At the beginning of the year, Coinbase announced its Wallet-as-a-Service (Waas) solution to enable businesses to adopt wallets using their infrastructure, and recently, Circle (issuer of USDC), also announced its Wallet-as-a-Service platform, which provides relevant infrastructure for developers to easily adopt this wallet service. WaaS sits at the intersection of Web2 and Web3, indirectly helping both companies and non-crypto-savvy users enter this space.
We are moving steadily towards an internet of comprehensive services from trusted points for different utilities, thanks to the evolutionary layer that blockchain adds to the network. One such high-demand and future-oriented service (meaning highly competitive and where traditional financial or banking entities must pivot) in this industry is undoubtedly Wallet-as-a-Service (WaaS), a cloud-based service that provides users with a digital wallet to store, manage, and transact with cryptocurrencies. Whether you are an individual, a company, or a talented developer, you can leverage the infrastructure and security of an external provider to manage all these functions from a single point, eliminating the friction of complexity sometimes associated with cryptocurrencies.
Thanks to Wallet-as-a-Service, users can access their wallets through a user-friendly interface provided by the service provider. This service typically offers functions such as cryptographic key generation and storage, transaction execution, account balance checking, and transaction history monitoring. If we want adoption on one side and business on the other, incentivizing on networks or protocols alone is no longer enough; we need one more factor, and that is simplicity. Simplicity can be defined as a wide range of advantages in processes that must be fully automated, leaving nothing to the user’s discretion in a rapidly growing sector filled with scams and high volatility. Granting certain freedoms or responsibilities to users without a financial or technological foundation can be riskier than leaving your wallet unattended on a beach towel in Benidorm on a summer afternoon. Therefore, let’s be responsible with what we build.
The user who adopts a Wallet-as-a-Service (WaaS) must:
1 Find convenience when accessing their wallet from any device, making it easy to manage their cryptocurrencies on the go.
2 Feel secure regarding the protection of their funds, including encryption, two-factor authentication, and cold storage solutions.
3 For businesses and developers, simplified integration is key to the success of Wallet-as-a-Service among the developer community. Companies and developers will easily start integrating cryptocurrency wallet functionality into their applications or platforms without having to build and maintain their infrastructure, saving significant time and resources.
With all this in mind, the WaaS provider must ensure an excellent user experience, provide thorough wallet maintenance, and offer the best and most up-to-date software updates, including security patches if necessary. However, it’s essential to be aware of certain risks, limitations, or situations that may arise when delegating what you should do on your own to third parties (even if you don’t perceive it right now). It may expose you to a provider’s blockage, loss of privacy, or delays in the compliance process, which could take months, resulting in missed opportunities and momentum, among other things.
CONCLUSION:
There are many use cases for this service, and several of them are already in progress, even if they don’t make headlines due to hidden interests. Some examples include digital markets, decentralized finance (DeFi), the gaming sector, or reward programs for community building, code auditing, or value contribution, etc.
In my opinion, WaaS could easily become mainstream in the cryptocurrency space, either because even religious organizations or ONG´s will adopt it sooner or later, or because cryptocurrency wallets will undoubtedly integrate into most websites, much like Stripe and PayPal, making stable coin payments the norm.