Cryptocurrency Wars Are Intensifying

Anyone who can remember the days of Web 1.0 can probably remember the legendary “Browser wars”That became synonymous with the dawn of the Internet.

Back then, there was fierce competition among the early innovators of the World Wide Web, all vying to become the number one portal on the Internet. The browser wars raged for years before the dust finally settled. But with the rise of Web3 and crypto wallets, we have another epic battle on our hands.

Remembering the browser wars

It was open source Netscape Browser which launched the first consumer-focused web browser, paving the way for millions of people to browse the Internet. Despite initially dominating the market, it soon began to lose market share to Microsoft, which took advantage of its monopoly on the operating system space to outperform its rival by bundling its browser with Windows.

Netscape Navigator’s user base slowly declined and for a time Internet Explorer was by far the most popular browser, with over 90% market share. However, the browser wars were far from over.

On the brink of defeat, Netscape decided to join forces with other software organizations and create the Mozilla Foundationbefore launching your browser as Mozilla Firefox. Around this time, other browser manufacturers entered the game, such as Opera. A brutal battle ensued as Microsoft, Mozilla and others competed for the soul of the Internet. Little by little, Mozilla Firefox made its way upwith its open source nature and innovative new features like tabs helping it convince millions of users to switch from IE, breaking Microsoft’s stranglehold.

But when Mozilla Firefox’s market share peaked at around 30%, fast-growing search engine giant Google burst onto the scene, with the Chrome browser based on the open source Chromium project, leaving aside his two rivals to seize the crown by himself.

A new battlefield for Web3

Now, as interest grows in Web3, a new type of decentralized Internet, Browser Wars is entering new territory with an entirely different set of players. The web browser is widely considered the gateway to the Internet, but with Web3, digital wallets are slowly taking over that role, providing the tools and features people need to engage with the brave new world of DeFi applications, decentralized autonomous organizations, NFTs and the metaverse.

Web3 wallets are the main portal to access Web3 applications and there is already one company threatening to establish a monopoly. Just as IE became the default portal for Web1, the MetaMask The wallet has become the key to so many decentralized applications. In fact, numerous DeFi protocols and Web3 dApps have already begun optimizing their platforms for MetaMask, which has amassed by far the largest share in the crypto wallet market.

There is reason to be concerned about this development, as wallets are one of the most centralized elements of the crypto industry. ConsenSys, the company that owns the MetaMask codebase, relies on monopolistic business tactics, combining them with a walled garden approach that undermines the very spirit of Web3. After switching its codebase from a free license to a tiered proprietary license, it grew its user base from just over 500,000 in 2020 to more than 30 million active users starting in January 2024. As a result, ConsenSys has earned hundreds of millions of dollars in service fees.

Innovation shapes wallet wars

MetaMask is in a powerful position, but just as Firefox emerged to wrest control from Microsoft in the Browser Wars, it faces many innovative competitors in the new Wallet Wars.

One of the biggest rivals that has emerged so far is Trusted walletwhich is a smartphone-based crypto wallet that allows users to manage their digital assets through their smartphone. It is packed with easy-to-use features including QR code scanning, supports hundreds of different cryptocurrencies, and integrates advanced features such as “bet to win” rewards, as well as several third-party dApps to interact with the broader Web3. ecosystem.

Meanwhile Coinbase Wallet offers an advantage over previous wallets thanks to its direct integration with the Coinbase exchange platform. Although users’ accounts on Coinbase are custodial, meaning they are controlled by Coinbase, Coinbase wallets are non-custodial, so users have full control of their funds. Its biggest advantage is its built-in exchange functionality, which allows users to buy and sell different crypto tokens at the same price as the main Coinbase exchange.

Other rivals include desktop wallets like Exoduswhich can be installed on user’s PCs. Because private keys are stored locally on the user’s machine, Exodus claims to offer greater security than any mobile crypto wallet. It also supports advanced features such as multi-signature transactions, which require multiple approvals to improve security, as well as compatibility with hardware wallets such as Ledger.

Smart wallets to change things

The competition in Wallet Wars is fierce, but the arrival of Ambire Walletwhich represents a new generation of so-called “smart wallets” could open conflict because of the way they ease the user’s security burden.

With traditional wallets, users must safeguard their private keys themselves, and that means there’s no going back in case they lose that all-important seed phrase. This is in stark contrast to the backups offered by legacy finance, where you can always access your money by showing legitimate identification.

Contract-based smart wallets like Ambire Wallet enable something called “account abstraction” and include a basic application layer that coexists with an on-chain smart contract account where transactions are processed. This combination allows Ambire Wallet to incorporate Web2-style account recovery features that provide a solution to the security issues of traditional crypto wallets.

Because wallet security keys are encrypted and stored on the user’s device, Ambire Wallet supports custom signature verification logic, which can use security mechanisms found on smartphones and laptops. This means that the wallet can be unlocked with a simple fingerprint scan or face scan. The process is then verified on-chain using smart contract logic, ensuring that no unauthorized users can access it, even if they obtain the seed phrase. It also means that users can continue using Ambire Wallet even if they forget their password.

Most important of all, Ambire Wallet does all of this by safeguarding the user’s funds. User accounts are under the control of the users only, as Satoshi Nakamoto had intended.

Smart wallets like Ambire Wallet have a long way to go before they can claim victory in the Wallet Wars, but they have one big advantage: they solve the most critical flaw of traditional wallets. With its novel account recovery features, we finally have a wallet that matches the expectations of Web2 users.

It’s too early to say whether MetaMask will share the fate of Microsoft’s IE, which went from hero to zero in the span of a few years, but it’s clear that smart wallets can be a game-changer. They radically simplify the important onboarding experience for new cryptocurrency users. If Web3 wants to achieve its long-standing goal of amassing its first billion users, it will need the improved accessibility that only smart wallets provide.