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Crypto wallets: An important battlefront to gain wallet share and mind share

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Crypto wallets: An important battlefront to gain wallet share and mind share

Digital wallets are software constructs that mimic physical wallets and provide the functionality of storing, using and categorizing payment instruments. The journey of digital wallets started with payments and morphed to other forms of stubs such as digital passes, tickets and boarding passes. However, crypto wallets attempt to redefine the digital wallet landscape as something more than safe storage of payment and crypto instruments. 

With more than 100 crypto wallets and growing, this sector in the cryptosphere is getting crowded and adding further complexity to an already fragmented blockchain and digital asset space. As I study this space and try to make sense of the complexity of new blockchains, layer-one protocols decentralized finance (DeFi) and nonfungible token (NFT) projects emerging with exponential growth, I think crypto wallets will be the next battlefront as the wars of layer-one protocols eventually cool down. The core issues of scale, security and speed of transaction processing and layer-two protocol consolidate and morph as layer-one superiority aims for processing efficiency and security. Crypto wallets will not only provide an avenue to gain wallet share but will also represent the battle for mind share.

Related: This time it’s different: When DeFi meets NFTs

Today, most crypto wallets provide software constructs that, for the most part, provide the following services at a very basic level:

  • Store public and private keys;
  • Interact with various layer-one blockchains;
  • Send and receive crypto assets and cryptocurrencies;
  • Monitor balance.

Crypto wallets should be more than better key management

In my opinion, we need to broaden the definition of a crypto wallet and view it as an avenue to participate in the crypto economy. It can provide the wallet holder with a choice framework for participating in a regulated network that emphasizes digital identity and requires third-party validation, for example, Know Your Customer.

Related: Authorities are looking to close the gap on unhosted wallets

At the same time, it also can be part of emerging networks that preserve anonymity and emphasize the confidentiality and privacy preservation of the participants. This choice framework will enable the regulatory and compliance conversation, shifting towards the network and activities as opposed to individuals, just like the choice frameworks our current wallets provide at an analog level.

A wallet would be modeled to be an extension of our identity constructs within the current identity frameworks that are issued by authoritative agents (like a government-issued ID) to an evolving digital identity that represents our (credit) history, reputation and incentive-driven history. It would not only promote transparency and good behavior but also preserve privacy. The notion of identity is important because digital identity (which today is tied to every wallet and every network) is foundational technology to ensure the trade, trust and ownership of digital assets.

Related: Concerns around data privacy are rising, and blockchain is the solution

A wallet’s ability to control participation and the choice framework for enabling users to choose wallet attributes will allow for a flexible design and encourage participation. These wallets are traditionally containers of all types of asset classes such as NFTs, DeFi assets, cryptocurrencies and crypto assets. In addition, they also contain existing payment instruments, stored value accounts and other forms of digital stubs, allowing participation and inclusion by a registration process for existing financial services platforms and both current and future blockchain and crypto-economic driven networks. The registration could involve either sharing crypto primitives, say a public key, or providing the wallet identified for traditional centralized platforms.

In the Web 3.0 era

The question we should be asking is how to design a crypto wallet that can be a conduit to a new decentralized internet (Web 3.0) and the entire cryptosphere, and replace and reform our relationship with current services and institutions.

The new design of these wallets should enable engagement in (crypto) economic activities — whether Web 3.0 or otherwise — for example, file storage, NFT custody and simply storing data or instruments that let a wallet serve as an account receptacle for all our earnings and engagements in the cryptosphere and existing institutions.

Related: How NFTs, DeFi and Web 3.0 are intertwined

Whereas website payment standards and web payments at World Wide Web Consortium (W3C) aim to define technology standards. MetaMask, although confined to Ethereum (layer-one protocol), provides an impressive view into what could be a clean way to provide a browser and wallet integration, known as a browlet. MetaMask has been doing this since early 2016 and now defines institutional access with MetaMask Institutional (MMI). Currently, the technology design of wallets focuses on layer-one or platform-specific wallets and key management, which is necessary for the durability and long-lasting growth of Web 3.0. With a model like MetaMask’s, however, wallet provisioning can be a new business model.

Institutional context and considerations — An institutional wallet?

Exponential growth in digital assets and related ecosystems, such as decentralized finance, native crypto assets and NFTs, has not only given rise to massive innovation in technology and finance products but also attracted the attention of many innovators, technologists, investors and, more recently, institutional investors.

Related: Institutions appear bullish on crypto despite record Bitcoin outflows

While blockchain, as a distributed ledger infrastructure and transaction processing system, aims for efficiency for dematerialized assets (assets in a ledger entry), the emergence of crypto and digital assets changes the landscape and the participants, essentially altering the market infrastructure. Thus, it makes digital (and crypto) assets unique and differentiated due not only to inherent characteristics of the assets but also to the resulting changes in the digital (crypto) assets market infrastructure. Digital (crypto) assets are generally bearer assets, and the claim to these assets is generally governed by a public-private key infrastructure. Digital assets are bearer assets, raising implications for trading and safeguarding, and surfacing considerations for institutional asset managers looking to allocate capital to a digital asset fund.

The notion of a wallet in an institutional context has a few more nuances and considerations that include (but are not limited to):

  • Know Your Customer/Know Your Transaction requirements.
  • Asset allocation and token deployments.
  • Interaction with crypto-custody services and service providers.
  • Collateral management and lending.
  • Liquidity management and treasury considerations.

Unlike traditional finance with a unique institutional market infrastructure, specialized asset classes, dematerialized assets, licensed gating criteria and much more — the core constructs of digital assets like DeFi tokens, tradable NFTs, cryptocurrencies of layer-one protocol and so on — do not significantly differ for institutional investors. The dematerialized assets, centralized security depositories (CSDs), collateralized lending and trading models for traditional finance are not the same in DeFi and other emerging asset classes. The issue and emergence of institutional-grade custody solutions, digital asset trading desks, etc., apply the systemic traditional finance apparatus and risk models to tame a fast-growing technology and crypto-economic led ecosystem.

The issues from an institutional perspective are scale, risk and alignment with traditional organizational controls and governance. For instance, the institutional situation around digital asset custody is similar to the traditional service provided by a custodian bank, which is the physical possession of financial assets on behalf of a client. Despite being conceptually similar, however, the practice of digital asset custody requires significant considerations about technology design. It is also necessary to pay attention to business and transaction considerations such as liquidity, treasury and collateral management, as well as fostering a deeper understanding of an evolving regulatory and compliance framework for digital assets, which may represent diverse asset classes.

Applying the traditional finance lens not only adds a cost component but also puts institutional investors at a disadvantage. This makes a case for using wallets in an institutional context to address the nuances discussed previously.

Perhaps the impact of DeFi on traditional business models, liquidity (capital adequacy) and treasury and related services offered to fund managers and administrators may drive the design of institutional wallet requirements from “institutional custody” of core assets to the “point of deployment, disbursement and allocation.” This changes the lens and focus from institutional custody and extends the institutional wallet as a conduit to providing allocation instructions to crypto-capital deployment, participation instructions in automated market makers (AMMs) and liquidity pools and an interface to “custody” for long-only assets.

Related: The rise of DEX robots: AMMs push for an industrial revolution in trading

And again, here is the most important question we should be asking: How can a crypto wallet be designed that can be a conduit to Web 3.0 and the entire cryptosphere, and replace and reform our relationship with current services and institutions? The promise of crypto assets only comes to life with their use, circulation and velocity, but if we create a market structure that only mimics or replicates an existing system, what have we solved?

I think crypto wallets will be the next battlefront as the wars of layer-one protocols eventually cool down. As the core issues of scale, security and speed of transaction processing and layer-two protocol consolidate and morph, layer-one superiority aims for processing efficiency and security. Crypto wallets will not only provide an avenue to gain wallet share but will also represent the battle for mind share.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Nitin Gaur is the founder and director of IBM Digital Asset Labs, where he devises industry standards and use cases and works toward making blockchain for the enterprise a reality. He previously served as chief technology officer of IBM World Wire and of IBM Mobile Payments and Enterprise Mobile Solutions, and he founded IBM Blockchain Labs, where he led the effort in establishing the blockchain practice for the enterprise. Gaur is also an IBM-distinguished engineer and an IBM master inventor with a rich patent portfolio. Additionally, he serves as research and portfolio manager for Portal Asset Management, a multi-manager fund specializing in digital assets and DeFi investment strategies.

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Bitcoin (BTC) Drops Below $60,000 But Correction Could Be Short-Lived

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Bitcoin (BTC) Drops Below $60,000 But Correction Could Be Short-Lived

Bitcoin (BTC) is likely in the middle of a short-term correction that has taken it below $60,000. Following this correction, a rebound in price is likely. 

BTC decreased considerably on Oct 26 and created a bearish engulfing candlestick.  This is a type of bearish candlestick in which the entire upward movement from the previous day is negated with an equal or larger drop the next day.

The main support area is found between $52,400 and $53,350. This range is made up of a short (white) and a long-term (black) Fib retracement level and a horizontal support area. There is also a minor support level at $56,550, created by only the short-term Fib level. 

Technical indicators support the continuation of the decrease.

The MACD, which is created by short and long-term moving averages (MA) is falling. Currently, the MACD is still positive, indicating that the short-term trend is moving faster than the long-term trend. However, it’s decreasing, signaling that the MA is decelerating.

The RSI, which is a momentum indicator is also decreasing. It’s above 50, signaling that momentum is still bullish, but the decreasing RSI indicates that momentum is also losing strength.

BTC gets rejected

The six-hour chart shows that BTC is moving underneath a descending resistance line since the Oct 20 all-time high price. 

More recently, the line rejected the price on Oct 25 (red icon), initiating the current downward move. The rejection also coincided with the $63,650 resistance area.

As long as the descending line remains unbroken, the short-term trend is considered bearish.

Wave count

The short-term wave count shows that BTC is likely in an A-B-C correction, which is potentially contained inside a parallel channel. For a long-term wave count analysis, click here.

Currently, BTC is in the C wave, which is the final portion of the correction and after which a rebound in price is likely.

There is considerable support near $56,500 and a drop to those levels would give waves A:C an exact 1:1 ratio. Furthermore, it would coincide with the support line of the channel. In addition to this, the area coincides with the short-term Fib support outlined in the first section. 

For BeInCrypto’s previous Bitcoin (BTC) analysis, click here.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Bitcoin drops $1K in five minutes in fresh dip below $60K

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Bitcoin drops $1K in five minutes in fresh dip below $60K

Ethereum slips below $4,000 as an anticipated correction suddenly takes hold of crypto markets.

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Bitcoin drops K in five minutes in fresh dip below K

Bitcoin (BTC) fell sharply on Oct. 27 as $60,000 finally gave way to two-week lows.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Bitcoin bites into major buy wal

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD nearing $58,000 at the time of writing, hitting its lowest since Oct. 15.

The move follows multiple retests of $60,000, with Bitcoin now taking liquidity in a large support wall with $57,000 as its base.

Analysts, as Cointelegraph reported, were already prepared, with some data suggesting a deeper dive to a low as $50,000 would still preserve the overall bull trend.

#Bitcoin couldn’t break through $63.6K and tests the other side of the range.

Might be dropping another time if $61.6K can’t break and then I’m looking at $58K next. pic.twitter.com/HIsvhE5ZlZ

— Michaël van de Poppe (@CryptoMichNL) October 27, 2021

Commenting on the situation meanwhile, Charles Edwards, CEO of investment firm Capriole, blamed leveraged traders for sparking the volatility.

“Basically Bitcoin looks incredible here on most metrics, but leverage traders have gone out of control,” he argued.

“We won’t get sustainable price rises until that changes.”

Data showed $500 million being liquidated in a single hour across cryptocurrency.

Altcoins lose big on trend reversal

Ether (ETH) led a bleed from altcoins Wednesday, falling below its hard-won $4,000 support line.

ETH/USD 1-hour candle chart (Bitstamp). Source: TradingView

Related: Expanding ecosystem and $1.86B futures open interest back Solana’s $250 target

Several of the top ten cryptocurrencies by market cap saw daily losses of over 15%, including Dogecoin (DOGE) and Solana (SOL).

Shiba Inu (SHIB) was still largely in the green, up 23% on the day despite the market turnaround and continuing a wild month.

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Redditors cheer as GameStop assembles team of NFT experts

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Redditors cheer as GameStop assembles team of NFT experts

“Future creators won’t just build games but also the components, characters, and equipment. Blockchains will power the commerce underneath,” Gamestop’s Head of Web3 Gaming job listing reads.

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Redditors cheer as GameStop assembles team of NFT experts

GameStop (GME) is assembling a team of blockchain and NFT experts to work on the firm’s upcoming NFT platform.

The firm’s GME stock is a cult favorite amongst retail traders as a result of the r/wallstreetbets and Robinhood saga earlier this year. On Reddit the r/Superstonk community boasts 659,000 members, and is dedicated to hosting business and stock discussions related to GME.

A post about GameStop’s job listings yesterday has received more than 10,000 upvotes at the time of writing, with many members posting bullish sentiments over GameStop’s latest move.

GameStop quietly unveiled a bare-bones website for its NFT marketplace in May. The site currently features a Nintendo Gameboy-style gaming console with an Ethereum logo, along with a message calling out for recruits to work on the platform.

Since then the firm has held its cards close to its chest, however on Oct. 25 it listed a total of eight jobs for crypto-friendly candidates, including three roles for NFT experienced software engineers, three jobs for product marketers and with two roles focused on Web3 based gaming.

One of the listings for the Head of Web3 Gaming job says that GameStop is looking for someone with experience with “Ethereum, NFTs and blockchain-based gaming platforms.” The firm has also hinted that there are some plans related to the Metaverse in the works.

“GameStop is looking for a unique individual who can help accelerate the future of gaming and commerce. In this future, games are the places to go, and play is driven by the things you bring. Future creators won’t just build games but also the components, characters, and equipment. Blockchains will power the commerce underneath,” the job listing reads.

Web3, billions in revenue, NFTs, Ethereum Layer 2. probably nothing. $GME pic.twitter.com/s3PiaqtWQl

— Chris SilvΞstro (@vestro) October 26, 2021

Related: Reddit may be preparing to launch its own NFT platform

Members of the r/Superstonk community were singing the firm’s praises yesterday, with “Triaspia2” calling it one of the “best job listings” they had seen, while pledging to buy more GME as it was a “bullish signal.”

Redditor “Donnybiceps” was equally bullish, noting that:

“NFTs are the future and people who haven’t gotten on board the GME train while knowing all these clues then you should be blaming yourself for not thinking this through.”

GME has had a volatile performance in October, going as low as $166 before bouncing to around $187 and subsequently crashing down again. However, according to data from Tradingview, the price of GME has still gained 2.8% this month to sit at $178 at the time of writing. The year-to-date gain for GME is a whopping 844%.

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