Bitcoin Wallets Desperately Need An Upgrade
Bitcoin is a unique cryptocurrency in that it doesn’t have a single point of failure the network is by far the most decentralised in the world with miners spread across the globe and applications pulling or contributing to the network made by several companies and individuals. The issue with decentralisation is that it is by definition, inefficient in the beginning as all avenues are taken on and allow the market to decide which solution is best.
This way of working is inefficient in the beginning but gets exponentially efficient as years go by, especially when the majority of the contributions are open-source. This allows for collaboration on a global scale and creating superior products as the needs arise.
One of the critical issues with Bitcoin is that the wallets suck! There is no hot wallet application that is the outright leader in the space, and I’ve personally downloaded several on desktop and mobile to try them out.
It’s highly frustrating as it creates so much fragmentation and anyone in the crypto space probably has several wallets in use as we speak.
While I could rant on about wallets overall for quite a time, but I’m only going to focus on what I feel a Bitcoin wallet would need to be successful.
Bitcoin is a bank in your pocket
Bitcoin is an entire bank in your pocket; the problem is it does not feel like it because of the user interfaces are severely lacking and not showing us what is truly capable using the coin.
Having used several Bitcoin wallets both custodial and non-custodial, I’ve pulled out my favourite features. I think ould make a great bitcoin wallet and will hopefully become part of all Bitcoin wallets in the future.
Since you can have multiple public addresses giving you the ability to name each address on your end helps you manage why you created each address. Perhaps one is for social media tipping and the other is for business payments etc.
A wallet should also help maintain the various address types such as your
- Standard BTC address
- SegWit and SegWit bench 32 addresses
- Lightning Network Addresses
Bitcoin wallets primary function is to receive payments, and yes you can share your public key or QR code but with Bitcoin addresses changing to maintain the privacy of the user it’s hard to maintain all that data.
These payment methods still leave openings for human error which is why I think invoicing is an ideal feature. Sending a user a payment link via instant message or email will reduce the change of human error, it would pull in the amount, and the address and all the user will need to do is authorise to complete the transaction.
Having seen what is capable with chains like EOS, STEEM, HIVE and even with unstoppable domains, I think having handle addresses for your wallet would be a great addition. This would allow you to have one handle that you own that can collect several cryptocurrencies as the handle is connected to several wallet addresses.
When a user sends a Bitcoin or Ethereum, for example, to your handle, the wallet will automatically detect which coin it is and attribute it to the correct wallet.
Having a bank in your pocket comes with plenty of housekeeping, and seeing a bunch of transactions with alphanumeric addresses in a list would be like looking at the code of the matrix for most people.
By adding memos into wallets, users can manage transactions better by defining the reasons for an incoming transaction and the reasons for outgoing transactions.
Memos also allow you to manage where your crypto is going and will enable you to categorise your purchases to help you take control over your finances.
Beneficiaries & address management
One of the critical issues with Bitcoin wallets for both private and business use is the managing of transactions in a way that makes sense to the user on first glance. By having a list of beneficiaries similar to your address book on your smartphone would be helpful.
You could add a user say, mum:
Each beneficiary ticket could contain the following
- Phone number
- Payment addresses
- Transfer history between mum and her various addresses
This will bring so much more context to a users wallet transactions and provide rich data which will encourage repeat and regular use of Bitcoin.
Having a wallet with connections with tools like Nano Ledger to take your crypto and move it to cold storage seamlessly would drive more responsible storage of cryptocurrency.
If your wallet would warn you to say that you’re keeping too much money in hot storage and suggest you move some to cold storage or that you’ve been holding this amount for a more extended period than would be better stored offline, then we could see more people save their Bitcoin safely.
Additionally, the wallet should provide safety guidelines for storing your phrases and how to use recovery wallets and the best storage practices.
Think of this as a secure vault for your coins.
Another significant critique of Bitcoin is that it’s not tangible and can’t work with intermittent internet. This can be overcome with the help of a paper wallet.
If your wallet could have the option to send a transaction to a paper wallet and then provide you with the recovery phrase to write down or send via email or SMS, this will allow you to transfer funds to users without securing it directly on-chain.
I see a service like this working fantastically well in rural areas and parts of Africa that have very limited access to the internet and electricity.
Using tools like the liquid network or the new Maker Dai collateral system you would be able to secure your coins in a smart contract that could be used to secure funds for a business like a loan or payment provider and pay you interest for staking your coins with them.
The wallet could provide you with connections to various service providers looking for collateral and the rate of return for your investment so you can put your capital to work from your wallet.
Think of staking as the personal savings account with your Bitcoin wallet.
The lightning network is a second layer solution with its unique addresses of its very own. To use the lightning network you need to upload Bitcoin into a new payment channel which is excellent for near-instant transfers at satoshi level costs.
Think of the lightning network wallet as your day to day payment option like a pre-paid credit card or tap and go payment system.
I think a wallet needs a block explorer solely for more transparency. When sending on-chain or off-chain transactions, I would like to know what’s going on in wallet addresses if I feel they may not be correct or I could be scammed.
Since transactions cannot be reversed, it would be great to view wallet transactions and their history to get some night into who I am transacting with and if they are legit.
I don’t mind altcoins I own several, but for the majority of the world, Bitcoin is the only currency worth keeping and is still the gateway to cryptocurrency. In private money, you should have the choice to be paid or pay in the currency you chose, and this is why I think atomic swaps are an essential wallet feature.
If I don’t want EOS, for example, I should be able to set that any EOS I get is swapped into Bitcoin immediately in my wallet.
The same goes for payments, an app may want ETH, and my wallet should allow me to convert my BTC into ETH to perform the transaction to buy what I want without me needing to use an exchange.
The bitcoin price means a lot to most of us and would like to know its dollar or local currency value at anyone time. Most crypto portfolio apps have the feature for push notification based on price settings you define which I think is a valuable service.
Setting various price notifications allows you to take advantage of dips and peaks for you to buy or sell when you feel comfortable or dollar cost average in at the best times.
Bitcoin is tied to the crypto market, and many users like to view the price and the current market sentiment. Your wallet should be providing you with the data feeds from an aggregator like @coingecko or coin market cap as well as newsfeeds from the popular news sites in the space. We already see this in wallets like Jaxx Liberty.
Having a wallet keep you up to date with the latest news and price action gives you a better idea of when to buy or sell or how to leverage your stake better.
BTC Transfer accelerators allow you to set the amount of money you are willing to submit as a transfer cost to encourage miners to pull your transfer out of the mempool and add it into the latest block.
By having the ability to control that on the front end and seeing what others are bidding for the transfer confirmation. Then you’ll be able to take control over how quickly and how costly you’re willing to make a transaction to get it confirmed on-chain.
Coin mixing or confidential transactions
Coin mixing allows you to create private transactions by grouping them with a bunch of other transactions. This protects the fungibility of the coin and provides you with the right to privacy.
Having a wallet with the option to say do you want to make this transfer private via coin mixing with various 3rd party services and the cost or to push a confidential transaction via a 2nd layer tool like the lightning network and its cost, give you even more power to control how you move your Bitcoin.
Banking for the people
Imagine having all these options available to you without having to jump from application or website. How brilliant would the use Bitcoin become?
About the Author
Che Kohler is the co-founder of nichemarket, a South African Business Directory and digital marketing agency. He is an avid blogger who specialises in writing about marketing tech and cryptocurrency.