By Joe Jowett, CEO and co-founder of StrikeX
Crypto wallets have enjoyed explosive popularity in recent years, with 79.3 million people across the world using the technology as of 21 November 2021.[1] However, while 78% of adults have now heard of it, up from 73% in 2020, fewer adults were able to define cryptocurrency than at this time last year.[2] Crypto wallets have enjoyed explosive popularity in recent years, with 79.3 million people across the world using the technology as of 21 November 2021 @StrikeXofficial Click To Tweet
Designers and developers of crypto wallets have an obligation as well as an incentive to reduce this educational deficit, by providing products which leave users in no doubt about their benefits. This means delivering the security and clear links to fiat currency which first-time buyers crave and, beyond that, supporting a range of tokens to trade and even offering cross-chain compatibility. At StrikeX, for example, we are preparing to launch our own crypto wallet which will address a number of these issues.
Designers and developers of crypto wallets have an incentive to reduce this educational deficit, by providing products which leave users in no doubt about their benefits @StrikeXofficial Click To TweetBut before that…
Wallet providers are often quick to bombard consumers with arguments of why their product is the best, but this will fail to resonate without first ensuring that consumers understand what a crypto wallet is.
Unlike a physical wallet, a crypto wallet does not store currency. Cryptocurrency and other tokens such as NFTs are stored on the blockchain, whereas a crypto wallet houses a user’s public and private keys, which enable them to access their assets. A public key is like an email address; if someone wants to transfer an asset, they send it to the recipient’s public key. A private key is like the password to an email account; it proves that the public key belongs to that user.
A crypto wallet does not store currency. Cryptocurrency and other tokens such as NFTs are stored on the blockchain, whereas a crypto wallet houses a user’s public and private keys @StrikeXofficial Click To TweetWhy is this important?
Crypto wallets cannot, and should not, achieve mainstream adoption until consumers can be confident about their security credentials. Moreover, providers should be equally forthcoming about the potential security risks, as every platform on the market has both pros and cons.
Hot wallets, which store data online, are inherently riskier than cold wallets, which store data on hardware such as UBS drives. Online wallets are more susceptible to cyber-attackers, who might use malware to break into a wallet or exploit hidden vulnerabilities in its software.
Crypto wallets cannot, and should not, achieve mainstream adoption until consumers can be confident about their security credentials @StrikeXofficial Click To TweetBut not all hot wallets are created equal. Electrum, for instance, has several security features which competitors such as Coinbase lack, including integration with hardware wallets to allow for “cold storage” of users’ data.[3] Offering advantages such as this, and ensuring that consumers understand them, will surmount a significant obstacle to mainstream adoption.
Providing a payment gateway
Crypto wallet providers can also drive adoption by making it as easy as possible to convert crypto assets to fiat currency. As well as assuring investors that cyber-attackers cannot easily access their assets, platforms should ensure that the opposite is true for users themselves. Making the transition from crypto to “real” currency as straightforward as possible will increase both convenience and consumer confidence, contributing to an overall improved user experience.
At StrikeX we are preparing to launch our own crypto wallet which avoids the hassle of exchanging crypto assets for fiat. Converting between crypto and cash must be a seamless process @StrikeXofficial Click To TweetAt StrikeX, for example, we are preparing to launch our own crypto wallet which avoids the hassle of exchanging crypto assets for fiat. It will offer instant fiat-to-crypto deposits as well as withdrawals direct to the user’s bank account, with Visa, Mastercard, and Apple Pay all compatible. Converting between crypto and cash must be a seamless process to win over crypto-sceptic consumers.
Broadening horizons
But converting sceptics into first-time buyers is only an initial step on the journey to mainstream adoption. Keeping investors interested in their crypto assets with a fully functional, user-friendly platform will be key to the viability of crypto wallets in the long term. Wallets which support a range of tokens will be best-placed to achieve this.
Even some of the most popular platforms on the market do not yet offer this. MetaMask, for instance, surpassed 10 million users in August 2021,[4] but only supports Ethereum and Ethereum-based tokens. Integrating decentralised exchange capabilities into a platform, on the other hand, opens new opportunities for users to trade in different cryptocurrencies and tokens without requiring recourse to an external exchange.
Unlocking ever greater functionality for consumers will encourage them to keep using crypto wallets, as long as their expectations around security can be met @StrikeXofficial Click To TweetBeyond this, cross-chain compatibility would empower users to transfer value between different blockchains: Ethereum and the Binance Smart Chain (BSC), for example. Unlocking ever greater functionality for consumers will encourage them to keep using crypto wallets, as long as their expectations around security can be met. The onus is on crypto wallet providers to help consumers understand and adopt their products, and these principles of security, accessibility, and flexibility will provide the basis.
[1] https://www.statista.com/statistics/647374/worldwide-blockchain-wallet-users/ [2] https://www.fca.org.uk/publications/research/research-note-cryptoasset-consumer-research-2021#lf-chapter-id-results-public-awareness [3] https://money.com/best-crypto-wallets/ [4] https://consensys.net/blog/press-release/metamask-surpasses-10-million-maus-making-it-the-worlds-leading-non-custodial-crypto-wallet/
