Cryptocurrency is not a beginner-friendly technology and is known to require new users to learn many concepts and tools. This is not surprising due to its highly technical nature, but users tend to fall prey to cognitive biases as they progress through their cryptocurrency journey. Although this is not necessarily true for everyone, it is not uncommon to see the Dunning-Kruger effect clearly evident in so-called “veterans.”
Perhaps the biggest example of cryptocurrency users overestimating their knowledge is their understanding of cryptocurrency wallets. Cryptocurrency wallets may be the most important tool when interacting with cryptocurrencies and blockchain, but most people misunderstand them. Starting with the idea that cryptocurrency wallets “store” your cryptocurrencies, this misconception can be disastrous in the long run.
There is also a group of cryptocurrency enthusiasts who understand that cryptocurrency wallets don’t just store cryptocurrencies, but keys that allow you to interact with them. Private and public keys have a variety of uses, allowing you to perform a variety of tasks, from receiving cryptocurrency to approving transactions. To truly understand how these keys make such operations possible, users need an understanding of cryptography and the underlying blockchain infrastructure.
As concepts like custody, non-custodial, asymmetric cryptography, digital signatures, hot/cold wallets, and multisig become more prevalent, understanding how cryptocurrency wallets work has become more difficult. It’s true that you don’t need to understand these concepts to use a cryptocurrency wallet, but misunderstandings about them should be avoided at all costs. Therefore, it is essential to make it easy to use cryptocurrency wallets without having to understand the technology.
Creating such a wallet may not sound that difficult, but in reality it can be complicated, especially considering the decentralized nature of cryptocurrencies. Decentralization puts developers in a difficult situation, as it provides more freedom of choice at the expense of safeguards. The importance of these decisions continues to grow as new movements like Web3, NFTs, and GameFi gain momentum.
This same dilemma is what Robin Guyard, Laguna’s CTO, faces. Blake Commagere, co-founder and COO of Vault12; And Doug Horn, Chief Architect at Telos, sat down to discuss it at Consensus 2022’s Grit Daily House. Rachel Wolfson, enterprise blockchain analyst at CoinTelegraph, moderated a panel titled “What’s in a Crypto Wallet?” She asks insightful questions about what role wallets will play in the cryptocurrency world.
If you missed your chance to attend Grit Daily House in person and hear what experts have to say on this topic, don’t worry. You can watch the panel in the video below, as well as other panels on Grit Daily’s official YouTube channel.
Juan Fajardo is the news desk editor at Grit Daily. He is a software developer, technology and blockchain enthusiast, and writer who has contributed to several projects. Skilled in all professions, he was born in Bogotá, Colombia, but after traveling many places, he now resides in Argentina. Always with new interests and a passion for entrepreneurship, Juan is the news desk editor at Grit Daily, covering everything related to the startup world.