Coinbase Unveils “Wallet as a Service,” Reveals Top Firms as Partners
On Wednesday, crypto exchange Coinbase announced a new service aimed at making Web3 technology more approachable for consumers and companies by simplifying existing digital wallets.
Coinbase’s new “Wallet as a Service” product features a developer toolset that allows firms to add customized digital wallets directly to their applications. According to the exchange, the goal is to make the procedure of creating a wallet as easy as possible.
The latest announcement comes a few days after Coinbase revealed that it would launch its Ethereum layer-2 called Base, a protocol that the company said it was confident would become a popular choice among Web3 developers for building dapps.
Coinbase has focused more on services and subscriptions in recent months following a drop in crypto prices that has led to decreased trading activity on its platform. Even though Coinbase is the leading exchange in the United States, the firm posted $2.5 billion in losses last year.
The exchange’s head of product for Web3 developer platforms, McGregor, refers to Wallet as a Service and Base as mirroring components of a demand and supply dynamic. This is because Base drives traffic to a Web3 app while more wallets create increased demand for various apps.
Companies Expected to Use Wallet as a Service
When asked about companies likely to tap into its new service, McGregor mentioned Web3-natives, including Moonray, Tokenproof, Thirdweb, and Floor. He, however, hinted that bigger companies would be unveiled as Coinbase partners in the coming days.
Recently, Coinbase boss Brian Armstrong acknowledged the rising adoption of Web3 technology among firms not native to crypto, stating the exchange could benefit from that trend. Armstrong said Coinbase is looking to onboard companies like Adidas, Coca-Cola, Starbucks, and Instagram, who have already shown interest in integrating web3 technology into their products.
What Separates Wallet as a Service From Other Wallets?
Unlike in other wallets where only the owner can access their private keys, Coinbase will employ cryptography known as multi-party computation in its Wallet as a Service product, dividing the wallet’s private key among several parties, including the exchange.
Although many believe dividing a digital wallet’s key among different parties violates Web3 principles regarding self-custody, McGregor says it gives an extra layer of security.
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