Why the Web3 wallet needs to evolve for mass adoption
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The Top 3 Web3 Wallet Problems
Let’s talk about the crucial issues of the software that is supposed to keep your crypto-assets safe and facilitate Web3 services/protocols usage.
#1 Complexity
A wallet is complex to set-up and use. Why?
The main reason is that wallets rely on a particularly important and powerful security concept: Public key and private key cryptography.
To make it simple, it matches the login (public key) and the password (private key) you are using to access any account over the Internet.
Unfortunately, public keys and private keys have larger sizes than logins and passwords. Too large to remember. So, the wallet software must store them. But you also need to save them for yourself in case your wallet is lost. Or at least save a complex passphrase to recover it. Usually, the wallet software also requires you to define a password or a pin and sometimes to set-up a two-factor authentication like google authenticator.
All this makes the set-up of a wallet complicated, time consuming, cumbersome, and overwhelming for newcomers. Most of them give up during the process, especially because they don’t understand what they are asked to do and the importance of doing it. Moreover, this process is also annoying for people familiar with Web3 because you must reiterate it to access any new blockchain.
#2 Security
This is the second main problem, and it is underestimated by both the users and the Web3 ecosystem players who are used to it.
Public keys and private keys make wallets drastically more secure than a simple login password in theory. Although, remember that your wallet software must save these keys in the app to use them. And that’s the problem. Your private keys are stored on your browser or your mobile. They are then available for anyone who wants to steal them. And this can be done very easily by hackers.
Today, only hardware wallets that can save your private keys on a piece of hardware like a Ledger are secure. But they are even more cumbersome to use and to set-up, especially for non-technical people.
For technical or curious people, an article about current wallet security flaws
Are cryptocurrency wallets more at risk than ever?
#3 The lack of third-party protection and management
Another major issue experienced by the whole Web3 ecosystem.
Why Blockchain’s Ethical Stakes Are So High (Harward Business Review)
When your assets are in a bank or your cryptocurrencies in an exchange, they are usually managed and secured through a centralized custody solution. In addition, the access to your account is also managed with higher security through multiple authentication factors. If you lose your login and/or password, it is easy to recover the access to your account.
You can even complain when your account gets hacked and will most likely get reimbursed.
So far, there is no third-party protection and management because, the wallet is a stand-alone centralized software.
Moreover, the “Wallet” name itself does not reflect what it really is.
Many people, especially newcomers still do not understand the wallet concept. Some people still think that your coins, tokens and NFTs are stored in your wallet. But a wallet is just a software to access your assets on the blockchain. Like a login/password, it is just an authentication mechanism to access Web3 services and sign transactions related to assets or services directly managed by the blockchains.
Surprisingly, this authentication, despite being one of the most crucial features of the blockchain is not decentralized for now.
Those three main problems slow down the Web3 mass adoption
Web3 is much more than just cryptocurrencies like Bitcoin, Ethereum, etc… It is a new ecosystem that will have an enormous impact on the economy and society. At least as important as the Internet revolution.
As an example, decentralized finance provides new services to compete with banks and fintechs. But decentralized technologies will also emerge in Gaming, AI, Media, Social Networks, Supply Chain Management, Enterprises… with many more new use cases to come.
This new generation of services will only be accessible through an authentication solution which is known as a wallet today.
Decentralizing this Authentication Layer can solve what current wallets and Dapps are missing and be the key to open up Web3 for everyone.