I am sure some of you remember the browser wars. The browser wars referred to a period of intense competition between Netscape and Microsoft over which web browser would dominate the market. They started in the mid-90s, when the world was just starting to come online. A lot was at stake, as the company which controlled this browser could have a huge influence over its users. Search engines would bid to be the default search tool in the browser, while other companies would bid to be listed in the default set of preinstalled bookmarks that came with the browser. The browser was and still is a powerful gateway to the digital world. Fast forward 25 years later, crypto wallets are the new gate keepers to the future services. Crypto wallets are more than applications on a phone that hold your cryptocurrencies. They are future ecosystems that enable access to a variety of services that include wealth management, trading, insurance and payments, identity and social media.
Today’s crypto wallets have a range of capabilities, but the general idea of a crypto wallet is pretty simple. Basically, a crypto wallet stores the keys and addresses of wallets that live in the blockchains underlying each cryptocurrency.
According to a recent report by Apptoppia, a record 3.5 million downloads of crypto wallet apps was recorded in July 2020, an 81% increase from the same period last year. In addition, the number of active users increased by 110% between January 1 and August 19, 2020. In the earlier 12 months, downloads averaged just below two million, with May and June being the only time this mark crossed. The increase in downloads of crypto apps is seen just after countries started to impose lockdown measures in the wake of Covid-19.
The number of people using blockchain-based wallets is roughly doubling each year, which closely mimics the early growth of the Internet. The chart below show the adoption rate of crypto wallets, compared to the adoption rate of the Internet. For now the the curves are similar. if the current trends continue there could be a million crypto wallet users by 2030.
The number of Blockchain wallets has been growing since the creation of the Bitcoin in 2009, reaching over 50 million blockchain wallet users at the end of June 2020.
But as cryptocurrencies are gaining mainstream adoption and are being used by the general public, a new war is unfolding. Crypto wallets could end up being at least as important as the browser was for the web.
A dozen or so companies, from Coinbase and Binance to smaller startups are competing for market share in the growing crypto ecosystem. Coinbase, MetaMask, Brave are working on new and improved wallets.
Crypto’s wallet makers are in position to define the gateways to the decentralized web. The next stage for wallets will be to perform crucial functions with the ability to surf a directory of dApps, buy and sell tokens, manage collectibles, pay for things, verify identity and log onto social media sites, without ever leaving the app.
Many multinationals like MasterCard, Bank of America and Rakuten have set out to develop cryptocurrency wallets, to take advantage of growing market opportunities. Already, huge smartphone manufacturers have moved into position. Samsung, HTC and several other startups have introduced smartphones with cryptocurrency wallets.
However, the increasing adoption of cryptocurrencies has also led to increasing security threats, driving an important need for secure solutions to store and transfer digital assets. New generation of wallets, like Argent try to hide the complexity from the end user, yet provide simple non-custodial user experiences.
We’re at an early stage now, one that is not well-defined, but crypto wallets represent the next stage in the battle of dominance, one that is far greater than a browser or our mobile phone’s operating system.
As crypto wallets morph into full scale digital wallets, they will become an important step in the evolution of banking products and value transfers, making transactions and exchanges simple and seamless. They will also provide access for managing and trading non-financial assets as well. They may even control and manage your data on social networks like Linkedin and Facebook, your emails on Gmail, your purchases on Amazon and the photos you’ve shared on Snapchat and Instagram.
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