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What is a wallet?

By Chuy Cepeda


It is believed that in the next 20 years, technologies associated with digital self-sovereignty will have an impact equivalent to that of the internet in the last two decades.


In addition, given the global economic difficulties, it is also believed that digital identity will be at the center of a new global economy since fraud and information theft will decrease, privacy will increase, and frictionless user experience will become the norm. Identity and financial inclusion would be extended to everyone.

For this reason, although the standardization of digital identity, due to its new decentralized nature, is taking quite some time, governments have recognized the need for innovation in this area to ensure data sovereignty and not rely on a BigTech with opaque commercial practices.


Today perhaps the EU's eIDAS is the most complete and ambitious step towards web3 identity at an international level. While the exact implementation and technical specifications still need to be determined, the mandatory issuance for EU member states, as well as its mandatory acceptance for major platform providers, will have a tremendous international impact.


However, in order to operate a decentralized digital identity, a digital wallet, or simply a wallet, is required.


Wallets have been very popular for accessing the world of DeFi (decentralized finance) and buying, selling, or transacting cryptocurrencies. It is easy to think of the concept of a digital wallet when talking about digital money. But, it is likely that digital wallets for pure identity management and DeFi (such as cryptocurrencies or central bank digital currencies (CBDCs)) will merge. Dozens of use cases are already being explored in different industries and in many parts of the world.


Let's better understand what constitutes a wallet.


Digital Wallet, or simply, Wallet.


A digital wallet in the Web3 context is a type of online storage that allows you to securely track your digital assets and information, such as digital credentials, coins, and digital identity information. It's like a traditional wallet but for your digital things, so you can easily use your assets and information in a variety of online transactions and activities.


A conformant wallet is a type of wallet that has successfully passed Wallet Conformance Testing (WCT). These tests verify that the wallet meets certain standards of performance and functionality, whether it's a holding, issuing, or verifying wallet.


For now, there is no global standard to say that a wallet is compatible worldwide. The closest efforts to achieving this are happening in the European Union through its EBSI Conformant Wallets initiative. However, the availability of wallets is increasing, and there is an interesting mapping for each type of wallet.


In the best case scenario, a conformant wallet would be based on the following principles and functionalities.


Compatibility principles

  • User-centered

  • Trustworthy

  • Interoperable

  • Multi-sectorial

  • Sustainable

  • Portable

  • Highly secure

  • Privacy preserving

  • Based on standards

  • Multi-function

Compatibility functionalities

  • Obtain, recover, and manage multiple decentralized identifiers (DIDs).

  • Obtain and manage multiple attributes associated with decentralized identifiers (Credentials, Cryptocurrencies, NFTs).

  • Obtain, recover, and manage multiple credentials.

  • Obtain, recover, and manage multiple digital coins (Tokens).

  • Have the ability to interoperate with other wallets and applications (dApps).

  • Communicate with multiple blockchain networks.

  • Allow access to identification, authentication, and authorization services.

  • Have clear API interoperability specifications.

  • Have clear security and privacy specifications.

  • Be multi-language and have accessibility features.

In the case of OS City, we are developing a wallet with all this in mind. Because of its decentralization and sovereignty capabilities, we call it Soberana.


 

Author

Lucas Jolias, Director de OS City


Jesús Cepeda, CEO at OS City



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