📚Glossary
Comprehensive list to understand Comet and its purpose
Web3
Web3 is a term used to describe the third generation of the internet, which is focused on decentralization and the use of blockchain technology.
It enables users to interact with decentralized applications (dApps) and manage their digital assets or cryptocurrency directly from a browser.
Wallet
A cryptocurrency wallet or wallet for web3, like Comet, is software used to store and manage cryptocurrency assets. It enables users to send, receive and store cryptocurrencies, and in some cases, interact with decentralized applications (dApps) on web3.
DApp
A decentralized application (dApp) is an application that is built on a blockchain or other decentralized network. It operates without a central authority, and is often used to enable secure and transparent transactions and interactions.
Examples of dapps:
safeswap.io
inheriti.com
Private Key
A private key is a secret code that is used to access a cryptocurrency wallet and authorize transactions. It is essential for the security of cryptocurrency assets, and must be kept confidential and secure at all times.
Examples of private keys:
Seed Phrase (Mnemonic)
A seed phrase, also known as a mnemonic, is a list of words that are used to backup and recover a cryptocurrency wallet. It is typically comprised of 12-24 words, and provides an additional layer of security in case the private key is lost or compromised.
Examples of seed phrases:
Keystore File
A Keystore file is a file that contains an encrypted version of a private key.
It is often used to backup and store private keys offline, and can be used to restore access to a wallet in case the original private key is lost or compromised.
Wallet Password
A password for a browser extension wallet, like Comet, is used to protect your wallet data stored locally on your device. It functions as an additional layer of security to prevent unauthorized access to your wallet if someone else gains access to your device.
When you create a new Comet wallet, you are provided with a private key and a 12-word seed phrase (mnemonic). These are the keys to your crypto kingdom and should be kept safe and secure at all times.
The private key and seed phrase are used to access your wallet and make transactions. They are unique and related to your wallet only and can be used to recover your wallet if you ever lose access to your device, get a new device or uninstall Comet.
They also can be used to import or restore your wallet into another browser extension wallet.
In contrast, the password for your Comet wallet is stored locally on your device and is used to encrypt your wallet data. This means that the password is not sent over the internet and is not stored on Comet's servers.
It's important to note that while the password is an additional layer of security, it should not be used as a substitute for keeping your private key and seed phrase safe. A password will not protect your wallet if your private key or seed phrase get stolen, it'll only prevent someone from gaining access to your wallet if they get access to your device.
Hot Wallet vs Cold Wallet
A hot wallet, like Comet, is a cryptocurrency wallet that is connected to the internet and used for frequent transactions, while a cold wallet is a cryptocurrency wallet that is not connected to the internet and used for long-term storage, typically a hardware wallet or paper wallet.
Self-Custody
Self-custody refers to the practice of taking full responsibility for the security and management of your digital assets. In self-custody, you have full control over your private keys and are not relying on a third-party service provider to manage your funds. This is typically achieved through the use of a non-custodial wallet, like Comet, where you manage your own private keys and are responsible for ensuring the safety of your assets.
Self-custody is often seen as the most secure way to store digital assets, as it eliminates the risk of loss or theft from a third-party provider.
Custodial Wallet vs Non-Custodial Wallet
A custodial wallet is a type of digital wallet where a third-party service provider holds and manages your funds on your behalf. This means that you do not have direct control over your private keys, and your assets are stored on a centralized server. Custodial wallets are often provided by exchanges and other financial institutions and are known for their convenience and ease of use. However, they also carry a higher risk, as the third party could be malicious, fraudulent, hacked, go bankrupt, or be subject to government seizure.
On the other hand, a non-custodial wallet (like Comet) is a type of digital wallet where you have full control over your private keys and manage your own funds. This means that you are responsible for the security and storage of your assets, typically through the use of a software wallet. Non-custodial wallets are known for their security and privacy, as well as their flexibility and accessibility. However, they also require a higher level of responsibility on your part.
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