The opportunity for Crypto wallets is 3.5 billion people with smartphones. Who will win this important place in the ecosystem?
*I appreciate all of you early readers of the Crypto Executive Guide newsletter. Please help me grow the audience by sharing this with a friend that is interested in Crypto and web3.*
In the last post, we covered the basics of a Crypto wallet. Now let’s talk about why this is so important. The war to be the Crypto wallet of the future is going to be huge, like king maker trillion-dollar market cap huge. Today there are about 30MM people using Crypto wallets. I believe the market opportunity here is 3.5 billion people, basically everyone on the planet with a smart phone. I believe that in the next decade or so, pretty much all your assets and liabilities will be stored in a digital wallet on the blockchain. Everything from your house deed to your car title to your driver’s license to your diploma, all on chain. You student loan, your car lease, also on chain. Everything.
This will make your Crypto wallet the hub of your life. It will be the way you login to most websites, apps, and experiences. Even IRL ones will use your Crypto wallet. You will hold tickets to concerts, sporting events, conferences and more in your digital wallet. The companies that control this space will be critical to the future. What they can do with this information about you will be (hopefully) limited, but you will be reliant on this digital wallet in ways we can’t even fully anticipate today.
Right now, a startup called ConsenSys is the leader in the Wallet Wars with their MetaMask product. Their founder Joseph Lubin was part of the original Ethereum creation team. He has built this company rapidly over the last five years to over 150 people. ConsenSys has raised nearly $300MM in capital from leaders of the traditional banking community and from Crypto experts. Their cap table includes JP Morgan, HSBC, Blackrock, UBS, and BNY Mellon. They have also raised funds from Coinbase (who is now offering a competing wallet) and Animoca Brands, the biggest player in blockchain gaming. MetaMask has over 20 million users and is growing at a crazy speed. This gives them a big advantage since most companies building on Ethereum quickly add a MetaMask wallet integration.
Coinbase is another serious contender to win the Wallet Wars. They announced their wallet launch earlier in 2021 and immediately had a few million people sign up. They have a browser extension and phone apps, the same as MetaMask. Right now, Coinbase Wallet only covers Ethereum blockchain items, but they have publicly discussed their intention to expand to other chains. Coinbase is also in the process of launching their own NFT platform, which presumably will integrate nicely with their own wallet. Back in November, Coinbase bought a wallet tech company called BRD to deepen their expertise and improve their offering. As a public company with deep resources, Coinbase will be a formidable player in the Wallet Wars.
In the last post, I covered the leaders in wallets for Solana, Flow, and Dapper. Phantom, Blocto, and Dapper have accumulated a few million users each, and they could have a voice in the Wallet Wars too. We could also see a new tech company bring a serious cross chain offering and vault themselves into contention. However, I think the players to watch in the Wallet Wars will come from big tech and the banking oligopoly. Let’s review the likely suspects in each.
Apple and Google already have digital wallets on their phones. Apple has 1Bn users, and Google has 2.5Bn. Right now, these are not Crypto wallets with the same capabilities as a MetaMask or Coinbase Wallet, but I am certain these tech giants are looking at this possibility. What if they integrate Crypto into their wallet product that already comes installed on the operating system automatically? They would have a huge advantage in the Wallet Wars and likely would add tens millions of users instantly, maybe hundreds of millions.
Meta/Facebook already made a move in the Crypto space with their failed Libre project. However, are they really going to concede this opportunity to others? I think we could see another attempt by Meta to get their 3Bn users onto a Crypto wallet of their own making. A few others to keep an eye on would be PayPal and Block/Square. PayPal has a giant consumer install base and the trust of its users. Block’s Cash App also has a big consumer base, and the company already allows people to buy Crypto on it. Microsoft and Amazon haven’t shown much interest in Crypto yet, but they certainly have the resources to make a major play in the space if they want to throw their hat in the ring.
Another big category that will likely impact the Wallet Wars is the banking oligopoly. JP Morgan, Bank of America, Wells, and Citi control nearly $10 trillion of assets today. I doubt these giants will simply concede that Crypto is too difficult and let the tech world have control over this massive opportunity. As mentioned earlier, several banks invested in ConsenSys. A few banks were investors in Coinbase before they went public. The banks must find a way to be a part of the solution here or they risk being disintermediated from a ton of profitable businesses in the future. It will be interesting to see who moves first in this sector. They all have massive consumer customer bases, and while people tend to hate their bank, there is a level of trust and security in the sector that would help with mass adoption.
With a potential market of 3.5Bn smart phone users, the Wallet Wars are just beginning. This will play out over the next decade and has the potential to move trillions of dollars of market cap. Grab your popcorn and keep an eye on this important battleground.