Wallets — Can’t Live Without ‘Em
Self-custody wallets (”wallets”) are essential portals to the on-chain world—facilitating activities ranging from onboarding funds to deploying smart contracts.
Despite their crucial role in the crypto ecosystem, wallets today offer suboptimal user experiences. The unintuitive message-signing process, unwieldy addresses, and perpetual threat of permanent private key theft / loss represent major obstacles to Web2-esque seamlessness. Many talented teams are currently building products to mitigate this friction and risk. Fully appreciating the value of their work, however, requires familiarity with wallets’ evolution as unprecedented enablers of financial self-sovereignty.
In 2009, Bitcoin Core—Bitcoin's original software, and the first peer-to-peer (P2P) cash system—was introduced. One of its key features was the first non-custodial wallet, which was accessible through command-line interface (CLI). This tool granted users independent control over their keys and tokens, offering a level of digital autonomy unimaginable in traditional finance.
The CLI wallet was succeeded by the more user-friendly BitcoinQT. With a click (vs. code), users could send, receive, and store Bitcoin. While the initial feature set was confined to basic transactions, BitcoinQT helped establish a new standard for digital commerce; indeed, disintermediated P2P exchange remains modern wallets' fundamental utility.
Over time, wallets have evolved in form and function. They are now accessible on desktop, mobile, and hardware platforms, and they can offer enhanced convenience and security (tailored to user preferences). Additionally, the emergence of smart contract platforms, such as Ethereum, has greatly expanded the universe of potential wallet features.
Wallets today are best described as control centers for a complex set of on-chain actions. Possible activity includes borrowing, trading, gaming, minting digital assets, and messaging. Ironically, modern wallets’ wealth of features, and the more sophisticated crypto usage they inspire, has revealed their crudeness—particularly when compared to Web2 experiences.
In our opinion, though still relatively primitive, wallets’ impressive progression since the original Bitcoin CLI is a harbinger of continued, rapid maturation. This month, we are excited to discuss the latest developments in the wallet ecosystem, the challenges that teams are working to address, and the exciting solutions on the horizon.
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Weekly explorations into emerging crypto trends and how to navigate 2023 from the Slow Crypto Team, Sam Lessin, Clay Robbins, and Caroline Cline.