• Wallets are the foundation of the Web3 ecosystem but using them has been difficult for new users.
• Some companies are trying to create wallets that combine security with convenience, such as Magic Labs’ Magic SDK.
• Other solutions being used by wallet developers include Amazon Web Services Hardware Security Modules, biometrics, and more.
The Challenges of Using a Web3 Wallet
Using a wallet to access the Web3 ecosystem has always been a challenge for new users due to the steep learning curve. Not only must they learn to copy down their seed words and store them in a safe place, but they must also create a strong password to encrypt their keystore file and be accurate when copying addresses when sending funds. This is why many crypto users prefer noncustodial wallets over custodial wallets from centralized exchanges due to the risk of losing all funds if one of these providers goes bankrupt or gets hacked.
Combining Convenience with Security
A few Web3 companies are now trying to make wallets easier to use while still keeping user’s funds secure without having to trust a centralized custodian. Companies like Magic, Dfns, Kresus, Web3Auth, Immutable and others believe that it’s possible for wallets to be just as easy to use as email accounts while still being secure enough for users’ identities and funds.
Magic Software Development Kit
One solution being implemented by developers is the Magic software developer kit (SDK), created by Magic Labs. It allows developers to create seedless wallets so that private keys aren’t stored on the user’s device – instead an encrypted copy is kept on an Amazon Web Services Hardware Security Module (HSM). The encryption uses a Master Key which cannot leave the HSM so that all signing is done within its secure environment.
Biometric Authentication & More
Other solutions being used by wallet developers include biometrics for authentication, hardware tokens such as YubiKey or Nitrokey devices, blockchain-based authentication protocols like uPort or Keybase/StellarSigner signatures, or even SMS-based authentication methods from companies like Twilio or Nexmo. All of these can help make onboarding easier while still allowing users complete control over their identity and funds without having to rely on any third party provider.
Web3 wallet developers are working hard on making it easier for new users to get started with crypto without sacrificing security. With solutions such as Magic SDKs, biometrics, hardware tokens and more being integrated into wallets it looks like soon onboarding will become much simpler while still keeping user’s in full control of their identity and funds at all times!