What is the Future of Crypto Wallets?

Will there be more to crypto wallets than just transactions?

These and many more thoughts have clouded my mind in the past few weeks and I thought it nice to elaborate on the future of consumer wallets. 

The explosion of cryptocurrencies and NFTs have brought about the adoption of crypto wallets for different purposes. However, crypto wallets aren't the first wallets ever innovated. 

Take a stroll down memory lane to your first wallet. What made you get one? You may have purchased one to help you effectively store money and some items you deemed personal. Over time, that wallet grew into something you considered very personal because it stored your money, various identity cards, maybe your credit or debit card, and some other items you saw as personal. You took your wallet almost everywhere and it was something you cherished.

That exactly is how a wallet should be. With the rise in web3.0, DeFi, NFTs, and other aspects of cryptocurrencies, users are ever in search of a wallet they can feel safe with.

It's no wonder in November 2021, it was reported that MetaMask has hit more than 21 million monthly users which is about 420% growth since April 2021 all thanks to the rapid growth in DeFi, NFTs, DAOs, and the play-to-earn models.

With this being established, let's take a short dive into the foundation of crypto wallets.

What are Crypto Wallets?

Crypto wallets are devices or applications that enable crypto users to manage their cryptocurrencies. It allows users to safely store, send or receive cryptocurrencies. An ideal crypto wallet has the following features

1. It allows the instant transfer of assets across different geographical locations without the need for an intermediary

2. It is secure and easy to use

3. Allows the transfer of various cryptocurrencies from one user to the other

The crypto world comprises different types of investors and as such gives rise to different types of wallets that will serve the needs of each investor.

Types of Crypto Wallets

There are two types of crypto wallets. They are the hot wallets and the cold wallets.

1. Hot Wallets:

Any crypto wallet that requires the use of an internet connection to assess its assets is known as a hot wallet. While they offer access to users and are user-friendly, they are less secure and prone to hackers. There are various categories of hot wallets. They include

• Mobile wallets: These wallets have the requirement of downloading a mobile application that serves as your wallet. The interesting thing about this is that it offers flexibility to crypto users, especially newbies. Mobile wallets providers give you control over your private keys. Examples include Trust wallet, metamask, etc

• Web Wallets:  Crypto users can assess their web wallets through the web without any requirement of downloading an application. Some web wallet providers hold and manage your private keys on your behalf Examples of wallets in this category include coinbase, Binance, etc

• Desktop wallet: In the case of a desktop wallet, users are required to download an application on their desktop. The advantage of this when compared to some web wallets is that it gives you full control of your assets and keys. Examples are Electrum, Atomic wallet, Exodus, etc

2. Cold Wallets

When it comes to a safer alternative for securing assets, cold wallets are the go-to option, Cold wallets are wallets that use a physical medium to store the assets of users in an offline mode thus making them resistant to online hacking. There are various categories of cold wallets. They include

• Paper Wallets: In paper wallets, the wallet's address and private key are printed out in the form of a QR code which is scanned to execute transactions. 

• Hardware wallets: These refer to devices that generate public and private keys which are stored on the device itself and are not connected to the internet. Hardware wallets convey the true definition of cold wallets. Examples include safepal wallets, Trezor, Ledger, etc

While there are currently several wallets for crypto users, my opinion remains that to onboard the next 100million users into web3.0, there needs to be more functionality for the present crypto wallets than just execution of transactions and storage of assets.

The Limitations of Present Crypto Wallets

While many crypto wallets to date have been built to enable just crypto transactions, they fail in many functional areas.

1. Wallet as transaction entities: While the core of crypto revolves around making transactions without the need for a third party, as the world evolves, so does the crypto niche. Many crypto wallets are built to handle solely buying, selling, and hodling crypto tokens and this imposes a limitation on crypto wallets. The movement to Web3.0 is opening up the need for a more interoperable and social internet which gives users lots of fantasy about how exactly their wallet should be and how they can spend more time in their wallets.

For example, the NFT niche got massive traction last year. Many users who got into the NFT niche required wallets that can enable them to safely store their NFT and also give them the option to come back anytime to admire this beautiful art that sits right in their wallets. So more than just transactions, crypto users want to spend more time in their wallets. This is one reason that led to the spike in MetaMask's monthly active users

2. Wallet User Experience: A seamless user experience is what every crypto user wants. However, this is something that isn't quite common when it comes to crypto wallets. High-quality experience within various crypto wallets can lead to massive adoption of web3.0 and make users feel safe, secure, and well understood. Nothing beats interacting with an application or device that is easy to understand, user and makes you feel at home while you explore its utilities and features.

3. Wallet Identity: When purchasing a traditional wallet, one basic feature that comes with it is the ability to use it as you wish and display your identity. One look at any traditional wallet now, you will find various cards that display the owners' identity from credit or debit cards to pictures, letters, handwritten notes, etc. These wallets also come in different colors.

This exactly is one feature that is missing in today's crypto wallet. If only crypto wallets can allow users to curate the assets they own something as simple as choosing their wallet color or sorting out their assets by type, it would go a long way in making their wallets feel like a place they could spend more time in.

With these limitations in the present-day crypto wallet being established, let's have a look at the future of crypto wallets.

Future of Crypto Wallets

A critical look into the future, I am wondering if crypto wallets will be more used than messaging apps, bank apps, and even social media apps.

However existing wallets are not super focused on metaverse and to onboard the next 1bn+ people into web3.0, we need a better wallet and also a few changes in the infrastructure of crypto wallets. These changes should first begin with eliminating the current limitations that exist.

The future of crypto wallets will look a little similar or more to these:

1. Seamless user experience within various crypto wallets. Easy navigation within various crypto wallets should be prioritized by various crypto wallet providers.

2. Wallet Identity. Crypto wallet providers will finally understand that users are first humans before customers and as such prioritize the need to integrate identity display in their products. This will enable the user to display their collections, content, and tokens as they wish with the option of customizing for different colors and features.

3. Data privacy. The web3.0 promises to give users the ability to own their data and have as much privacy as they wish. Incorporating this idea into the future crypto wallets will let users manage their authority and data as they wish without the fear of their transactions being monitored.

4.  Seamless hot/cold wallet integration. The gap between both crypto wallets is quite vast now. In years to come, I am hoping that users wouldn't have to choose between the use of cold wallets or hot wallets; rather, there would be a swift integration of both wallets to better foster crypto and web 3.0 adoptions.

5. Community. The backbone of every successful project is the community behind it and in the crypto niche, it has proven true. When I say community, I do not just mean discord servers rather I mean a group of individuals with a common interest. The incorporation of different consumer-focused infrastructures into crypto wallets will help strengthen the crypto community.

Conclusion

I believe that we have barely scratched the surface of what crypto wallets could be and their numerous potentials. By incorporating the right infrastructure and consumer-focused features to different crypto wallets we are on our way to onboarding the next 1 billion users who will deeply fall in love with crypto, its use cases, and web3.0 as a whole.

First Published here