How Social Wallets Will Change The Cryptocurrency Industry
In the past year, the mainstream world has embraced the idea of the blockchain and crypto-based transactions, even making 2018 the so-called year of the blockchain. The topic has moved past mere buzzwords and opened up into new ideas and new innovations. One of the biggest steps forward in this mainstream acceptance is the fact that people understand how crypto can mean more than just trading cryptocurrency.
Much of this is due to the great work accomplished on Ethereum in 2018. From there, the blockchain industry has witnessed an explosion of new assets, and in doing so, the nature and function of crypto assets have evolved. Today, they break down into four distinct categories:
Traditional cryptocurrency: The traditional cryptocurrency options offer a decentralized currency with thousands of people mining and securing the network — all without crowd sales, ICO, or airdrop. Bitcoin is the de facto example of this.
Tokens or colored coins: Tokens/colored coins are typically associated with some form of distribution outside of mining. Many are issued on another blockchain such as Ethereum or Waves. They can be broken down even further into several subgroups, with the common thread being that they are tied to an outside market and their source of value is fungible. How this is achieved, though, can differ; in some cases, it can use a physical commodity like oil (Petro is a great example) or it can have an intangible valuation (PAX has joined the ranks of the USD Tether tokens).
One-time use token: Also known as coupons, this oft-forgotten crypto comes in a variety of flavors and can even be on their own blockchain. The benefit of these stems from their ability to record data, then disappears from the market. This is particularly effective in any market where one-way exchanges are key, such as when the Custom and Border Patrol team record data for an Internet of Things devices. Factoids are a hybrid example of a crypto and a token. They allow a user to write data to the Factom blockchain and then they are gone from the market.
Nonfungible digital assets: Not all digital assets are interchangeable, and there is plenty of real-world need for this type of transaction. Nonfungible digital assets represent unique items, and they can have a real-world connection (e.g. real estate, where every house or unit of property is unique) or a digital collectible. Examples of the latter include CryptoPunks, which is purely for collectors, or collecting-based games such CryptoKitties.
Where Can People Store Their Tokens?
If the blockchain industry is going to create ways of representing both online and offline forms of value through cryptocurrency and tokens, then the next question is this: where can people store all of their digital possessions? A secure location is required to put all this value. The answer is crypto-based wallets, which have come a long way in just a few years of development.
Wallets have evolved to hold many different types of tokens. Storage is essential, but the latest innovations have also given the ability to access decentralized exchanges. This creates an all-in-one tool, streamlining the overall process so that the wallet can act as a hub for all things crypto. A good example of this is the Waves client, which goes beyond mere storage; the Waves client also lets you create new tokens and make trades from within your wallet. Another pair of examples is Vault and Lumi. These were created specifically for storing your digital collectibles — most of which are ERC 721 assets (the standard used for many collectibles created on Ethereum).
The common thread through all of these new blockchain assets is the practical need for a wallet mechanism. Especially for the space of unique tokens or digital collectibles, without having a virtual holding location, the process becomes more cumbersome and difficult to track. Such hurdles wind up slowing down the overall adoption of a platform, which leads to another point: the speed of mainstream acceptance goes beyond the platform itself. The development of supporting applications and accessories are just as important, as they simplify and scale the user experience. It’s the difference between having a computer that technically runs even though it’s operated by a command-line system versus a user-friendly MacBook.
The wallet innovations have just started to scratch the surface of what’s possible. In the coming months, several wallets will offer new security features to extend protections, creating a deeper layer of security around your passwords. What does that mean for the layperson? Now the crypto wallet can sign into websites, MetaMask already does this for some websites. Not only does this streamline things for users, but it also creates a new form of digital identity. By signing into your wallet, you are thus validating yourself.
This brings a new idea to the horizon: a unified and secure identity. Cryptocurrency can power the process of transactions, but the engine under the hood is the blockchain. With the blockchain, a permanent, secure, and transparent database backed by one-way encryption brings a scalable type of protection to the most precious of data.
While the idea of a digital wallet may seem like practical storage for crypto tokens, it only takes one step back to see the bigger picture: a truly secure digital identity on and offline.
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