The Crypto Wallet: Unlocking Digital Identity
The key to composable identity in web3
Twenty-five thousand for a jacket…wear it once 🤧
—Lil Baby & Gunna, “25k jacket”
I remember getting my first wallet as a pre-teen. It was hideous. It was a black, faux leather bi-fold wallet with one of those metal clips that allowed you to attach it to your belt.
Getting my first wallet was a huge step towards self-sovereignty in my pre-teenage years. Having a wallet allowed me to do more “adult” things like carrying a membership card or debit card, or tithing at church with my own cash instead of my mom handing me a few dollars. But more importantly, having my own wallet allowed me to compile pieces of my identity and carry them with me wherever I went. Obviously, as I grew in age, maturity, taste, experiences, and income, the things I held in my wallet evolved, as did the wallet itself. Today, almost all the things I’d previously held in my wallet live natively on my iPhone but here’s a glimpse of what was inside young Jay’s first wallet:
My favorite sports trading cards (Kobe Bryant and Alex Rodriguez)
A family photo
My YMCA membership card
A library card
One of my 5th grade crushes gave me a cut-out of her school picture on Valentines’ Day…I put it in my wallet 🤦🏾♂️
My first debit card
Last week, Poolsuite, the self-defined “Internet Leisure Corporation” behind one of the most creative NFT projects of 2021 enabled Poolsuite NFT holders to add their NFTs to their iPhone and Android mobile wallets. Poolsuite NFT holders rushed to share screenshots of their NFT in their mobile wallet, many of which revealed other items in the wallet. As Tiffany Zhong’s reply flexed her SoHo House membership pass alongside her Poolsuite NFTs, my favorite reply was from Trevor McFedries, whose wallet contained two gift cards from Starbucks and Erewhon.
This was dope because these screenshots provided a unique insight to an NFT holders’ identity. When someone asked Trevor why he had $400 on a Starbucks gift card, he shared “lmao everyone in my life gets me starbucks cards cuz they know that my life as a DJ meant living in airports which meant making healthy decisions at starbucks and now I live and die starbucks.” What originally seemed like a regular, well-funded gift card revealed a seemingly important part of Trevor’s life and identity.
This exchange is just one reason I’m excited about the crypto wallet’s potential to enable more fluid and composable digital identity. We’ve barely scratched the surface of what wallets can achieve but with the right composition of UX, infrastructure, and community, there’s endless potential for the crypto wallet to empower consumers to manage their digital identity in ways that were never possible with Web2 products.
As the first step towards interacting with web3 products, the crypto wallet is the most important piece of a consumer’s journey into the world of web3. However, the UX of today’s wallets don’t fully reflect how critical it is to web3 usage and adoption. In November 2021, MetaMask reported more than 21 million monthly users, despite being derided endlessly for the product’s difficult, confusing consumer experience as web3 adoption exploded in 2021. Metamask’s suboptimal UX and the surging popularity of NFTs have created tremendous opportunities for newer crypto wallets to gain both mind and market share with superior UX, especially on mobile. As web3 products become a growing part of our digital interactions and identity, creative, high-quality UX within the wallet can vastly improve web3 adoption and retention by abstracting away some of the technical complexities of using web3 applications, and making the wallet feel more like a place to explore than a tool.
Two weeks ago, Rainbow got all of crypto twitter aroused when they teased mockups of a more profile-centric UX complete with an ENS registration feature. Not only would in-app ENS registration be further validation of ENS domains as web3 usernames, making the assets you own feel more personal, but it’d also remove the need for users to go off-app to secure their ENS (a process that’s often confusing and complex to new web3 entrants), and would improve Rainbow’s stickiness.
In addition to simplifying complex web3 actions, where UX really has an opportunity to shine is in designing a wallet that feels like a PLACE. Despite web3 being an internet based around user ownership, we’re still quite limited in how we can use and display most of the assets we own. Much like today’s social networks have siloed users into a handful of content types and displays, today’s wallets limit our asset engagement and display options to simple showcases or galleries. But the possibilities are endless if consumers also have the ability to curate around the assets they own. This could be as simple as changing the background color of your wallet, or more complex like sorting your NFTs by the type of art, colors, dimensions, etc. (e.g. The Kobe jersey in my room is just a jersey, but you can learn something about my identity based on where and how I might hang it up on my wall, or what items I place around it.)
In high school, Tumblr was the one social/media platform where I actually felt a sense of ownership and control, despite rarely creating original content. Tumblr was one of the few places on the internet that actually felt like a PLACE, and there’s a reason that after all these years it’s resonating with Gen Z’s more than Instagram and Facebook. Although wallet contents are public, wallets can still design for intimacy à la Tumblr, making the wallet feel like a personal, digital third place to hangout and interact with your assets.
2022 will surely bring more excitement to the wallet space. Phantom is finally slated to launch their mobile wallet this month, and I’m even more excited for the launch of mobile wallets by Glow (by Luma), Sudo, Bitski, and several more in stealth 👀 .
While the onus is largely on designers to optimize wallet UX, some of the frontier capabilities for crypto wallets and decentralized identity will only be enabled by underlying web3 infrastructure and dev tools. Today, there are several exciting pieces of web3 architecture leading the charge in enabling provocative use cases and second order effects for the crypto wallet though data sharing and identity management.
One of my favorites is Ceramic Network: Ceramic is a decentralized, open source platform for creating, hosting, and sharing streams of data. As the Ceramic team explains, “Most of the information on today's internet is locked away on application-specific database servers designed to protect data as a proprietary resource… This siloed and competitive environment results in more friction for developers and worse experiences for users.” Ceramic solves this by creating a ~dataverse~ in which users control the information they create online, and apps share data between one another. Use cases enabled by Ceramic integrations that I find most relevant to the wallet experience include decentralized identity, multi-user applications, and decentralized databases. With partnerships that include Near Protocol, RabbitHole, Livepeer, and Zerion, there’s a good chance some of your favorite web3 apps and protocols already utilize Ceramic.
Another piece of web3 infrastructure key to unlocking the crypto wallet’s full potential is Spruce ID. SpruceID is an ecosystem of open source software tools designed to enable users to control their identity across the Web. In September 2021, SpruceID announced it would begin working with the Ethereum Foundation and Ethereum Name Service (ENS) to develop a standardized way for users to connect their Ethereum wallets to website applications (“Sign in with Google” → “Sign in with Ethereum” / “Connect your wallet”). In case the transformative value of this proposal isn’t already clear through existing web3 apps, look no further than this explanation from Kei Kreutler:
“When you connect [to a website or app] using a wallet, that wallet is actually providing a range of services: functionally, you are simultaneously invoking fund management, identity (cross-platform address), and a profile (on-platform history) through one software account, whereas previously on web 2.0 platforms, generally each of those functions pointed to a different service.
SpruceID’s products DIDKit and Rebase also will supercharge wallet functionality by enabling use-cases like credential verification for DAO governance, NFT authenticity confirmation, and social profiles linked to public keys.
Lastly, Sismo allows users to aggregate their reputation, ownership, and data without broadcasting details they’d like to keep private. By issuing badges (as NFTs) to a user’s public Ethereum profile based on ZK-attestations of facts from other Ethereum or social accounts, Sismo is solving a critical problem for the millions of users that manage multiple Ethereum wallets and want to protect their privacy. Without a public link between private and public profiles, users have “their history and reputation fragmented over multiple accounts,” which they assert is a “waste in the world of open and interoperable protocols.”
As entirely new web3 applications are built across novel and existing blockchains, infrastructure for the wallet will remain critical to building applications that facilitate identity management.
As frequently pointed out, in open source environments, you can replicate technology but you can’t replicate people. Consequently, the final and possibly most important key to unlocking the crypto wallet’s full potential for composable identity is community.
Over the past year, “community”’ has become a buzzword, especially as folks have slapped the term on any group of people with a minimum viable common denominator. Let’s clear one thing up: Slack channels ≠ Community. The same applies for Discord servers. What actually constitutes a community, as outlined by Gaby Goldberg, is the alignment of a group across 3 elements: Identity, Initiation, Ritual.
In addition to consumers using wallet functionality to form communities, I predict communities will form around certain wallets themselves. Not only will the contents of your wallet help express your identity in a digital realm, but the wallet you choose to use will as well. Here’s a quick example (using Gaby’s framework):
Identity: I am a DeFi degen
Initiation: I use XDEFI wallet
Ritual: I lend/borrow/swap these tokens; I stake in these liquidity pools; I use max gas to execute my transactions instantly
You’d be hard pressed to find someone that believes the wallet space will be ‘winner-take-all,’ especially as we move towards an increasingly multi-chain world. Some wallets will certainly be optimized for distinct activities like NFT collecting, DAO governance, or DeFi transactions but restrict users to one blockchain; other wallets might support cross-chain activity or seamless bridging between L1 and L2 but provide a less robust experience for each unique activity. Either way, as we onboard the next 100 million people to web3, I’m confident consumers will choose the wallet that best enables them to express themselves and their goals.
Don’t forget: if you’re reading this, you are still very early. Metamask’s 21 million monthly active users in November represent just 0.7% of Facebook’s nearly 3 billion MAUs, and 6% of Twitter’s 331 million MAU’s. Collectively, most of us have only dipped our toes into the waters of web3 and its potential.
As the most critical piece of consumers’ interaction with web3, the crypto wallet is arguably the largest canvas for ingenuity, creativity, and exploration. As builders explore that potential and web3 becomes mainstream, managing a composable identity will surely introduce challenges as well. But I’m confident that in the coming years, strong UX, novel blockchain infrastructure, and curated community will supercharge crypto wallets and empower consumers to own and share their identity on the internet like never before.
In the meantime, if you’re building a crypto wallet that feels even remotely like using Tumblr, please DM me. I have a check for you.
A big thank you to my friends Holyn Kanake, Kinjal Shah, and Sean Thielen-Esparza for sharing their thoughts and feedback on this post, and to countless others with whom I’ve discussed crypto wallets 🤝.
Kei Kreutler: Inventories, Not Identities
Mario Gabriele: MetaMask: The Hero Crypto Deserves
Fawzi Itani: Crypto Wallets Are the Next Form of Social
Justine Humenansky: Scarcity Networks: Social Networks on Web3
Kyle Chayka: How Tumblr Became Popular for Being Obsolete
Holyn Kanake: Web3: the internet’s 3% difference