Wallet providers emphasize security as top hurdle to overcome

Crypto wallets are becoming an even bigger entry point for new users than centralized exchanges. 

That’s according to Phantom co-Founder and CEO Brandon Millman who spoke Monday at the Permissionless conference in Austin, Texas.

And that’s why the phrase that anyone who’s been paying attention to crypto for half a minute has come across — “how do we onboard the next billion users” — is fundamentally flawed in Millman’s view.

“The space really needs to focus on…retention of users, and not actually trying to onboard all these net new users,” Millman said. “It doesn’t matter if you onboard a billion users if your retention is zero, because then you end up with no users.”

Having good security in place is the first step toward getting people to stick around. That’s because if they fall victim to a phishing scheme, it makes it dramatically less likely for them to persist in crypto.

However, the assembled panelists seemed eager to move away from seed phrases, a security measure that’s so rigid it can lock the end user out of their account. 

Look no further than Stefan Thomas, a programmer who has hundreds of millions of dollars worth of bitcoin trapped in a wallet to which he lost the password.

Braavos co-founder and CEO Motty Lavie went as far as to say that seed phrases are “almost the root of all evil.”

Braavos, a smart contract wallet, uses two-factor authentication, biometric authentication and a seed phrase, widening the ways users can access their assets. This, essentially, is a form of account abstraction, which can allow users to recover their funds in the event of losing their seed phrase. 

A subsequent panel weighed the evolution of account abstraction and its benefits — chief among them being gasless payments. 

Stackup co-founder and CEO John Rising described gas payments as a “huge barrier of entry that has now been knocked down by smart accounts” and paymasters.

“A paymaster is an entity that exists on-chain that can basically sponsor transactions for people. So if you have a marketplace, and you want creators to publish things to your marketplace, you can effectively pay for gas for that,” Rising said.

Still, even if account abstraction became the norm, panelists said crypto wallets would need to evolve to handle customer issues in a more standard manner. 

As Lavie put it, people will inevitably make mistakes. They’ll click on links they shouldn’t click on and they’ll transfer funds they shouldn’t have transferred. 

Read more: Researchers flag security concern for users of certain crypto wallets

Millman and fellow panelist Jason Lau, OKX’s chief innovation officer, emphasized that providing customer support through standard, time-tested systems is the way to go. 

“For some reason, crypto and Web3 don’t really take much inspiration from all of the customer support techniques that have been developed over many decades on Web2 and instead opt for sending people into a Discord channel,” Millman said. 

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