Are Web Wallets A Key Step In Cryptocurrency Adoption?

Executive Brief

Within the industry, there is a divide in opinion as to whether or not it is a good idea to use web wallets. The lack of trust toward governments and financial institutions, as well as losses suffered due to some unscrupulous exchange operators and other scams, has left a bitter mark on a lot of people. This group believes that everyone should hold onto their own cryptocurrencies. What many of them fail to consider are the obstacles mass adoption faces if the only option people have is to store their funds on a downloaded desktop or mobile wallet.

Downloading a wallet, whether it is for bitcoin or another digital currency, has been a tough sell with the mainstream public. Whether it is because they erroneously feel you need a great deal of technology knowledge, distrust and fear downloading anything, or they simply suffer from sheer cryptocurrency bewilderment, it is clear there needs to be some sort of bridge that makes it both easier to get started and has a degree of familiarity people can relate to.

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Having the ability to hold onto and control your own wealth without any intermediaries is groundbreaking, and has set digital currencies apart from other forms of money. This may be a bit too much for the average person to wrap their head around as most of them have always relied on custodial relationships for their investments. They are usually more comfortable when someone else is responsible for holding their wealth, and the chances of them jumping directly from this type of arrangement to one of storing and securing it on their computer or smart phone, is very, very unlikely.

Web wallets are rising in popularity, in part because of their ease of use - all you have to do is register with the wallet provider, and it is ready to go. A regular cryptocurrency wallet on the other hand, can take hours or days to download, and needs to be 'maintained' by regularly syncing it with the network. The user-friendliness of web-wallets makes them a perfect stepping stone for 'first mainstream users', those that are already comfortable in bank held equities, mutual funds, and other investments. Not afraid to take on some risk for the chance of a substantial reward, this group will be the ones most likely to be the first investors from outside the industry to invest in bitcoin ETFs, cryptocurrency index funds, and other similar products when they become available.

Critical to the success of web-wallets is trustworthiness, and because there is a lot of money to be made in bitcoin and other digital currencies, it is important to research and choose your wallet provider carefully in order to steer clear of those that are dishonest. Custodial cryptocurrency arrangements of any kind should be with people that have a verifiable history of integrity. This track record should precede the birth of bitcoin, or you may end up with a teenager as your wallet provider.

Web-wallets are not for everyone. They are a better fit for those that are investing in the long term potential of a particular cryptocurrency and don't need access to it for day-to-day spending. People in countries whose government-based currencies have either collapsed or are teetering on the brink, are already using digital currencies in their daily lives, usually on smart phones. It will be a long time before they trust anyone to hold their wealth again.

The views expressed by the authors on this site do not necessarily represent the views of DCEBrief or the management team.

Author: Chase Green

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