Digital Wallets - Accessories For The New Economy

As a kid I remember going with my father to the bank. It really was an event. Something I always would look forward to - I mean I saw how important It made my dad feel. Walking in there and being greeted by multiple people in suits. Referring to him as sir and asking what they could do for him today from behind the large brass frames that would separate you from the inside of their little banking universe.

As a child I found this fascinating.

But times they are a changing. Every year banks are reporting of larger percentages of less people visiting their physical locations. This is happening because everything is going digital.

Can you imagine a world without banks?

Enter the digital dollar. Now for those of you that don't know what I’m talking about the United States has been planning for years to digitize the US dollar. Dubbing it a digital currency - but don’t fall for that for one second. It is in no way a digital currency (as far as how we define the terminology) it is simply a digital version of our old fiat dollar.

Plain and simple.

But why would they be creating a digital dollar?

We’ll address that in a future piece.

For now let’s get back to financial institutions going digital. Unlike paper money where traditionally it is placed into a bank for safe keeping. Digital forms of money will be stored on the blockchain. These blockchains can be public or private. They can also be ran by public or private entities. Blockchains that are associated with platforms that are decentralized would be public.

While a blockchain that is centralized and is designated to a bank or financial institutions would be private. Think of blockchain as a database that is cryptographically secured and locked. Only to be accessed by designated owners of these accounts or appointed custodians that can provide the right credentials.

When you buy digital assets like bitcoin or ethereum from an exchange like coinbase. Unless you transfer those assets to a cold storage wallet. (offline) Those assets will remain on that exchange in the custody of that particulate platform. Which in this particular scenario would be coinbase. Now some people are fine with leaving their assets on an exchange.

After all these platforms are secured and FDIC insured.

While others like the idea of their assets being in their own custody in tandem with a Trezor or a Ledger nano S. These cold storage devices act as keys to your assets that reside on the blockchain via a 24 word seed or by a similar system that grants you access. Unlike a traditional bank your assets are available to you 24 hours a day. There also is no cap to how much you can withdraw or transfer.

Mind blowing isn’t it.

(Before I move on if I refer to something that is “hot storage” it means you are utilizing a computer or something similar like a mobile device to store your assets on)

Cold storage refers to something that is offline. *You would still need an internet connection to access your assets but it is absolutely disconnected from an exchange and from your personal computer or device)

For example let’s say you purchase some bitcoin on coinbase. You aren’t too comfortable with leaving your assets on their exchange or utilizing a type of hot storage so you decide to get yourself a trezor which is one of the cold storage devices I mentioned above.

Once you buy the device there very little setup you have to do. It really only entails you writing down your 24 word seed (password) and getting your software setup on a designated device that I would suggest is only utilized for your assets.

Thats it you’re done. Now when you want to access your assets you’re only a few keystrokes away from withdrawing or transferring. If you have a Blockfi card or a similar crypto card or app you can transfer your assets to any of these platforms and spend.

Now if you aren’t a fan of having to store your word seeds in a vault along with your Trezor or similar cold storage devices. Then by all means keep your assets on an exchange. It is personal preference. As for now traditional banks are offering crypto custody services but only to very large buyers of the assets. But soon they will be offering these services to us retail investors.

Don’t forget that in 2020 Brian Brooks the former Comp Controller on the Currency that oversees all US Banks gave them the green light to custody digital assets. This was a game changer. This solidified a lot of things in my mind including the fact that All US banks will be selling us Digital Assets very soon. Sooner than you think.

In closing I don’t believe that paper money is going away anytime soon. That would take an entire generation to get rid of in my opinion. There is way too much paper money in circulation.

Lastly here is something to ponder.

In my grandparents lifetimes they were introduced to credit cards. Which for them was new technology that they were probably skeptical about using when they were more than content to just walk into a bank and pull out money.

As an adult now. I find THAT fascinating.. :)

Jk