Crypto Wallets | The Future of Crypto Wallets

#What are Crypto Wallets?

Crypto wallets are programs that enable users to store and manage their cryptocurrencies. They can run on phones or computers, and can also be apps or physical devices that resemble USB devices. An ideal crypto wallet will allow users to transfer funds across borders without the need for an intermediary, transfer different cryptocurrencies from one user to another and most importantly, be secure and easy to use. Today, crypto wallets fall under two categories: hot and cold wallets. Hot wallets need an internet connection to operate, making them ideal for faster access to assets but less secure. A few examples include mobile wallets, web wallets, and desktop wallets. On the other hand, cold wallets store private keys offline, making them ideal for storing large amounts of cryptocurrencies for the long-term.They rely on physical mediums to store private keys, with popular examples being paper and hardware wallets.

Limitations of Present-Day Crypto Wallets

Present-day wallets have a lot of limitations that need to be addressed as we move into the Web3 era. One of the issues includes being restricted only to buying, selling, and holding crypto assets. In addition, the user experience may not always be the best. One needs technical know-how to handle various wallets without risking the loss of funds by sending them to the wrong network or scam addresses. Such complexities hold crypto back from mass adoption. This begs the question – what can be done to make wallets more interoperable and easier to use to onboard users to Web3?

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Crypto Wallets | The Future of Crypto Wallets

The Future of Crypto Wallets

As mentioned earlier, there are plenty of low-hanging fruits that need to be addressed in the short term to improve user experience. For example, moving tokens from one exchange to another is painful and needs to become a thing of the past. People should also be able to buy crypto directly from a wallet using their credit cards. Another issue is that many people do not know how to secure their secret phrases. Some take a picture of it on their phones or send it to themselves through unencrypted channels. Users need better education on this, and a solution is needed to eliminate the secret phrase altogether.

While we might speculate on the future of crypto wallets, people already involved in the space might offer better insights into this. One such individual is Brandon Millman, CEO of Phantom, the number one wallet on Solana. Phantom grew to over 3 million users in six months and raised over $109 million.

Millman believes that wallets will play a big role as they will be the identity layer for all Web3 applications. Since a user's journey into crypto starts with basic onboarding and ends with discovering and using different dApps, wallets have a central role to play in this journey . However, as things stand, dApp discovery is scattered across random Twitter threads and other channels. For this reason, the CEO sees a world where wallets will recommend dApps instead.

To onboard the masses onto Web3, Millman believes developers have to build new use cases beyond DeFi and NFTs. The two that he is excited about include payments and gaming. For payments, there is a need for mobile-friendly wallets and chains boasting faster and Cheaper transactions. As for gaming, many great teams are already working on Web3 games that will have a huge impact if they take off, like Fortnite. These new use cases should help Web3 dApps rival Web2 social apps and games in terms of users.

Based on these insights, we can predict crypto wallets of the future will boast features that include:

1. A seamless user experience: This means various wallet providers will have to prioritize ease of navigation.

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

3. Data privacy: Web3 promises to provide users with the ability to own their own data. Therefore, crypto wallets of the future should incorporate this to allow users to manage their data as they wish without fear of their transactions being monitored.

4. Seamless hot and cold wallet integration: The gap between these two sets of wallets is quite huge. It only makes sense to hope in the future that users will not have to choose between the use of cold wallets and hot wallets. Rather, there will be a swift integration of both wallets to better foster crypto and Web3 adoption.