Bitcoin wallets are a critical cog in the rise of digital currency adoption globally. Today, wallets have gone beyond the safe custody of users’ funds and offer features such as remittances, on/off ramps, day-to-day payments, direct bank withdrawals, and more. But what goes toward making the perfect Bitcoin wallet? This was the question the industry’s leaders in the field sought to answer on Day 1 of the London Blockchain Conference.
The panel discussion was moderated by the BSV Blockchain Association’s Kevin Healy on the technical stage. The panelists were Centbee founder Lorien Gamaroff, 4chain Studio CEO Michal Pawelski, DotWallet founder Lin Zheming, and TAAL’s Liam Missim.
The discussion starts with Healy asking whether new entrants must build their own solutions from scratch or leverage existing wallets. Lin pointed out that it all depends on the needs of the users.
“We need to think about the user,” Pawelski concurred. “There are a lot of solutions already out there. Do we need another wallet, or another application that we surrender our crucial data to? For simple UTXO management, you can use existing tools that are battle tested.”
The panelists noted that security is one of the key concerns for anyone building a wallet. Missin says some formats, such as web wallets, have higher security risks. He believes the industry needs more standards to allow different interfaces to interact easily.
“Security is a major topic,” Gamaroff added. He revealed that Bitcoin wallets are “constantly attacked, all the time.” Some, like Centbee, offer non-custodial solutions, easing the burden on security. However, he admitted that this is a band-aid solution as an average user doesn’t want the responsibility of securing their private keys.
The panelists delved into the dire need for regulations in the industry, having Bitcoin wallets at the operating system (OS) level, and the role that financial institutions play in the industry.
The challenges of wallet development
On challenges faced, the panelists noted that regulators have not caught up with the rapid pace of industry developments. Centbee, for instance, has failed in its quest to be regulated like other remittance companies despite offering the same services through Minit Money.
“If we could get these licenses—since we’re performing the same function but using a different rail—we could enjoy some benefits like easy access to bank accounts,” Gamaroff said.
A few high-profile delistings have also thrown a spanner in the works for the wallets, which must adapt quickly. Some popular hardware wallets also don’t support BSV blockchain, making it even more critical for BSV blockchain wallets to secure their platforms as they hold large sums of funds for their users.
Most wallets offer both web and mobile platforms. According to Lin, the choice of platform depends on the target audience.
Another key challenge for Bitcoin wallets has been the ever-evolving industry standards impeding interoperability. Gamaroff noted that most exchanges still use legacy systems and addresses and have yet to adopt features such as Paymail and simplified payment verification (SPV).
“It makes things more complex, and so you have to support everything. Eventually, hopefully, we can scale it down to just a few standards which the entire ecosystem can buy into,” he added.
Yet another challenge has been integrating legacy payment systems for off-and-on-ramps. Some, like Centbee, have resorted to providing their liquidity ecosystem where users can cash out directly to make payments or buy gift cards.
“As adoption comes, these problems will go away,” Missin summed it up.
Watch: How To Create a Wallet?
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