrase.

Subsequently (~2013), several Bitcoin Improvement Proposals were introduced and protocolized which saw 'wallet' used to mean 'the set of accounts generated by a seed phrase'. BIP-32 in particular, 'Hierarchical Deterministic Wallets', would come to be the technical foundation for the seed phrases, mnemonics, Secret Reovery Phrases, as they are variously known, used by many popular public blockchain networks.

With the advent of Ethereum, there was a need for a new kind of technology: not just a keystore running on a mostly-anonymous client sending digital money. What was needed with Ethereum was the ability to bring cryptographic keys into the browser context. MetaMask, the first widely-used product of its type, was originally described by founder kumavis as an 'identity manager', but by that point, the idea of a 'cryptocurrency wallet' existed in the minds of much of the public, and 'wallet' became the name for this class of software: MetaMask, and all the forks and innovative versions of the idea after it. Notably, MetaMask and other wallets also have an encrypted keystore file, just like bitcoin's original 'wallet' file. MetaMask named theirs the 'vault file'.

Note: Given that these interactive wallets were generally on devices connected to the internet and interacting with the browser context, they are at higher risk of falling victim to attacks from people trying to steal the keys out of the wallet (or vault file). Given this higher risk, they are often referred to as 'hot wallets', while a 'cold wallet' would be one that is e.g. written down on paper or etched into metal, or otherwise stored on a device or in a way that is not connected to the internet.

In parallel, a class of hardware was developed, intended to offer cold storage with the ability to transact securely. These are called 'hardware wallets', and are generally devices that use QR codes or a USB connection to receive transaction requests and pass back signed transactions, with the keys never touching an internet-enabled device.

This word came from... the ether

Date first recorded: 2025-01-31

Commentary

It can often be hard to tell what someone is referring to, specifically, with the word 'wallet'. Many people use it to refer to their seed phrase or SRP, or to one or more of the accounts generated by the SRP.

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