Cryptocurrency is known for not being a beginner-friendly technology, requiring new users to learn a lot of concepts and tools. While this is not surprising due to its highly technical nature, users tend to fall for cognitive biases as they progress through their crypto journey. While not necessarily the case for everybody, it is not uncommon to see clear representations of the Dunning-Kruger effect in so-called “veterans”.
Probably the greatest example of crypto users overestimating their own knowledge is their understanding of crypto wallets. While Crypto wallets are probably the most important tool when it comes to interacting with crypto and blockchain, most people misunderstand them. Starting with the idea that crypto wallets “store” cryptocurrency, these misunderstandings can prove disastrous in the long term.
There is also a group of crypto enthusiasts that understand that cryptocurrency wallets don’t store crypto but the keys to interact with it. Private and public keys serve different purposes, allowing a range of actions from receiving cryptocurrency to authorizing transactions. To truly understand how these keys allow for such operations, a user would need to have an understanding of cryptography and basic blockchain infrastructure
The understanding of how crypto wallets work gets even more difficult as concepts like custodial, non-custodial, asymmetric cryptography, digital signature, hot/cold wallets, and multisig get thrown around. While it is true that understanding such concepts is not necessary to make use of a cryptocurrency wallet, misunderstanding them must be avoided at all costs. As such, making crypto wallets easy to use without the need to understand the technology is essential.
Making such a wallet might not sound that difficult but in truth, it can be especially complex given the decentralized nature of crypto. Decentralization comes with more freedom of choice at the cost of safeguards, putting developers in a tough spot. With new movements like Web3, NFTs, and GameFi gaining momentum, the importance of these decisions continues to increase.
Dilemmas like these are what Robin Guyard, CTO of Laguna; Blake Commagere, Co-founder and COO of Vault12; and Doug Horn, Chief Architect of Telos, sat to discuss during Grit Daily House at Consensus 2022. Rachel Wolfson, Enterprise Blockchain Analyst at CoinTelegraph, moderated the panel titled “What’s In a Crypto Wallet?” by asking insightful questions on the role wallets are to play in the future of the crypto space.
If you missed the chance to attend Grit Daily House in person and to hear what these experts had to say about this topic, worry not. Not only will you be able to watch the panel in the video below but you can also find other panels on Grit Daily’s official YouTube Channel.