Babbitt Original | In the era of digital currency, memories and future reflected by a wallet

"Digital currency will become a parallel system of the fiat currency system and cannot be an alternative."

–Zhu Chen, Currency Scholar, August 2018

In an era where the fiat currency and the digital currency system are parallel, the wallet is a familiar and unfamiliar "partner" to us.

In the traditional fiat currency system , payment methods for commodity transactions have undergone many changes, from the physical currency of the primitive society to the metal currency and banknotes that lasted for centuries, to the credit cards and electronic money in the Internet era, and currency forms. The development of communication technology and communication equipment has affected people's habit of using wallets. Therefore, wallets, folding wallets, electronic wallets and other forms of wallets have appeared in history.

In the blockchain-based digital currency system , the wallet is no longer the carrier of currency. "Addresses are identities, and those who obtain the private key have the world." Having the private key has the right to control the digital currency at the corresponding address. From full-node client wallets, exchange escrow wallets, to ecologically-rich integrated wallets, to smart wallets that can manage private keys, the iteration of digital currency wallets is closely related to the importance that users place on security and convenience. Related.

In 2020, Facebook's Libra and China's central bank digital currency (DC / EP) may come. The wallet, as the "key" to the digital currency gate, realizes the authentication and interaction between the actual identity of ordinary users and the digital identity on the blockchain, and its significance has exceeded the storage tool itself. This article sorts out the development of wallets under the above two currency systems , with a view to establishing readers' multiple perspectives on wallets in the coming decade.

1

The history of the wallet begins with the story of the Ötzi (also known as the "Ice Man"). On September 19, 1991, Iceman Oates was discovered in the Alps by two mountaineers from Germany. According to tests, Oates died between 3400 and 3100 BC, and his body and belongings have been completely preserved since his death, including a leather purse for food. In the era of physical currency , the main function of wallets is to store food, shells, salt and other items.

Before the birth of the country, physical currency, as a spontaneously formed equivalent of the folk, participated in the circulation of commodities. After Qin Shihuang unified the country in 221 BC, money was cast, and the original currencies such as shells, knives, and cloths became obsolete. In the era of metal coinage more than 1400 years later, in addition to storing metal money, wallets also played a role of decoration. In the costume culture of the upper classes in ancient China, purses were often hidden in the "wide sleeves" of "broad robes and wide sleeves", and an inverted trapezoidal pocket was sewn into the sleeves.

Although metal money has the advantages of being easy to store and unit value higher than general commodities, it is not portable and is easily abraded, which is not conducive to circulation across regions. Papermaking, printing, materials technology and anti-counterfeiting technologies have provided impetus for the emergence of banknotes.

During the Northern Song Dynasty, the world's first banknote, Jiaozi, was born in Chengdu, Sichuan. In the 13th century, banknotes were introduced into Europe by Marco Polo and others. Until 1661, the Bank of Sweden issued the first banknote in European history. After the popularity of banknotes, foldable leather wallets were created. By the introduction of bank cards in the 20th century, folding wallets with multiple fixed-size card slots were on the road to international standardization.

Although the appearance of the leather folding wallet has not changed much over hundreds of years, it has witnessed the evolution of money from credit notes to electronic money.

In the 20th century, driven by information technology, a new currency form emerged- electronic money . Electronic money itself is not currency, but a payment tool, including bank card payment, online payment, mobile banking payment, and third-party payment. Corresponding to them are various electronic wallets. Apple Inc. launched the world's first electronic wallet, Apple Pay, in October 2014, followed by Samsung and Android. Data show that China's domestic mobile wallet consumption accounted for the highest proportion of major global economies, followed by the United Kingdom, Germany and the United States. Domestic mobile payments are mainly Alipay, WeChat Pay and UnionPay.

2

On January 3, 2009, Satoshi Nakamoto dug out the "genesis block" of Bitcoin on a server located in Helsinki, Finland. In February, the first Bitcoin wallet Bitcoin-Qt (version 0.1) was born . Later, starting with version 0.9.0, the Bitcoin-Qt wallet was renamed Bitcoin core at the proposal of Gavin Andresen.

In the following years, various blockchain-based digital currencies have emerged endlessly, and corresponding digital currency wallets have also emerged. Litecoin wallet, Ethereum wallet, Sia wallet, Ripple wallet, BCC wallet, ZEC wallet, ETC wallet, Dash wallet, QTUM wallet, EOS wallet, BTS wallet, Dogecoin wallet … Digital currency wallet can generate and save private money The key and address can be used to add a password to the wallet, connect to the blockchain network, and send and receive digital currencies recognized by them.

As the core industry and main source of traffic for digital currencies, exchange wallets provide great convenience to users. In 2014, research showed that exchange users who bought bitcoins for the first time, because of speculative nature, preferred to store their coins in exchange wallets, "because there is no desire to buy goods with bitcoin. Or service ideas. "However, exchange wallets can only meet market demand in one stage.

Overall, the development of digital currency wallets is essentially a game between wallet security, functionality, and convenience.

In terms of security , in 2012, Bitcoinica stole more than 60,000 bitcoins within two months; in 2014, the world's largest digital currency exchange Mt.Gox was stolen and bankrupted; in January 2015, the British Bitstamp exchange was stolen 19,000 bitcoins … Frequent security incidents on exchanges have caused devastating blows to the digital currency industry, and also created a crisis of trust in exchange wallets for users. To some extent, this has led users to choose wallets other than exchanges.

In terms of functionality , "If the wallet is a window into the blockchain world, then DApp (Decentralized Application) is the scenery in this new world." He Bin, the founder of imToken, Writes. The landing of Dapp in 2018 allows digital currency to move from pure trading to practical application, and the traffic entrance is gradually transferred from the exchange to light client wallets (such as mobile phones or web pages) represented by imToken and Bitpie. The current digital currency wallets on the market include "Wallet + DApp", "Wallet + Exchange", "Wallet + Social Communication", "Wallet + Quotes", "Wallet + Money Lending", "Wallet + PoS Mining" Mine "and other functions.

Conveniently , in 2009, the private key of the Bitcoin-Qt wallet was stored in a file called "wallet" on the user's desktop. However, for many years, people have accidentally deleted this folder or searched by malicious software, causing a large amount of BTC to be lost. In 2019, people don't have to store private keys in desktop files, but private key management is still a big pain point for digital currency wallets. How do users save private keys? How to recover digital currency in case of loss of private key? Smart wallets are trying to solve these problems.

On September 18, 2019, Vitalik Buterin, the founder of Ethereum, put forward the concept of "Smart Wallet" at the 5th Blockchain Global Summit. Smart wallet refers to the use of smart contracts to manage user accounts. Each user account is an independent smart contract. Users can use the logic in the contract to implement functions such as account recovery and limit management. Smart wallets on the market now include MYKEY, Argent, Monolith, and Status.

Taking the MYKEY smart wallet as an example, the management private key of MYKEY users can only be used for account management and cannot operate assets; the operation private key for operating assets is tightly coupled with the mobile phone and is protected by local password encryption. The user can use the recovery code to freeze or replace the operation private key. If the recovery code is lost or leaked, the account can be retrieved by using the wallet's emergency contact service.

For exchange wallets such as Coinbase, the highest authority of the wallet lies with the service provider; for light wallets such as imToken, the highest authority lies with the user's private key; for smart wallets such as MYKEY, the highest authority lies with the user's smart contract. Although smart wallets reduce the cost of private key management, there is still room for improvement in the security of smart contracts, the cost of deploying smart contracts, and the compatibility of wallets.

3

This is an era of uncertainty. The arrival of the central bank's digital currency (DC / EP) may blur the boundaries between the fiat currency and the digital currency system.

According to Yao Qian, digital currency is the integration of electronic money and physical cash . The significance of the evolution of physical currency to digital currency is that the payment function of physical currency is optimized, and payment can be completed on a variety of transaction media and channels, which has good universality and ubiquity. The significance of the evolution of electronic payment tools to digital currency is that it can absorb the characteristics of physical currency "point-to-point" payment and anonymity, and truly attach payment rights to users themselves.

As a carrier, the wallet reflects the application ability and value of the central bank's digital currency, and gives the latter new vitality. According to statistics, 18 patents filed by the Digital Currency Research Institute of the People's Bank of China in the past three years are related to digital currency wallets. The patent mentions that expanding the function of digital currency wallets on the basis of the bank account system should not change the existing bank account system. Users can use the newly added independent authentication mechanism of digital currency wallets to realize users' direct access to digital currency wallets.

Some scholars believe that the central bank's digital currency can adopt a two-tier structure of "commercial bank account system + digital currency wallet", adopt a separate digital merchant management entrance in the existing bank and third-party payment system, or set up an independent digital wallet app Two paths to achieve one account to manage existing bank deposits and digital currencies at the same time.

From the evolution process, there are two reasons for the iteration and popularization of wallets. One is that people's awareness and consensus on currency are increasing. This awareness and consensus originates from the top-down coercive force and also has Bottom-up folk power. Second, the threshold for using wallets is constantly decreasing, thanks to the wallet entrepreneur's keen observation of the currency market and user-centric business ideas.

"The world is silent like a mystery. Fortunately, there are always people exploring." Are you ready for the new currency world?

References:

Zhu Chen's Stable Digital Currency Handbook , August 2018

Beijing Daily, "Money Companion from Wallet to Ancient Times " , April 2019

Erika Morphy, "It is really worth your while to use bitcoin to pay your dish bill" , May 2014

Helen, "Babbitt Exclusive | 74 Central Bank Patents, Discussing Core Points of Legal Digital Currency" , August 2019

Xie Chunsheng, Guo Yali, Guo Liangliang, Jin Xing, "One Article Analysis of Central Bank Digital Currency (DC / EP)" , 2019

Babbitt's "Ten Years of Blockchain: What the Future Is Seeing", May 2019 1st Edition

Yao Qian, Chen Hua, "Analysis of Digital Currency Economy", 1st Edition, October 2018