Web3 Wallets and Centralization: Can They Coexist?

Web3 Wallets and Centralization: Can They Coexist?

Web3 wallets have become a crucial tool in the new era of the Internet, where decentralization, blockchain, and cryptocurrencies are at the forefront of innovation. A Web3 wallet, also known as a crypto wallet, is a digital wallet that enables users to store, send, and receive cryptocurrencies, interact with smart contracts, transact NFTs, and access dApps on different blockchains.

As the use cases of Web3 wallets continue to expand, the question of whether centralization can play a role in managing these wallets arises. I will explore the concept of Web3 wallets managed by Centralized Exchange (CEX) and discuss whether it aligns with the principles of Web3.

What Is CEX + Web3 Wallet?

CEXs (centralized cryptocurrency exchanges) act as intermediaries for buying, selling, and trading cryptocurrencies in a centralized manner. They offer a user-friendly platform where users can conduct various cryptocurrency transactions. However, users must trust the exchange to manage their funds securely, as the exchange controls the wallets.

Web3 wallets provided by CEXs claim to integrate with decentralized ecosystems and allow interactions with dApps and blockchains. Despite this claim, the underlying nature of these wallets remains centralized, as the exchange retains control over users’ private keys and funds.

web3 app download

The centralization aspect of CEXs extends to their Web3 wallets in various ways:

  1. Users entrust the exchange with storing and managing their private keys, relying on the exchange’s security measures.
  2. The infrastructure supporting Web3 wallets, such as servers and network nodes, is owned and operated by the centralized exchange.
  3. Transactions from CEX’s Web3 wallets undergo internal approval and validation before being broadcasted to the blockchain, introducing a centralized control point.

For users seeking decentralization and full control over their funds, self-hosted software wallets or hardware wallets may be more suitable.

While Web3 wallets and centralization can coexist to some extent, the level of centralization varies depending on specific implementation and design choices by wallet providers. Understanding this relationship can shed light on how these elements interact.

Case Studies

Let me share some examples:

Case Study 1: OKX Wallet

OKX, a well-known player in the Web3 technology space and the second-largest cryptocurrency exchange in terms of trading volume, recently unveiled a significant upgrade to its OKX Wallet. This upgrade introduces groundbreaking features that position it as the first Web3 wallet to integrate advanced multi-party computation (MPC) technology.

Integrating MPC technology into the OKX Wallet eliminates the need for traditional key and seed phrase storage methods. Instead, the user’s private key is divided into three parts, significantly enhancing security and reducing the risks associated with a single point of failure. Leveraging MPC ensures that users retain complete control over their wallet assets while enjoying the highest level of security.

OKX Wallet operates as a fully decentralized and non-custodial solution, empowering users with full ownership and control over their funds. Unlike centralized exchanges, OKX does not hold users’ assets, creating a secure environment that allows individuals to have custody of their cryptocurrencies.

The wallet offers multi-blockchain support and automatically recognizes and connects to supported networks, providing a convenient solution for users engaged in decentralized finance (DeFi), non-fungible tokens (NFTs), and decentralized applications (DApps).

The upgraded OKX Wallet introduces an innovative asset recovery feature called “independent Emergency Escape,” revolutionizing the recovery process. In critical situations, users can regain access to their assets through using two out of three access credentials: a device, a cloud backup, or an OKX account login. This unique feature enhances user security and autonomy, allowing individuals to regain control of their assets without relying on OKX’s involvement.

In addition to its robust security features, the OKX Wallet provides complete control and ownership of funds, facilitating faster withdrawals without withdrawal approval. The wallet allows seamless management of multiple chains, eliminating the need for manual network switching.

Users can import multiple seed phrases and derive addresses within the wallet. Easy connectivity is ensured through the OKX Wallet web extension and dedicated iOS and Android mobile apps. Integration with the OKX DEX, an integrated decentralized exchange aggregator, enables multi-chain and cross-chain transactions.

Case Study 2: Bitverse

Introducing Bitverse, an innovative MPC + AA Wallet leading the way in building the “Credit Creates Wealth” Web3 ecosystem. Bitverse combines artificial intelligence, Oracle credit protocols, and advanced cryptographic techniques to create a secure, decentralized, and user-friendly environment for controlling and managing assets.

It aims to promote user engagement and loyalty with engaging features like lucky packets, event guessing, non-fungible tokens (NFTs), and airdrop tools. We will explore the key advantages and how it is shaping the landscape of Web3.

One of the primary advantages is its implementation of the Bitverse Credit Protocol (BCP) and Credit Oracle. BCP is a decentralized credit protocol that leverages AI and Oracle technology. It establishes a hybrid credit system (OCC + RWC) that operates on both the blockchain and off-chain.

Extending credit capabilities to both realms ensures that credit is accessible and convenient for all industry members and users. This innovative approach addresses common pain points in the industry, such as low fund utilization and limited benefits for high-credit users.

To achieve robust security, it employs MPC. It also prioritizes convenience for its users and incorporates a secret key partition management system with cryptography principles, zero-knowledge proofs, trusted execution environments (TEE), and robust authentication mechanisms.

In its development, it is actively working on an Account Abstraction (AA) wallet that supports non-main chain currencies. This AA wallet enables users to pay gas fees using alternative tokens. For compatibility, it supports single-signed wallets using traditional mnemonic phrases. This compatibility ensures a seamless transition for users already familiar with existing Web3 wallet practices while expanding the user base.

With its unique features and user-centric approach, it is shaping the future of decentralized finance and revolutionizing how users control and manage their assets in the digital world. It’s worth noting that Bitverse is integrated into the Bybit exchange, further expanding its reach and capabilities.

Can CEXs Manage Web3 Wallets?

The examples provided above serve to illustrate two distinct aspects. The first example showcases how a CEX can develop its own Web3 solution, while the second demonstrates the integration of a third-party solution. Both integrations have their merits and represent a positive step towards enabling users to experience the functionality of Web3.

In contrast, Web3 is founded on the principle of decentralization, ensuring that no single entity maintains control over the network. Decentralization enhances security, transparency, and resilience against attacks by eliminating a central point of failure.

So, can CEXs manage Web3 wallets? Technically, the answer is yes, but it contradicts the principles of Web3. When users entrust their assets to a CEX-managed Web3 wallet, they place their faith in the CEX, which undermines the concept of decentralization.

CEXs have a history of security breaches, and if it is hacked or goes bankrupt, users may permanently lose their funds. Moreover, they may impose restrictions on users’ funds, such as freezing or seizing them, which contradicts the financial sovereignty that Web3 aims to achieve.

Another concern with CEX-managed Web3 wallets is the risk of censorship. They may comply with government regulations and limit users’ access to specific decentralized applications (dApps) or blockchains, eroding the idea of an open and permissionless internet envisioned by Web3 further.

However, it is essential to note that not all CEXs are identical. Some have taken steps towards decentralization by adopting non-custodial features, enabling users to retain control over their private keys and assets while benefiting from the user-friendly interface of a centralized exchange.

Many also offer cross-chain interoperability, allowing users to access multiple blockchains from a single platform, which can be convenient for those who trade various cryptocurrencies. Nevertheless, despite these efforts, CEX-managed Web3 wallets still diverge from the core principles of Web3.

In Conclusion

Web3 wallets managed by CEXs may offer a user-friendly interface for cryptocurrency trading and accessing different blockchains, but they deviate from the fundamental principles of Web3. Decentralization is a pivotal aspect of Web3, distinguishing it from traditional Internet and financial systems.

While Web3 wallets and centralization can coexist, users should be cognizant of the degree of centralization involved and make informed decisions based on their priorities. For users seeking decentralization, the ideal scenario entails utilizing wallets prioritizing client-side control, locally stored private keys, and open-source code allowing independent verification.

The usual “Anndy Lian” quote to end the article: “Whether championed by a centralized or decentralized entity, this is the journey of Web3. We must respect this entire process.”

Source: https://www.financemagnates.com/cryptocurrency/web3-wallets-and-centralization-can-they-coexist/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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What is CC0 NFT? Are they any good? What are good?

What is CC0 NFT? Are they any good? What are good?

Melos Studio is launching their music NFT + CC0 month. CC0, also known as the Creative Commons, means “no rights reserved” on intellectual property. It’s a type of copyright that allows creators to waive legal interest in their work and take it into the public domain almost instantly.

They have invited the following guests to discuss it.

Yalu – Lin Melos Co-Founder
TP – X2Y2 Co-Founder
Daley – Community Lead of BSC Daily
Anndy Lian – KOL/ Best Selling NFT Book Author “NFT: From Zero to Hero”

A CC0 NFT can be owned by others. Anyone can use the NFT for commercial purposes without attributing it to the original artist or creator. In summary, CC0 NFTs can be seen as open-source IPs.

The sound of NFT on CC0 might sound like it is worthless, and everyone is copying everyone. But it may not be. If more people use the art, CC0 NFTs often become more valuable. If more people pay attention to it, it becomes more valuable. And CC0 incentivizes sharing the project’s art, creating derivatives or monetizing it. This is the point shared by Daley from BSC Daily.

However, Anndy Lian states two critical issues. NFT is still growing, and transforming from a 2D NFT to 3D for another batch of sales looks like a money grab. If the community generally accepts this, we will see more people selling new collections by adding some curly hair to the image. This changed the value totally. Anndy also cautioned that we need to trace back to the original CC0 image to ensure it is copyright-free.

The full discussion can be found at https://twitter.com/i/spaces/1ynJOagNbMlKR.

CC0- Are they any good? What are good? We just got to remind ourselves that NFTs are more than just owning a piece of art, or pure speculations; they are part of a community, where a culture has been created, and culture creates a following.

NFTs have opened a whole new set of opportunities for businesses and creators. You can read more about this topic in Anndy’s new book- NFT: From Zero to Hero at https://books.google.com.sg/books/about/NFT_From_Zero_to_Hero.html?id=OSqFEAAAQBAJ&source=kp_book_description&redir_esc=y

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Anndy Lian Spoke with CNA Money Mind Ep 4: What are NFTs and why are they trending?

Anndy Lian Spoke with CNA Money Mind  Ep 4: What are NFTs and why are they trending?

NFTs, or non-fungible tokens are a hot trend in the worlds of tech, finance and art. So why are people paying millions of dollars for these digital assets? Are they an emerging asset class, or the latest bubble in the tech world? And what do investors need to know, if they want to put their money into NFTs?

Money Mind’s Chubby Jayaram Singh speaks to Kelvin Goh, head of wealth advisory at OCBC Bank, and Anndy Lian, blockchain expert and an advisor board member of Hyundai DAC.

Episode 4 covers the following:

  • What is NFT?
  • How do we value NFT? Why would anyone pay so much for these digital pieces of media?
  • How do we going about buying? Can we use cash?
  • Do you think NFT be considered as an alternative asset class?
  • What does the growth of the NFT market meant for investors in Asia or is this just a cryptocurrency trend?

Quotes from the speakers:

“In terms of the potentials for NFT, I think it is close to limitless.” Kelvin Goh said.

“Blockchain technology is adding an additional layer of security & trust to your artwork.” Anndy Lian shared too.

To listen to the full podcast, you can visit https://www.channelnewsasia.com/news/podcasts/money-mind/ep-4-what-are-nfts-and-why-are-they-trending-14606876 or you can catch it on Youtube via this link.

About CNA:
CNA was established in March 1999 by Mediacorp, and is an English language Asian news network. Positioned to “Understand Asia”, it reports on global developments with Asian perspectives. Based in Singapore, it has correspondents in major Asian cities and key Western ones, including New York, Washington D.C., London and Brussels. CNA brings its audience not only the latest news but also diverse content such as business, lifestyle, human stories, current affairs and documentary programming.

CNA is a transmedia company, where users can get content online, on TV and radio and via smart devices. It is also available on social and messaging services, such as Facebook, Twitter, Youtube, Linkedin, and Telegram. CNA has been recognised as Channel of the Year by the Association for International Broadcasting (AIB), the global trade association for broadcast journalism. CNA TV is now viewed in 29 territories across Asia with its satellite footprint stretching across Asia, the Middle East and Australia.

For more information, please visit CNA’s website at cna.asia.

About Money Mind:
Money Mind tells you how to make the most of your money with tips for investors, business ideas for businessmen and analysis of the economy, companies, markets, financial products and trends.

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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