Grand View Research reports there are 84 million cryptocurrency wallet users around the world as of August 2022. The increase in usage is an effect of the growing adoption of crypto. Crypto wallets are essential tools for anyone who interacts with blockchain technology. They serve as private mediums that allow users to store, send, and receive various cryptocurrencies, including Monero. Crypto wallets provide the features necessary for secure transfers and exchanges of funds between different parties accessible via mobile and web devices. They are the gateways through which millions worldwide access and interact with the blockchain to manage their digital assets with ease securely.
Various types of wallets are available today, each with its own set of features and security protocols. Users can choose a wallet that fits their needs and preferences best, from hardware wallets to mobile apps. As the cryptocurrency industry matures, you will see further developments in wallet technology that will enhance usability, security, and interoperability.
Let us examine the limitations of current wallets. We will delve into how crypto and Monero wallets are evolving in part 2 of this article.
Issues of present-day wallets
1. Limited to transactions
The current state of crypto wallets mainly revolves around basic functionalities like buying, selling, and HODLing tokens, which restrict their potential. As the crypto market continues to evolve, the primary focus of cryptocurrencies has shifted from relying on third-party intermediaries for transactions to building decentralized systems. With the emergence of Web 3.0, there is a growing need for a more interoperable and social internet, which has sparked users' imaginations about the possibilities of their wallets. They desire wallets with more features.
2. User experience
One issue with using cryptocurrency wallets is how complicated they can be. For example, you need to go through several steps if you want to exchange one type of cryptocurrency for another. You must approve the transaction, pay the approval fee, and then pay another fee to make the exchange. You also need to have the right cryptocurrency to pay the fees. All of this can be bewildering for new users. It can also be a big reason people stick with custodial wallets instead of non-custodial ones, such as getting an XMR wallet for Monero. The platform may still charge you some fees, even if you do not have enough cryptocurrency to complete the transaction.
3. Securing passphrases or seed phrases
Some people are unaware of the importance of passphrases and seed phrases and may not know how to keep it safe. Users need to learn how to secure these phrases properly, such as using password managers or writing it down and keeping it in a safe place. There are ongoing efforts to eliminate the need for passphrases, such as using biometric authentication like facial recognition or fingerprint scanning to access wallets. This would eliminate the risk of losing or exposing the seed phrase and make using cryptocurrency wallets more convenient and secure.
When using traditional wallets, a basic feature is the ability to use it as you wish and personalize it with items like credit cards, pictures, and notes. This allows for identity display and adds a sense of ownership. In the world of cryptocurrency, wallets lack this level of personalization. If crypto wallets could allow users to curate and organize their assets, such as sorting them by type or choosing a custom wallet color, it would make the experience feel more personalized and enjoyable. This would create a more engaging space where users could spend more time managing their crypto assets.
One thing we cannot deny is we are moving towards the next iteration of the internet. Web3 or Web 3.0 is often referred to as the decentralized web because it moves away from the centralized control of companies and governments that currently dominate the internet. Web 3.0 aims to create a more open and democratic internet where users have more control over their data and online interactions.
Crypto wallets are integral to the Web3 ecosystem because they enable users to interact with decentralized applications (dApps) on the blockchain. These dApps are built on top of decentralized protocols and use smart contracts to allow trustless transactions. Crypto wallets act as a bridge between the user and these dApps, allowing users to manage their assets securely and interact with these protocols in a decentralized manner. As Web3 continues to develop, crypto wallets will probably become even more crucial as they become more than just a means to store financial assets but also a gateway into the decentralized world of Web 3.0.