Do you see cryptocurrency as digital cash? If you do, that means you need a digital wallet with the same properties as your pocket wallet. While a lot of people think of crypto like this, and it’s not necessarily wrong, a cryptocurrency wallet is more than just a digitized version of a real wallet. Also, the measures you need to take to protect it can be beyond your capability, especially if you’re not a tech-savvy person.
Cryptocurrency isn’t for everyone. With all the talk about decentralization, globalization, and sovereignty, there are still people who don’t have access to the new generation of blockchain-powered applications due to the technical boundaries mainly imposed by the requirement of using a digital wallet. In this article we’re going to talk about companies such as Ghost Talk, Coinbase, and ARK, who are looking to take over the technical burden of their users.
What’s the problem with all of the cryptocurrency wallets?
Let’s first understand why a cryptocurrency wallet comes with such a steep learning curve. To start with, it isn’t storing your tokens. It actually stores a pair of public and private keys that grant access to the blockchain where your cryptocurrencies reside. From its most basic definition, you can tell that it’s nothing like its physical counterpart. And, for a non-technical person, it is as confusing as it can be.
Starting over, a cryptocurrency wallet is a software that enables users to interact with the public blockchain ledger where the amount of tokens is just a record in this huge collection of addresses. For example, Bitcoin’s blockchain has ~24 million wallet addresses in total. This, however, doesn’t mean there are 24 million Bitcoin users. One person can be the owner of more than one address. And the wallet is the “address manager”; the place where the user can keep track of the remaining total and send or receive its tokens from any of these addresses.
What about the keys? There should be a way for a user to prove that he/she is the rightful owner of an address. Here’s why the private key is essential. It’s a long string of numbers and letters and it’s stored inside the wallet. You can read more about private and public keys and how a cryptographic system works but it’s enough to know that whoever knows your private key gets full access to your addresses and your funds.
If you don’t want to say goodbye to your cryptocurrencies, it is imperative to secure the private key, the wallet software that stores it, the device you’re accessing it from, the active Internet connection, and your backups. It’s fair to say it gets complicated.
What solution can help users keep their cryptocurrency safe?
In the case of institutional investors who invested millions of dollars in digital assets, the hustle of building your own digital fortress around your funds may be well worth it. At the same time, Coinbase Custody could prove you wrong. They are a service offering the exact opposite of that: an all-in-one custodial solution for large financial organizations to securely deposit their cryptocurrency in a way that is insured. The only problem is that the setup fee is $100,000 and Brian Armstrong, the CEO, stated that they already have more than $1 billion in assets under management. If these hedge funds, banks, or huge financial institutions prefer to outsource their security in the hands of field experts, what are you supposed to do as an average user?
The best use case example is Ghost Talk’s social media messaging application. While it serves as a peer-to-peer messaging service with the automatic deletion of messages and a complete set of communication features, it uses a decentralized payments platform to reward its users for their activity within the platform using their own Smart Coin token.
Anyone who’s currently using Facebook, Instagram, YouTube or any other traditional social media application can simply switch to Ghost Talk and enjoy cryptocurrency rewards just by creating content, leaving quality comments, promoting, reviewing, liking, and even disliking content. All activities taking place within the network are rewarded.
Basically, anyone with a device and connection to the Internet can generate their own cryptocurrency. In this case, if you don’t have knowledge about the blockchain or know how to at least handle the tokens you can’t benefit from these rewards, right? Or even worse, someone with extensive knowledge can hack you and leave with your earnings. Until now, $1.3 billion worth of cryptocurrency were already stolen and 61% of this amount disappeared only during the past year.
Instead of letting its users try their luck with the multitude of wallets and their questionable security, Ghost Talk will issue a Smart Wallet for them to store Smart Coins, along with a smart contract as a payment escrow service in order to ensure that the funds are securely and fairly distributed.
Their Smart Wallet, similar to any cryptocurrency wallet, gives users full control over their Smart Coins. Users can spend within Ghost Talk’s platform and exchange them for other cryptocurrencies or fiat currencies on the open exchanges.
The certainly sounds like the best solution, and if every platform would do the same we could finally have an ecosystem ready to handle a mainstream audience.
From the top 20 blockchain projects that are active right now, there are only two others who were willing to walk the extra mile and develop a native wallet for the convenience of their users. One is ARK, who implemented its wallet for desktop, Android, iOS, and as an online tool for generating a so-called paper wallet. The other is Origin, which comes with a mobile wallet for Android devices and iPhone.
We can also name projects like Status and Basic Attention Token, who are offering the storage feature within the actual platform. It’s easy to use, but how secure can it be if you’re going to access it every time you’re using the product? There’s Gnosis with an online wallet which doesn’t seem to work properly. And OST with an SDK for developers to implement their own wallet if needed.
The rest of the projects chose to offer support for other wallets, Augur and Storj coming straight up with a list of such software solutions. In some cases it even led to articles about “the best wallet” for a certain project. At least Storj is linking to trusted websites, but relying on third-party software (whether it is open source or not) it’s an unnecessary dependency.
One year ago, when Decentraland launched its platform, we’ve seen hundreds of discussions from their confused users looking for a place to store the platform’s native cryptocurrency, MANA. It even led to debates about which wallet could be the best fit.
Are custom wallets a long-term solution?
Even though the number of blockchain-based applications is growing, as well as the number of cryptocurrency users, there is still time to perfect the way people can interact with their blockchain.
An interesting perspective is to make a parallel between the growth of the Internet and where cryptocurrency stands. Such a study shows that we are where the Internet was in 1994 when most people used PCs. Cells phones were available, but very expensive. There were no touchscreens. The battery was as big as the phone. Cloud storage wasn’t even invented or thought of yet. The DVD wasn’t invented until 1995. There was no streaming. Video stores were full of VHS tapes. Now, look at us today. We have access to Netflix, from a mobile device, on a bench in a park. The Internet is nothing like it used to be in 1994, just as the cryptocurrency space won’t be anything like it will be 25 years from now.
Saying that companies like Ghost Talk, ARK, or Origin are paving the way for the future of cryptocurrency is not so far fetched. In time, the cryptocurrency ecosystem will evolve and reach a higher level of mass adoption. And, at that point, building a safe and trustless solution for the custody of their users’ assets will be the standard. Until then, are you going to sit back and wait for it to happen or will join the current platforms and get a taste of the future?