I don’t know about you, but downloading a Web3 wallet and funding it for the first time was a nerve-wracking experience. It was difficult to send money without knowing who the central authority is and what their logo means. I waited, refreshed my wallet several times, and waited.
After using it for several months, I realized how different this decentralized wallet was from the payment apps offered by banks and companies. Paypal. These wallets carried not only my crypto assets, but also my login credentials. Transaction history is stored in the wallet. This proto-identity can be used around the world of Web3.
Web3 wallets look more like vehicles. These wallets allow people to travel the new blockchain-based web. And one day, the brown wallet in my back pocket may be as obsolete as rotary dial telephones. It is true that there are so many Decentralized Finance (DeFi), apps that it would be difficult for someone to create a new account every time. Privacy issues aside,
Web3 wallets will also function in innovative ways. By hosting a personal collection of NFTs, they will fulfill the human need to identify with certain ideas or cultures. Archaeologists show that people have always kept items to enhance their social identity, such as precious stones or funny hats and tattoos.
It’s very natural, then, that we are already seeing wallets being used as the digital equivalent of an NFT scrapbook containing the same kind of meaningful ephemera that humans have always used to create cultural identities. There are already websites that allow users to save media and make NFTs from it. This trend is expected to continue. NFTs could be the metaverse equivalent of piercings or designer clothes, or personalized number plates.
This new wallet-based identity will allow us to create a variety of online identities that are not possible with current social media platforms. Because the wallet ID is just one string of alphanumeric characters, it’s possible to change its outer identity while the core functionality remains the same — like changing clothes on the same body.
All this is great for crypto nerds, but what about the average person who doesn’t see any reason to trade their old Red Hot Chilli Peppers tour shirt for a NFT collectible? And isn’t the process of learning to use DeFi too esoteric for widespread adoption?
The solution is in the DeFi wallet, which is a centralized exchange (CEX). These wallets enable users to discover the fresh world DeFi in the same open and egalitarian fashion these apps were created for. However, they also have features that replicate the old methods of transacting through a trusted third party.
They say that old habits are hard to break. You may recall the odd experience of sending money overseas without trusting authorities. When using CEX wallets, people who are uncomfortable with the idea of self custody, or don’t want to take on the risk of smart contract hacks, can still access the world of Web3 but with their keys locked up in their favorite CEX.
DeFi apps are overwhelming, so even crypto-addicts can fall for a rugpull from time to time. These risks can be mitigated by the CEX wallets, which audit the apps that their wallets can interact and provide clear warnings before allowing access or providing educational material.
CEX wallets’ launch is good news for blockchain as they make it easy to get started in the onboarding process. Many people don’t want to download an application with a picture o fox on it, and YOLO a section of their portfolio into a completely new space.
Many people around the world use digital wallets that are connected to their bank accounts. Indeed. A study from Juniper Research has “found that the total number of digital wallet users will exceed 5.2 billion globally in 2026, up from 3.4 billion in 2022.” The research predicts that digital wallet use will continue to thrive in developing countries, which are considered “cash heavy.”
The gap between Web3 offerings and digital wallets is already small. Every day it’s becoming easier for people to make the jump and realize the promises of Web3 for themselves.