As Crypto Storage is Still a Major Problem, Can NFT integration Solve the Issue?
Now a trillion-dollar market, the crypto ecosystem has withered
some of the toughest conditions within its period of existence.
However, like any other technological innovation, it is not short
of native challenges. This ‘lucrative’ market faces a myriad of
shortcomings, including criticisms from regulators and
long-standing financial institutions. But the most significant
hurdles are currently attributed to the underlying infrastructures.
In a recent interview during the Paris Blockchain Week, Binance CEO
Changpeng Zhao identified crypto custody as one of the hardest
challenges that remains unsolved. According to CZ, the inaccessible
and complex nature of crypto wallets is undoubtedly hindering mass
adoption in the digital asset space. He was also keen to highlight
that this one of problems he would prioritize given an opportunity,
“If I had no financial pressure, I would want to solve the most
difficult problem that is blocking adoption. That would be the
problem I would try to solve.” The Loophole in Crypto Custody
Anyone who has interacted with crypto long enough understands there
is a thin line when it comes to storing the newly found wealth.
Stakeholders have in the past lost huge sums of money as result of
wallet breaches or forgetting one’s seed phrase. As it stands, 20%
of the BTC in supply cannot be accessed due to lost private keys.
Is this efficient for an ecosystem touted as the future of finance?
While Rome wasn’t built in a day, the issue of crypto wallets needs
to be addressed sooner than later. Some crypto diehards would argue
that non-custodial wallets are a long term solution. However, the
complexities involved in securing one’s seed phrase paint a
different picture. “But today, most people cannot store their
private keys securely. The wallets require them to be technical.
Your computer cannot get a virus. If your computer gets a virus,
there’s all kinds of problems that will happen. You will lose your
money.” added CZ Binance. Even worse, the current infrastructure of
most non-custodial wallets does not feature a solution for passing
heritage to future generations. It is quite unfair to invest in an
industry where there is no guarantee that one’s offspring will
benefit in the event of their death. After all, this is standard
practice in the traditional finance scope. Unfortunately, custodial
wallets offered by crypto exchanges are not any better; while they
might feature a heritage structure, users are not in control of
their private keys. In the event of a breach such as the infamous
Mt Gox hack, chances are high that any investor holding funds with
the affected exchange will have to incur significant losses. So,
what is the ultimate solution to a secure crypto storage ecosystem?
The perfect answer would be it’s neither white nor black, but the
emergence of Non-fungible tokens (NFTs) seems to be paving way for
tamper-proof and heritage-designed Web 3.0 wallets. NFTs; The
Future of Crypto Wallet Infrastructures The NFT hype has taken the
crypto industry by a storm, with digital creatives such as Beeple
cashing big on their work. Though a relatively new area of
innovation, the indistinguishable (unique) nature of NFTs could be
a game-changer in the development of non-custodial crypto wallets.
Emerging DApps such as Serenity Shield are implementing NFT
technology to introduce a strongbox solution that addresses seed
recovery and heritage issues. Launched in 2021, this Web 3.0
project features a fully encrypted solution for storing digital
assets. Ideally, Serenity shield allows crypto natives to create an
account where they can securely store their seed recovery phrases.
Serenity’s strongbox then partitions the sensitive information into
three unique NFT keys. The first NFT is allocated to the account
owner, the second to a prospective heir while the final key is
stored in the Serenity Shield smart contract. To unlock the
information in the strongbox, one requires at least two of the NFT
keys, making it possible for a user to recover sensitive
information or transfer ownership to an heir. Going by the trends
in NFT integrations, the value stretches beyond play-to-earn and
the metaverse economies. There is a wide range of crypto
applications that could benefit from scaling through NFT
infrastructure. Most notably, this upcoming crypto niche provides a
building base for secure DApps, ultimately solving pertinent issues
such as seed recovery and digital asset heritage. Conclusion
Cryptocurrencies might have come of age but there is a lot to be
done to ensure that investors sleep comfortably knowing their
assets are safe. As highlighted in the introduction, it is still a
murky world for crypto wallets, whether custodial or non-custodial.
This is not to say that existing issues cannot be solved; newer
technologies like NFTs present an opportunity to tackle a majority
of the underlying problems.
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