Crypto wallets can protect your personal data | Opinion

As a part of the technologically advanced world, fintech is thriving. Its growth is mainly driven by specific sectors, including digital wallets. They have become very popular in recent years, reaching sky-high numbers for downloads every year.

However, I believe that they can be much more than a place to deposit your cryptocurrencies. In the era of digitalization, they can also represent a trustworthy tool for digital identity. Digital wallets have the potential to store the necessary data that will allow quicker verifications and provide different kinds of services much faster and safer than we are used to.

Let’s delve deeper into this topic and consider the prospects of such digital wallet usage.

The traditional approach has to be revised

The internet today contains a lot of different information about us. This may include names, birthdays, addresses, emails, and other personal data. Every time we register on a site, we leave a digital trace that is spread across giants like Google, Facebook, and others. And these companies do not sit still; they actively benefit from our data and monetize it through ads and other tools. They have power over us because their algorithms shape our digital experience.

Sounds disturbing, right? The thought that a big company probably knows everything about you is intimidating. But that’s not all. These companies cannot always be fully confident that their data will not be leaked. Actually, they face breaches very often; for example, Facebook is renowned for constant hacks and data thefts.

Given this, it becomes clear that the situation has to be modified. Here, digital wallets can represent a much safer and more private alternative for storing your data.

How can we use crypto wallets as digital identities?

Digital wallets are based on blockchain technology, so they are inherently secure and practically impossible to hack. They use public and private key cryptography, where the public one is the address of your wallet, and the private key is like your password. By doing this, they make sure that no one except the owner can access the private data.

With such an approach, there is no need to hand in your data to different websites. Digital wallets can help you change this and only send one-time verifications without the need to provide unnecessary data. With them, users can maintain better control over their personal information, ensuring privacy and fostering trust in digital interactions. Additionally, crypto wallets can facilitate seamless access across platforms.

The practical change can be widespread

Imagine creating a new social media account without needing to make up a new password and insert tons of data. Everything will be done using your crypto wallet—no need to remember passwords or worry about hacks.

Another area for improvement with digital wallets is medical records. Instead of having many papers with doctor visits and other relevant data, digital wallets can keep it in one place and allow access for you and your doctor. Considering that your medical data is secret information, this could be a strategic solution.

Government services also mean shuffling endless paperwork that also contains a lot of private data. For example, if you need to issue a new document, it would be much easier to verify your identity using a digital wallet and not a pile of papers.

But it’s not as easy as it seems

It’s not a surprise that every technology implementation comes with its hurdles. Although digital wallets’ potential is huge, we are nowhere close to benefiting from them. One of the main limitations is regulatory issues. The main goal of every government is to protect its citizens, and when new technologies appear, they need to figure out how to regulate them competently.

The human factor is another thing that has to be not underestimated. People are usually very reluctant to change, and they adapt to it slower than we think. This is even worse when something complex and puzzling appears in the markets. So, if we want to bring digital wallets to the masses, we need to make their usage as easy as possible.

Security also remains a challenge. Although digital wallets are a much safer alternative, if someone steals your private key, you risk losing all the data stored in your wallet. Multi-factor authentication or biometrics are good points to consider in order to prevent such situations.

Finally, there is a huge problem with establishing universal standards. For digital wallets to be effective and work indeed, they need to be functional across various platforms worldwide. It will definitely take a lot of time and effort to create these universal standards.

What’s next?

The future of crypto wallets as a place to store not only cryptocurrencies but also important personal data seems to be very bright. Using them can be a much safer and more private way to store the data. Despite the challenges that I have mentioned, the integration of a similar technology has become more and more real.