What are the risks of using a Web3 wallet?

Summary

The Bitvavo Web3 wallet gives you full control over your crypto assets, so you can access and interact with the broader DeFi ecosystem with over 12,000 assets. With this control comes personal responsibility. This article outlines the key risks of using the Bitvavo Web3 wallet.

Introduction

The Web3 wallet is a non-custodial wallet. This means you are responsible for managing your wallet and approving transactions using your passkey. While this setup gives you more privacy and control, it also means you operate outside of Bitvavo’s regulated environment and without its protections.

What risks apply to the Web3 wallet?

• Non-regulated product: The Web3 wallet is not a regulated product. Protections such as MiCA safeguards or Bitvavo account guarantees do not apply, meaning you are fully responsible for your funds.
• No due diligence on tokens: Bitvavo does not review or verify tokens in the Web3 wallet. This means there is a real risk of scams, fake tokens, or copycats. You are expected to do your own research before interacting with any assets.
• Private key control: Do you wish to export your private key? It is essential to store it securely. Please be aware of the security trade-offs: choosing not to export your private key can be considered a more secure option, as it eliminates the risk of losing or having it stolen. In that case, you can continue to access your Web3 wallet through your Bitvavo account.
• Limited support: Support is limited for Web3 wallets. You are responsible for managing your wallet yourself, including handling transactions and resolving potential mistakes.
• Permanent loss: A small mistake in an address or network selection can result in the permanent loss of your funds.
• High volatility: Digital assets are highly volatile, which can lead to significant losses.
• Low liquidity: You may encounter difficulties selling assets if there is low liquidity.

Conclusion

In short, a Web3 wallet offers full control but requires you to handle your own security and transactions with extreme care. If you prefer Bitvavo to manage these technical aspects for you, using your standard Bitvavo account may be a safer choice.

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