With major exchanges suffering outages and hacks, and some abruptly suspending withdrawals, are wallet platforms a more compelling alternative?
One of the biggest trends in recent months has seen Bitcoin flow out of exchanges into wallets. Generally, this is interpreted as a bullish sign — indicating that investors are optimistic about further growth in cryptocurrency prices.
But delve deeper, and there’s more to this than meets the eye. The crypto industry has grown immeasurably over recent years — making stars out of a number of exchanges. Platforms such as Binance and Coinbase now handle billions of dollars in trading volumes every day. With this come concerns that centralization is creeping in — and fears that major exchanges are becoming the titans of the industry, just like big banks dominate the world of traditional finance.
Exchanges do have downsides. Binance and Coinbase have both suffered outages when Bitcoin surges — and in some cases, this has left traders unable to execute transactions in a timely fashion. Such breaks can prove to be extremely expensive, as a lack of immediate access can mean users are unable to buy and sell at optimal prices.
Another big platform, OKEx, recently hit the headlines when it abruptly suspended withdrawals for six weeks — leaving panicked customers unsure whether or not their funds were safe. Although this exchange attempted to make things right through a generous compensation program, users appeared to be pulling their funds out fast when services returned to normal.
As retail and institutional interest in digital assets shows no sign of abating, wallets are starting to serve as a viable alternative for those who are unsure about entrusting their funds in an exchange. Several platforms also claim that they offer low trading fees from the very beginning — a contrast to exchanges, which may only unlock their most preferential rates to those who hold its native cryptocurrency and lock it away for long periods of time.
What’s in your wallet?
In an attempt to entice crypto enthusiasts, wallet providers are making a concerted effort to show what makes them different from exchanges. And although consumers may be drawn to bigger platforms because of their credibility, there comes a warning: The power of exchanges gives them a greater ability to dictate the rules of doing business.
For adventurous investors who may have a diverse portfolio consisting of dozens of altcoins, one of the biggest frustrations centers on how many cryptocurrencies aren’t universally supported by exchanges. As a result, this means that their holdings can be scattered across countless platforms — each with their own username and password — that makes life a lot more complicated, especially when transactions need to be completed with urgency.
One of the biggest hurdles faced by the whole crypto sector involves making things as simple as possible, and making buying, selling and transferring cryptocurrencies free from any kind of confusion. Creating a user experience that’s akin to mainstream banks, with cleverly designed apps that allow tasks to be completed at the touch of a button, could prove crucial to ensuring that recent user growth remains sustainable.
And then there’s the perennial issue of security. High-profile hacks remain common, with $280 million taken from KuCoin’s hot wallets during one incident in September. Although most of these funds were eventually recovered, it still undermines confidence.
Streamlining the experience
Freewallet is one wallet provider that says its ecosystem offers a compelling alternative to crypto exchanges.
The company says it is aiming to create a one stop shop for digital assets, meaning that its users only need a single account to complete all of their transactions. This eliminates the need for logins with multiple sites, most of whom will take fees along the way. A recent revamp saw the platform expand its exchange capabilities — decreasing transaction processing times substantially, with an average completion time of under a minute.
Although the platform says convenience is something that weighs heavily on the minds of crypto owners, it stresses that there are other important things to consider too. According to Freewallet, its security is unparalleled — with cold storage employed to ensure that crypto assets are kept safe at all times. Additional security measures are also in force to ensure that the integrity of user accounts isn’t compromised.
Freewallet also says it has sought to offer some of the most competitive fees in the industry — making it easy to buy, sell and convert between more than 100 cryptocurrencies inexpensively. This is coupled by real-time pricing data that accurately reflects what’s going on in the markets, at a time when Bitcoin can fluctuate by hundreds of dollars in a single hour.
Fee-free transactions are also offered when Freewallet users are sending funds to another account that’s on the platform, with payments arriving instantly. Meanwhile, a new feature means that users can buy gift cards for online and brick-and-mortar businesses with any cryptocurrency supported by the platform — including Amazon, eBay and iTunes. An integration with MoonPay also means more than 40 major fiat currencies can be used to purchase a plethora of digital assets.
Freewallet will be hoping that its mobile-first secure storage, complete with an integrated trading platform, delivers a more satisfying user experience than what mainstream exchanges currently provide. First impressions matter, and simplicity will be key if the public is going to be persuaded that digital assets are right for them.
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