Author: Jiyun Kyung, Business Development (https://www.linkedin.com/in/jiyunkyung/)
[TL;DR]
- Blockchain wallets have evolved from basic private key storage to multi-chain, multi-asset platforms.
- Wallet form factors have diversified into browser extensions, mobile apps, and in-app solutions (including built-in and Telegram mini-apps).
- Each form factor presents unique advantages and disadvantages, with selection depending on user needs and circumstances.
- Future developments are expected to include cross-platform integration, wearable device connectivity, and AI-powered conversational interfaces, further evolving wallet form factors.
1. Introduction
Blockchain wallets have consistently evolved, reflecting technological advancements and changing user requirements. Early blockchain wallets focused primarily on securely storing private keys, but over time, their role and form have significantly expanded.
As blockchain technology progressed and various cryptocurrencies and tokens emerged, wallets evolved beyond simple storage into multi-chain, multi-asset platforms capable of managing multiple chains and assets. Simultaneously, as the importance of user experience (UX) came to the forefront, changes were implemented, such as using simple and convenient addresses instead of complex ones, and providing intuitive interfaces.
Significant progress has also been made in terms of security. Moving away from the initial simple password method, various security features have been added on the backend, including multi-signature (Multi-sig) and MPC. Additionally, hardware security module (HSM) integration, biometric authentication, and passkeys have been incorporated.
Furthermore, blockchain wallets are expanding beyond simple transaction tools to become comprehensive platforms. Users can now directly access various DeFi services within the wallet, from basic swaps and bridges to staking and lending, and with the integration of NFT management functions, wallets are becoming central hubs for digital asset management.
This expansion of diverse requirements and functions has inevitably led to the evolution of wallet forms, or form factors. Various types of wallets have emerged to suit different purposes and situations. This process represents a significant development towards the popularization and practical application of blockchain technology.
In the next chapter, we will examine in detail the major blockchain wallet form factors that have resulted from this evolution.
2. Four Form Factors of Blockchain Wallets
Form Factor refers to a concept encompassing a product's physical size, shape, and method of use. In the context of blockchain wallets, form factor is a crucial element that determines how users access and interact with the wallet.
While early blockchain wallets were primarily extensions (browser-based), they have gradually evolved into various form factors. The form factors of blockchain wallets go beyond mere physical differences, showing variations in aspects such as security, user-friendliness, and accessibility. For example, hardware wallets offer high security but lack portability, while mobile app wallets are conveniently portable but may be relatively vulnerable in terms of security.
Moreover, the choice of form factor also influences how users participate in the blockchain ecosystem. Browser extension wallets provide seamless integration with web-based dApps, while mobile app wallets are suitable for everyday cryptocurrency transactions. The emergence of various form factors is playing a crucial role in accelerating the popularization and practical application of blockchain technology.
2.1 Browser Extension
Browser extension wallets are cryptocurrency wallets installed as plugins in web browsers. This type of wallet provides seamless interaction with web-based dApps and offers a user-friendly interface in desktop environments.
A prominent example is MetaMask. Launched in 2016, this Ethereum-based browser extension wallet has become a key tool driving the DeFi and NFT boom. Users can easily access and interact with various dApps on the Ethereum network through MetaMask.
Other examples include Phantom and Rainbow Wallet. These wallets are specialized for specific blockchain ecosystems and have become essential tools for using dApps on their respective networks.
The main advantages of browser extension wallets are convenience and accessibility. Users can manage and trade cryptocurrencies easily from anywhere with just a web browser. Additionally, smooth integration with dApps allows users to access DeFi services or NFT marketplaces without complex setups.
However, a disadvantage is that they rely on browser security. There's a risk of private key exposure if the browser is hacked or infected with malicious extensions. Also, their use is limited in mobile environments.
2.2 Mobile App
Mobile app cryptocurrency wallets are applications installed directly on smartphones. This type of wallet has grown rapidly with the popularization of mobile devices, offering the convenience of managing cryptocurrencies anytime, anywhere.
Currently, most extension wallets also provide mobile apps, but a notable example of a dedicated mobile app wallet is Trust Wallet. Launched in 2017 and acquired by Binance in 2018, Trust Wallet gained popularity by integrating multi-chain support and DeFi services. It supports various blockchain networks and offers token swap functionality through a built-in DEX.
Another major example is Coinbase Wallet. Provided by the large centralized exchange Coinbase, this wallet has secured many users with its user-friendly interface and strong security features. It has particularly contributed to lowering entry barriers by providing a UI/UX suitable for beginners.
The main advantages of mobile app wallets are portability and accessibility. Users can easily manage and trade cryptocurrencies anytime, anywhere, and enhance security using the smartphone's biometric authentication features. They also offer mobile-optimized functions such as easy transfers via QR code scanning.
Disadvantages include security risks if the smartphone is lost, and the small screen size which may be inadequate for some complex DeFi operations. Additionally, they can be affected by policy changes in the App Store or Google Play.
2.3 In-App
In-app wallets refer to cryptocurrency wallets integrated into existing applications. This allows users to manage and use cryptocurrencies within specific services without installing a separate wallet app.
2.3.1 Built-in
Built-in wallets are directly integrated into dApps or Web3 services. This form greatly improves user experience and enables seamless integration between services and wallet functions.
A prime example is OpenSea's built-in wallet. OpenSea, the world's largest NFT marketplace, allows users to buy, sell, and manage NFTs without connecting to a separate wallet through its built-in wallet.
The role of WaaS (Wallet-as-a-Service) is growing in providing such built-in wallets. WaaS offers well-developed wallet infrastructure through SDKs and APIs, allowing services to save resources by not having to develop wallets independently.
Recently, not only OpenSea but various services are providing in-app wallets, often utilizing products from various wallet vendors rather than developing them in-house.
The main advantage of built-in wallets is maximizing user experience. Users can perform all operations within a single app, increasing convenience. For service providers, it helps reduce user churn and increase time spent within the service. Disadvantages include potential dependency on the specific service and limited integration with other dApps or services.
2.3.2 Telegram Mini App
Telegram mini app wallets are lightweight cryptocurrency wallets that operate within the Telegram messenger platform. This can be seen as a new approach to promote cryptocurrency adoption by leveraging Telegram's massive user base.
A notable example is HOT Wallet. Based on the Telegram mini app, HOT Wallet offers token claims and various games and quests for claiming based on the NEAR-based $HOT token. HOT Wallet is currently the most influential dApp in the NEAR ecosystem.
The main advantages of Telegram mini app wallets are high accessibility and ease of use. Any Telegram user can use a cryptocurrency wallet without installing a separate app. It also facilitates P2P transactions and group transfers, leveraging the messenger's characteristics.
Disadvantages include dependency on the Telegram platform and susceptibility to Telegram's policy changes. While the wallet is non-custodial, it may not be ideal for users seeking complete decentralization due to its operation within a centralized messenger platform.
These various types of in-app wallets each have their own advantages and disadvantages and can be chosen according to users' needs and situations. In the future, it is expected that these in-app wallet forms will become more diverse and evolved.
3. Outlook and Conclusion
The form factors of blockchain wallets have continuously evolved in response to technological advancements and changing user demands. This evolution is expected to continue, with the emergence of even more innovative wallet forms anticipated.
3.1 Outlook
One of the most notable changes in form factors is the trend towards cross-platform integration. As users increasingly navigate between various devices and platforms, there will be a growing demand for integrated wallet solutions that operate seamlessly across desktop, mobile, and web environments.
Integration with wearable devices is also expected to add new functionality to blockchain wallet form factors. Moving beyond traditional hardware wallets, wallets utilizing smartphones, smartwatches, and smart rings are being developed. These wallets connected to various wearable devices will make blockchain technology more natural in everyday life.
The development of conversational wallet interfaces utilizing natural language processing and generative AI is also anticipated. Interfaces that allow crypto management and trading through voice commands or chat will lower entry barriers for users unfamiliar with the technology and greatly enhance the convenience of wallet usage.
The possibility of major web browsers incorporating their own blockchain wallets is also noteworthy. It's expected that large browsers like Chrome, Firefox, and Safari will begin to offer basic wallet functionality. If realized, this change would allow users to access Web3 services without installing separate extensions, significantly accelerating the mainstream adoption of blockchain technology.
3.2 Conclusion
The evolution of blockchain wallet form factors is an ongoing process reflecting technological advancements and changing user needs. This journey, from browser extensions to mobile apps and in-app wallets, plays a crucial role in the popularization and everyday use of blockchain technology.
However, challenges remain in this evolutionary process. The fundamental role of a wallet - balancing security and usability, providing consistent experiences across various environments, overcoming technical limitations, and adapting to changing regulatory environments - presents ongoing challenges. As these challenges are addressed, blockchain wallets will evolve beyond simple storage to become core infrastructure in the digital economy.
The innovative wallet form factors that will emerge in the future are expected to fundamentally change how we manage digital assets and interact with Web3. Through this, we anticipate that blockchain technology will become more deeply embedded in our daily lives.
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