{"id":331885,"date":"2021-08-29T13:13:00","date_gmt":"2021-08-29T10:13:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/crypto-wallets-an-important-battlefront-to-gain-wallet-share-and-mind-share\/"},"modified":"2021-08-29T13:13:00","modified_gmt":"2021-08-29T10:13:00","slug":"crypto-wallets-an-important-battlefront-to-gain-wallet-share-and-mind-share","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/crypto-wallets-an-important-battlefront-to-gain-wallet-share-and-mind-share\/","title":{"rendered":"# Crypto wallets: An important battlefront to gain wallet share and mind share"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a32b407a57ea\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a32b407a57ea\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-wallets-an-important-battlefront-to-gain-wallet-share-and-mind-share\/#Crypto_wallets_should_be_more_than_better_key_management\" >Crypto wallets should be more than better key management<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-wallets-an-important-battlefront-to-gain-wallet-share-and-mind-share\/#In_the_Web_30_era\" >In the Web 3.0 era<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/crypto-wallets-an-important-battlefront-to-gain-wallet-share-and-mind-share\/#Institutional_context_and_considerations_%E2%80%94_An_institutional_wallet\" >Institutional context and considerations \u2014 An institutional wallet?<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Crypto wallets: An important battlefront to gain wallet share and mind share <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDgvNzEyNWM3NGMtMjM0OC00YWUxLWE5NzYtMGUwNmYxYzg4NDlkLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-128018ef>Digital wallets are software constructs that mimic physical wallets and provide the functionality of storing, using and categorizing payment instruments. The journey of digital wallets started with payments and morphed to other forms of stubs such as digital passes, tickets and boarding passes. However, crypto wallets attempt to redefine the digital wallet landscape as something more than safe storage of payment and crypto instruments.\u00a0<\/p>\n<p>With more than 100 crypto wallets and growing, this sector in the cryptosphere is getting crowded and adding further complexity to an already fragmented blockchain and digital asset space. As I study this space and try to make sense of the complexity of new blockchains, layer-one protocols decentralized finance (DeFi) and nonfungible token (NFT) projects emerging with exponential growth, I think crypto wallets will be the next battlefront as the wars of layer-one protocols eventually cool down. The core issues of scale, security and speed of transaction processing and layer-two protocol consolidate and morph as layer-one superiority aims for processing efficiency and security. Crypto wallets will not only provide an avenue to gain wallet share but will also represent the battle for mind share.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>This time it\u2019s different: When DeFi meets NFTs<\/em><\/strong><\/p>\n<p>Today, most crypto wallets provide software constructs that, for the most part, provide the following services at a very basic level:<\/p>\n<ul>\n<li>Store public and private keys;<\/li>\n<li>Interact with various layer-one blockchains;<\/li>\n<li>Send and receive crypto assets and cryptocurrencies;<\/li>\n<li>Monitor balance.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Crypto_wallets_should_be_more_than_better_key_management\"><\/span>Crypto wallets should be more than better key management<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In my opinion, we need to broaden the definition of a crypto wallet and view it as an avenue to participate in the crypto economy. It can provide the wallet holder with a choice framework for participating in a regulated network that emphasizes digital identity and requires third-party validation, for example, Know Your Customer. <\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Authorities are looking to close the gap on unhosted wallets<\/em><\/strong><\/p>\n<p>At the same time, it also can be part of emerging networks that preserve anonymity and emphasize the confidentiality and privacy preservation of the participants. This choice framework will enable the regulatory and compliance conversation, shifting towards the network and activities as opposed to individuals, just like the choice frameworks our current wallets provide at an analog level. <\/p>\n<p>A wallet would be modeled to be an extension of our identity constructs within the current identity frameworks that are issued by authoritative agents (like a government-issued ID) to an evolving digital identity that represents our (credit) history, reputation and incentive-driven history. It would not only promote transparency and good behavior but also preserve privacy. The notion of identity is important because digital identity (which today is tied to every wallet and every network) is foundational <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a> to ensure the trade, trust and ownership of digital assets. <\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Concerns around data privacy are rising, and blockchain is the solution<\/em><\/strong><\/p>\n<p>A wallet\u2019s ability to control participation and the choice framework for enabling users to choose wallet attributes will allow for a flexible design and encourage participation. These wallets are traditionally containers of all types of asset classes such as NFTs, DeFi assets, cryptocurrencies and crypto assets. In addition, they also contain existing payment instruments, stored value accounts and other forms of digital stubs, allowing participation and inclusion by a registration process for existing financial services platforms and both current and future blockchain and crypto-economic driven networks. The registration could involve either sharing crypto primitives, say a public key, or providing the wallet identified for traditional centralized platforms. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"In_the_Web_30_era\"><\/span>In the Web 3.0 era<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The question we should be asking is how to design a crypto wallet that can be a conduit to a new decentralized internet (Web 3.0) and the entire cryptosphere, and replace and reform our relationship with current services and institutions.<\/p>\n<p>The new design of these wallets should enable engagement in (crypto) economic activities \u2014 whether Web 3.0 or otherwise \u2014 for example, file storage, NFT custody and simply storing data or instruments that let a wallet serve as an account receptacle for all our earnings and engagements in the cryptosphere and existing institutions.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>How NFTs, DeFi and Web 3.0 are intertwined<\/em><\/strong><\/p>\n<p>Whereas website payment standards and web payments at World Wide Web Consortium (W3C) aim to define technology standards. MetaMask, although confined to Ethereum (layer-one protocol), provides an impressive view into what could be a clean way to provide a browser and wallet integration, known as a browlet. MetaMask has been doing this since early 2016 and now defines institutional access with MetaMask Institutional (MMI). Currently, the technology design of wallets focuses on layer-one or platform-specific wallets and key management, which is necessary for the durability and long-lasting growth of Web 3.0. With a model like MetaMask\u2019s, however, wallet provisioning can be a new business model.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Institutional_context_and_considerations_%E2%80%94_An_institutional_wallet\"><\/span>Institutional context and considerations \u2014 An institutional wallet?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Exponential growth in digital assets and related ecosystems, such as decentralized finance, native crypto assets and NFTs, has not only given rise to massive innovation in technology and finance products but also attracted the attention of many innovators, technologists, investors and, more recently, institutional investors.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Institutions <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ear bullish on crypto despite record Bitcoin outflows<\/em><\/strong><\/p>\n<p>While blockchain, as a distributed ledger infrastructure and transaction processing system, aims for efficiency for dematerialized assets (assets in a ledger entry), the emergence of crypto and digital assets changes the landscape and the participants, essentially altering the market infrastructure. Thus, it makes digital (and crypto) assets unique and differentiated due not only to inherent characteristics of the assets but also to the resulting changes in the digital (crypto) assets market infrastructure. Digital (crypto) assets are <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ly bearer assets, and the claim to these assets is generally governed by a public-private key infrastructure. Digital assets are bearer assets, raising implications for trading and safeguarding, and surfacing considerations for institutional asset managers looking to allocate capital to a digital asset fund.<\/p>\n<p>The notion of a wallet in an institutional context has a few more nuances and considerations that include (but are not limited to):<\/p>\n<ul>\n<li>Know Your Customer\/Know Your Transaction <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.linkedin.com\/pulse\/blockchain-enterprise-focus-kyc-aml-regulatory-compliance-nitin-gaur?trk=prof-post\">requirements<\/a>.<\/li>\n<li>Asset allocation and token deployments.<\/li>\n<li>Interaction with crypto-custody services and service providers.<\/li>\n<li>Collateral management and lending.<\/li>\n<li>Liquidity management and treasury considerations.<\/li>\n<\/ul>\n<p>Unlike traditional finance with a unique institutional market infrastructure, specialized asset classes, dematerialized assets, licensed gating criteria and much more \u2014 the core constructs of digital assets like DeFi tokens, tradable NFTs, cryptocurrencies of <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.linkedin.com\/pulse\/blockchain-business-series-protocol-commercialization-nitin-gaur\/\">layer-one protocol<\/a> and so on \u2014 do not significantly differ for institutional investors. The dematerialized assets, centralized security depositories (CSDs), collateralized lending and trading models for traditional finance are not the same in DeFi and other emerging asset classes. The issue and emergence of institutional-grade custody solutions, digital asset trading desks, etc., apply the systemic traditional finance apparatus and risk models to tame a fast-growing technology and crypto-economic led ecosystem. <\/p>\n<p>The issues from an institutional perspective are scale, risk and alignment with traditional organizational controls and governance. For instance, the institutional situation around digital asset custody is similar to the traditional service <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.linkedin.com\/pulse\/understanding-digital-asset-custody-technology-imperatives-nitin-gaur\/\">provided<\/a> by a custodian bank, which is the physical possession of financial assets on behalf of a client. Despite being conceptually similar, however, the practice of digital asset custody requires significant considerations about technology design. It is also necessary to pay attention to business and transaction considerations such as liquidity, treasury and collateral management, as well as fostering a deeper understanding of an evolving regulatory and compliance framework for digital assets, which may represent diverse asset classes.<\/p>\n<p>Applying the traditional finance lens not only adds a cost component but also puts institutional investors at a disadvantage. This makes a case for using wallets in an institutional context to address the nuances discussed previously. <\/p>\n<p>Perhaps the impact of DeFi on traditional business models, liquidity (capital adequacy) and treasury and related services offered to fund managers and administrators may drive the design of institutional wallet requirements from \u201cinstitutional custody\u201d of core assets to the \u201cpoint of deployment, disbursement and allocation.\u201d This changes the lens and focus from institutional custody and extends the institutional wallet as a conduit to providing allocation instructions to crypto-capital deployment, participation instructions in automated market makers (AMMs) and liquidity pools and an interface to \u201ccustody\u201d for long-only assets. <\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>The rise of DEX robots: AMMs push for an industrial revolution in trading<\/em><\/strong> <\/p>\n<p>And again, here is the most important question we should be asking: How can a crypto wallet be designed that can be a conduit to Web 3.0 and the entire cryptosphere, and replace and reform our relationship with current services and institutions? The promise of crypto assets only comes to life with their use, circulation and velocity, but if we create a market structure that only mimics or replicates an existing system, what have we solved?<\/p>\n<p>I think crypto wallets will be the next battlefront as the wars of layer-one protocols eventually cool down. As the core issues of scale, security and speed of transaction processing and layer-two protocol consolidate and morph, layer-one superiority aims for processing efficiency and security. Crypto wallets will not only provide an avenue to gain wallet share but will also represent the battle for mind share.<\/p>\n<p class=\"post-content__disclaimer\"><em>This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.<\/em><\/p>\n<p class=\"post-content__disclaimer\"><em>The views, thoughts and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.<\/em><\/p>\n<div>\n<div style=\"background: rgb(239, 239, 239); border: 1px solid rgb(204, 204, 204); padding: 10px;\"><strong>Nitin Gaur<\/strong> is the founder and director of IBM Digital Asset Labs, where he devises industry standards and use cases and works toward making blockchain for the enterprise a reality. He previously served as chief technology officer of IBM World Wire and of IBM Mobile Payments and Enterprise Mobile Solutions, and he founded IBM Blockchain Labs, where he led the effort in establishing the blockchain practice for the enterprise. Gaur is also an IBM-distinguished engineer and an IBM master inventor with a rich patent portfolio. Additionally, he serves as research and portfolio manager for Portal Asset Management, a multi-manager fund specializing in digital assets and DeFi investment strategies.<\/div>\n<\/div>\n<p><template data-name=\"subscription_form\" data-type=\"consulting_newsletter\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. 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The journey of digital wallets started with payments and morphed to other forms of stubs such as digital passes, tickets and&#8230;<\/p>\n","protected":false},"author":1,"featured_media":331886,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDgvNzEyNWM3NGMtMjM0OC00YWUxLWE5NzYtMGUwNmYxYzg4NDlkLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74894,74863,74983,74868,74891,95118,74879,93542,74355,117,73711,70934,4965],"class_list":["post-331885","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-blockchain","tag-cryptocurrencies","tag-decentralization","tag-defi","tag-ethereum","tag-nft","tag-wallet","tag-web3","tag-adoption","tag-business","tag-investments","tag-regulation","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/331885","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=331885"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/331885\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/331886"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=331885"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=331885"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=331885"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}