In this article, we will talk about the problems experienced in the use of wallets, which are our hands and feet while traveling around the crypto world. In our next article, we will look at how to solve these problems in the coming period.
We have frequently mentioned that the biggest share of the economic potential created by the introduction of the digital world into our lives is taken by the intermediaries that help individuals move freely in this world.
What was the main obstacle for us individuals to act safely? The fact that this world is a dangerous place, accessible to hackers as they are to everyone, and we need the safe arms of agents to find our way through this wild jungle. At the same time, we need the approval of the intermediaries to prove that we have any existence in this digital world. Similarly, we go to these intermediaries to confirm that a digital asset in the hands of someone else is the only one and belongs to that person. From where? Because the digital world is a fluid structure and the information in it can be changed at any time. In this fluid world, the blockchain allows information to be kept in an unalterable form. In this way, the person can have a digital presence comfortably, and he no longer needs any intermediary to achieve this.
Full digital ownership without the need for any intermediaries is a tremendous power. It is a great comfort that eliminates the troubles such as the cost, bureaucracy, and censorship brought by the intermediaries. This is one side of the coin. On the other side of the coin, this power also comes with great responsibility. Because, if there is no intermediary, you are left alone in this huge world. There is no ‘support center’ to call when you are in trouble or there is no one to complain to when you have a legal problem. The software that is here to help you is cold and still far behind in terms of ‘user experience’.
Because of this main obstacle, decentralized systems have achieved rapid growth, especially thanks to early users, but have been slow to be adopted by large masses. So, will this continue? The tech world has been aware of this fundamental problem for a long time, but the resources at hand have so far been spent mostly on building blockchain infrastructure. As the infrastructure issue is starting to come to an end, now it’s time to ask ‘How can we make decentralized systems bigger?’ started to come to the fore. We understand from this that the problems in the field of ‘user experience’ will be discussed more and these problems will start to be solved in order with the planned improvements. Let’s take a look at one of the most important of these improvements.
The main way to access DeFi and other decentralized systems is to have a digital wallet. This digital wallet can be an application you can install on your phone or a program you can install on your computer. When you go to the website of any service you want to use on DeFi, you usually press the ‘link your wallet’ button in the upper right corner, allowing your wallet to instantly contact the service provider. Afterward, you approve the transaction you want to make on the wallet, and the transaction is completed in seconds.
After passing a certain learning curve, the wallet becomes very comfortable and practical to use. However, there are still many problems with the use of wallets. What are they?
What we call a wallet is actually an application that provides access to the blockchain. For this application to work, the 12 or 24 words given when the wallet is set up for the first time need to be noted down. Forgetting, losing, or worse, stealing these words is one of the biggest problems that can happen to a user. When the user encounters such a situation, the first thing to check is whether they still have access to the wallet. If he has access, it is necessary to immediately set up a new wallet (which can be set up as many times as you want since it is free of charge) and transfer the digital assets to this new wallet. But what if he lost the phone with the wallet, meaning he doesn’t have access to the wallet as well? Then ‘burned rose flax halva’, all beings go. Net – no possibility of recovery whatsoever. This is the biggest danger to the user.
The second major issue can be experienced in terms of practicality. The user needs to give permission to the site to provide that service for each transaction he wants to do in the decentralized world. This means pressing the confirmation button on the wallet one by one for each transaction. Is it a big problem? No, but especially advanced users may not want to give the same permissions over and over after using the same services over and over. Because the parts of the permissions that touch the money need to be written on the blockchain, which means paying a transaction fee on the blockchain and in some cases, this cost starts to ‘sink’ to the user. There are many other minor issues, but let’s focus on these two for now.
It is possible to divide the wallet types into two. The first of these is the simple wallets. Currently, this type of wallet is used by large masses. In the simplest form, these wallets store the private keys of the user. You can think of these keys as a kind of password. There is an account number (address) on the blockchain that everyone can see, and this account number can only be opened with this private key. This private key is needed to pay for every transaction made and all the costs incurred on the blockchain in order to perform these transactions.
As a matter of fact, there is another type of wallet. It is a genre that emerged by turning simple wallets into smart contracts. When you do this, you can easily solve all kinds of problems related to the wallets we wrote above through smart contracts. In our next article, we will look at the details of this.
Making the wallets that form the basis of blockchain smart contracts will enable many people to solve the problems they experience, especially in the first stage. This will be a very important catalyst for decentralized systems to reach wide audiences.
In this way, wallets will be quickly accessible in case of being stolen, lost, or forgotten. On the other hand, unnecessary transaction approvals and costs experienced during frequent use will also be eliminated. In short, it will be possible to bring a personalized user experience to wallets.
Do you need consultancy for blockchain wallets for your business? Contact Enkronos team today.