An Analysis of the Future Role of Crypto Wallets in Web3: Savings, Digital Identity and Social Networking

Wallets are an important part of daily life. This is not a wallet that holds physical fiat currency, but an encrypted wallet that stores digital currency, NFTs and digital identities.

Most cryptocurrency holders only care about the value of the wallet, not the performance of the wallet. Wallets are the backbone of the crypto industry. It will be difficult for users to execute transactions without a wallet. Wallets are becoming increasingly important and used as gateways to cryptocurrencies, including for trustless logins to web3 applications, purchasing cryptocurrencies, and even representing personal digital identities.

Money-savvy and innovative thinkers have seen the potential value in wallets, with new wallets popping up and raising huge sums from investors.

Status of wallets

Crypto wallets have come a long way and started out just for storing coins and making occasional transfers. More recently, with the development of Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs), most wallets have had to introduce new features to allow users to interact with these protocols. At the same time, the hardware wallet and wallet app can also work together, and both can provide seamless interaction.

However, many users overlook the security of interacting with the underlying protocols due to the convenience and ease of connecting protocols, authorizing signatures, and executing transactions. When a user interacts with a malicious protocol, it can cause the user to lose funds. There have been incidents where a user signed a transaction on the protocol and then the coins in the wallet were maliciously moved to a different address. In a fast-moving industry, such unfortunate events are bound to happen, however a small number of malicious cases should not be representative of the industry as a whole.

On top of that, as various blockchains accelerate, some crypto wallets have a hard time keeping up. As a result, this caused some wallets to lag in updates or load slowly. This will be a problem of the past as the blockchain infrastructure improves.

In addition to enabling users to interact with multiple protocols, more wallets are starting to add redemption capabilities. This is usually achieved through liquidity aggregators, where wallets simply act as UIs to facilitate exchanges. This allows users to exchange different tokens (as long as there is liquidity) through the wallet. The only caveat is that fees tend to be higher than those of centralized exchanges.

What will the wallet of the future look like?

Everyday digital wallet

Fiat currency digital wallets have gained widespread attention in the past decade, such as the popular use of CashApp and Venmo in North America, Alipay and WeChat in China, M-pesa in Africa, and Grab in Southeast Asia. These wallets allow users to store fiat currencies in them and are widely accepted by merchants in their respective markets. This saves people from having to carry large amounts of cash or credit/debit cards with them. Instead, a small amount of cash can meet daily needs, and other funds are kept in a digital wallet on a mobile device.

With more and more merchants accepting cryptocurrencies, users only need a wallet to conduct crypto transactions safely and easily. This is where mobile cryptocurrency wallets come into play, where users can store cryptocurrencies on their phones, just like a fiat digital wallet. Crypto wallets can offer consumers another way to transact. Trust Wallet tried to differentiate itself from other crypto wallets by prioritizing mobile apps, and other popular wallets such as Metamask and Phantom subsequently deployed mobile apps.

Investment/Saving Center

There are many saving and investing apps on the market today, each offering a different asset class to suit users with different risk tolerances. Some are robo-financial solutions, while others allow users to buy investment products such as stocks or funds.

While users can trade using centralized exchanges, these applications do not allow users to hold private keys to their own crypto assets. Therefore, if the exchange is hacked, users are likely to lose their assets. With encrypted digital wallets, users can control their own funds and security. In addition, the wallet also provides services for users to interact with a variety of investment products, including various DeFi protocols, such as Index Coop, which can provide various encrypted indices or currency markets, Aave, which provides lending services, and centralized services such as BlockFi and Celsius. Revenue Aggregator.

digital identity

Similar to how Google allows users to access various applications without creating multiple accounts, crypto wallets can have similar functionality in web3. This is already happening where crypto wallet users are able to connect to the decentralized protocol at any time and start using it without submitting personal information or registering an account.

As more traditional companies enter the crypto space, expect to see mass adoption of this login feature. Wallets can also act as authentication tools. For example, holding a certain NFT is required to join a private Telegram group or a specific event. For example, some musicians have been experimenting with NFTs for concert tickets that users can keep in wallets, or show.

Even these wallets can contain personal information, such as a driver’s license or passport.

Web3 Social

As NFTs take the world by storm, many NFT holders showcase their NFTs on social media and use them as profile pictures. There are currently no crypto wallets that allow users to hold NFTs as personal data.

Furthermore, since these wallets have digital identities attached, they have the potential to develop into social networks such as Facebook and Twitter. Therefore, users can interact on-chain and share content on their profiles. Imagine users being able to execute crypto transactions and publish views from the same platform. Twitter has integrated cryptocurrency tipping into its platform, but such offerings on crypto wallets remain to be seen.

Multi-chain support

There is no doubt that the crypto world is developing rapidly, and new public chains are constantly emerging. However, most wallets currently cannot support all public chains. One-stop centers for different public chains are likely to emerge in the future. Phantom Wallet has already done this and is working on other public chain versions besides Solana.

cross-chain bridge

In order for funds to circulate among different public chains, users must use cross-chain bridges to transfer funds from one chain to another. Although some cross-chain bridge applications already exist, the ability for users to complete cross-chain in their wallets will make the experience smoother. Representative of these is the XDEFI wallet, which integrates the THORCHAIN ​​protocol into the wallet. Once the product goes live, users will be able to exchange assets from one ecosystem to another without having to do it manually in a cross-chain bridge.

friendly user

Many malicious protocols have already cost crypto users millions of dollars. If crypto wallets warn users about known questionable protocols, they can at least avoid some of their losses. This is especially useful for newbies unfamiliar with the crypto world.

At the same time, the amount of Gas information displayed by the current wallet is very small. It would be very helpful for users, especially new users, if the wallet could display more of this information. For example: the time period when the gas price is low in history, or the gas price is higher than the average price to send a notification to the user.

Finally, wallets have the potential to become encrypted app stores or Dapp search engines. New Dapps and protocols will be launched there. Wallets can serve as a tool for users to explore in the crypto world, which is a very powerful role because wallets will have a large potential user base of Dapps.

multi-signature

Currently, the mnemonic of the encrypted wallet can only support one configuration file (multiple accounts can be created, but they are all accessed through a mnemonic). In order to create another profile, the user must create a new profile in order to set up a new wallet.

This makes it difficult for companies or organizations to create accounts, and administrators don’t want to mix corporate wallets with personal wallets. On top of that, such wallets are usually multi-signatured, but users must use other tools to complete multi-signature. Wallet integration with multi-signature services will make it easier for users to create such accounts.

Epilogue

Crypto wallets are critical to advancing the industry as wallets are often the first application for new users to engage in crypto interactions. Even degens still require a trusted wallet to interact with many protocols. As the number of users increases, so does the demand for wallets. These crypto wallets will likely become general-purpose software and will need to continue to be built to support numerous crypto users.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/an-analysis-of-the-future-role-of-crypto-wallets-in-web3-savings-digital-identity-and-social-networking/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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