Learning Objectives
After completing this unit, you’ll be able to:
- Explain what a digital wallet is.
- Determine which type of wallet is best for you.
- Set up and connect your digital wallet.
What Is a Wallet?
A wallet is an app (or plugin) that enables users to access/retrieve, send, and receive digital assets. The most common assets people hold in their wallets are cryptocurrency, such as Bitcoin or Ethereum, or NFTs (non-fungible tokens). There are two main types of wallets: custodial wallets and noncustodial wallets.
There are many platforms that support custodial and noncustodial wallets. We recommend doing your own research before choosing a platform. Salesforce does not endorse any specific one.
Custodial Wallets
A custodial wallet is the most popular and easiest-to-set-up wallet. Someone other than the true owner (you) creates and secures this type of wallet. They store what’s in your wallet, similarly to how a bank keeps your money in a checking or savings account.
A benefit to using a custodial wallet is that if you forget your password, you won’t lose what’s in your wallet. With private custodial keys, the platform has control over the private key, which eliminates the risk of losing access to your account if you lose your private key.
Want a wallet that's easy to set up and manage? In this case, we recommend using a custodial wallet when your primary goals are to buy, sell, and exchange digital assets.
Set Up a Custodial Wallet
- Download a wallet app on your phone or access one on your computer browser.
- Sign up and create an account. This process is similar to setting up an account on any other platform.
- Optional: Add your credit card or bank account information if you like. (More on this later.)
- Transfer digital assets to your wallet. (More on this later, too.)
Non-Custodial Wallets
A non-custodial wallet is a type of wallet that the true owner (you) creates, owns, and manages. This means that the responsibility of remembering and safeguarding the password falls completely on you.
A benefit to using this type of wallet is that you can do more than just buy and sell cryptocurrency. Additionally, you’re the only person who has access to your wallet. Unlike a custodial wallet, where the managing company can access your wallet, you’re the only one with the private key. A downside is that if you forget or lose your means of logging in, there is no way to access your wallet.
Set Up a Non-Custodial Wallet
- Download a wallet app (or access one on your computer browser).
- Create an account.
- Transfer digital assets to your wallet—keep reading to find out how.
Add Assets to Your Wallet
There are two main ways to add assets, in the form of cryptocurrencies and NFTs, to your wallet.
- Buy them in your wallet.
- Transfer them from another wallet/brokerage.
Most wallets (custodial and non-custodial) have the functionality for you to connect to your bank account or debit card to purchase cryptocurrency within the platform. However, since there are typically fees associated with that, many people buy cryptocurrencies from external platforms, such as brokerages, and then send the assets to their wallet.
Here’s how to buy cryptocurrency on an external platform and transfer it to your wallet.
- Log in to a brokerage and create an account. Setting this up is similar to setting up a custodial wallet or an account on any other website.
- Connect your debit or credit card, and deposit your local currency such as USD or EUR.
- Click the cryptocurrency you’re looking to purchase, and clickBuy. From there you can set how much of your local currency you would like to transfer to cryptocurrency.
- When you’re ready to transfer cryptocurrency to your wallet, find your private key. This is a unique string of numbers and letters that should be easy to find in the settings area of your wallet.
Connect Your Wallet
While having the ability to buy and sell cryptocurrency is great, there’s a world of possibilities open to you once you connect your wallet. Connecting your wallet means that you authenticate your wallet to enable you to do transactions on dApps (decentralized apps). Those transactions include buying and selling NFTs and entering metaverses.
Here’s how to connect your wallet on a computer or mobile device.
- Open a dApp you want to connect to.
- Click Connect.
- You get a popup with different options for connecting your wallet. If you see the name of your wallet on the list, click your wallet name. If your wallet is not listed, click Wallet Connect and select the wallet you have.
- If you’re connecting your wallet using a computer, use your mobile device to scan the QR code that appears, then click Connect. If you’re connecting your wallet using a mobile device, click Connectin the popup.
The dApp now has permission to interact with your wallet.
Keep Your Wallet Safe
Now you know what a digital wallet is, why you need one, and how to set up and connect one. Remember that, as with any online account, it’s important to keep your wallet safe and secure. Disconnect it from the dApp when you’re finished using it. Keep your password or private key stored safely. And set up multifactor authentication if available.
Resources
FAQs
5 Best Digital Wallets Apps in 2024
- Apple Pay - Best for iOS.
- Google Pay- Compatible with Both Android & iOS.
- Cash App - Beginner-Friendly Stock Trading App.
- Venmo - Ideal for Peer-to-Peer Payment Network.
- PayPal - Ideal for Quick Transactions.
- Conclusion!
- Build your digital wallet app with VLink!
- FAQs–
Digital wallets, defined
The wallet securely stores virtual versions of debit and credit cards, so you don't need to enter your card details or carry a physical card at all to make payments. You can also save digital tickets and e-vouchers there, so you always have the documents you need on hand.
What are the benefits of a digital wallet? ›
A digital wallet can help you store credit cards, gift cards, customer loyalty cards, membership cards, and more. Digital wallet payments might be a safer option because you reduce the risk of losing a physical credit or debit card.
Is Zelle a digital wallet? ›
Some other popular digital wallets include PayPal and Venmo, both of which are uniquely social by allowing you to easily send money to retailers and friends. Zelle is another popular option for digital payments that automatically comes with many bank accounts.
Which wallet is best for beginners? ›
Best crypto wallet for beginners
- Coinbase – a great wallet for beginners.
- Luno - very intuitive and simple to use.
- eToro - the wallet with over 500 cryptocurrencies.
- Trust Wallet – over 5 million users worldwide.
- Bybit - a wallet with maximum security.
- Exodus – awesome support for the users.
Over 383 million people around the world trust Apple Pay, and it also remains the top choice in the United States, where nearly 44 million people utilize it for everyday payments both online and in-person. It's among the most prominent of all digital wallets and, like others, remains completely free to use.
What is the difference between mobile wallet and digital wallet? ›
An eWallet (electronic wallet) is a digital version of a traditional wallet that stores payment card information and facilitates electronic transactions. A Mobile Wallet is a digital wallet that resides on a mobile device and allows users to store payment information and conduct transactions through a mobile app.
Is Venmo a digital wallet? ›
Venmo is one of the most popular digital wallets. The Venmo app is available for iOS and Android. Venmo allows you to send money to anyone with a Venmo account. You can link bank accounts or cards to your Venmo account as payment funding sources.
What are the disadvantages of a digital wallet? ›
The Drawbacks of Digital Wallets
If you lose your phone or lose access to it due to a dead battery or damage, you also lose access to your wallet. Not accepted everywhere. As technology improves and becomes more accessible, contactless payment is being added in more and more places.
What is a risk of digital wallet? ›
Device theft or loss: Digital wallets linked to mobile devices pose risk. Lost or stolen devices or even stolen cards grant unauthorised wallet access. Without security measures, thieves could initiate transactions, causing financial loss. Biometric vulnerabilities: Biometric authentication isn't immune to fraudsters.
Some digital wallets and payment apps are completely free, while others have free features like sending or receiving money between friends and family.
Is Cash App a digital wallet? ›
Cash App is a popular consumer app in the US that allows customers to bank, invest, send, and receive money using their digital wallet. Cash App Pay is a payment method available to all Cash App customers for single use and recurring payments to businesses.
What is the safest Cash App to use? ›
Both Zelle and Venmo are both generally safe. The platforms use encryption to protect account information and monitor account activity, and encrypted data is stored on servers in secure locations.
What is the difference between a bank account and a digital wallet? ›
Digital wallets and bank accounts can both help you store and spend money. However, digital wallets are primarily meant as a replacement for the physical cards, keys and passes that you might otherwise need to carry. Bank accounts are offered as a safe place to keep your savings.
What is the easiest crypto wallet to use? ›
Best for Beginners: Coinbase Wallet
- User-friendly interface that is easy to navigate.
- Supports more than 100,000 digital assets.
- Multi-signature and two-factor authentication support.
- Backed by a reputable trading platform that is able to recoup lost or stolen assets.
Ease of Use: While lacking a large touchscreen, the Nano S Plus boasts a clear display and two physical buttons for simple navigation. Setup and management via the Ledger Live app are straightforward. Price: At $79, it's one of the most affordable hardware wallets offering these security features.
Do I need both Google Pay and Google Wallet? ›
No, you don't necessarily need both. Google Wallet is primarily for digitally storing cards, passes, tickets, keys, or IDy. On the other hand, Google Pay is for making payments online, in apps, and physical stores. You may choose to use one or both services depending on your needs.
Which wallet does not require a bank account? ›
There are some digital wallets that do not require a bank account and can be used for certain types of transactions. For example, mobile wallets like Paytm, MobiKwik, and Google Pay allow users to add money to their wallet using various payment methods, such as credit/debit cards, net banking, and UPI.
