Digital wallets don’t just hold crypto - they offer a far more effective alternative to online account management. How can a business use blockchain-based accounts to greatly increase operational efficiency and enhance the user experience? A thread

Account creation and management is the main step for onboarding users onto your platform, yet it’s by far the most arduous. Some sites even make users to create an account just to enter the site, which can create a drop-off in interest where potential customers will refuse to go through the onboarding process. How can a business enhance user onboarding to be less of a hassle?

Google has attempted to improve upon the account creation experience by creating their one click ‘Sign in with Google’ solution. The drawback though is that through this feature, all of your personal info associated with Google now becomes available to that site as part of the sign-on process. What if there was a way to have a single sign on feature that could act as a universal account without revealing any unnecessary personal data? This is the real value of digital wallets on the blockchain.

If you’ve ever interacted with decentralized apps (dApps), you’ll know the ease of connecting your digital wallet to an app. All it takes is one click to sign a transaction that will automatically give you access to the entire suite of services offered. No email, phone number, birthday, or identification required. What if instead of wasting time creating a new account for every site you visit, you could just click that Connect button and automatically be signed in? How could this logic be applied to regular online businesses?

The purpose of any account is to serve as an identifier that can tie a customer to their data. However, accounts today are siloed across individual servers, meaning that you can’t use the same account across different sites and need to create a new one every time. This creates additional security vulnerabilities, where the risk of your personal info leaking grows as you create more accounts and different servers hold your data. Blockchain solves this by offering a way to create an encrypted universal account that lets you hold all of your own data and that can interact with any application with one click.

The public address of a digital wallet acts as an onchain identifier that ties all your data to that address in a globally accessible database. Although your public address is visible onchain, no one can access your account because they don’t hold your private key. That private key can be either self-custodied or held through secure key management infrastructure already available on an enterprise level. This is something normal accounts don’t offer - truly restricted access control.

Unlike a password that can be stolen from a centralized server or exploited through phishing, private keys are encrypted and stored across a decentralized network, making them much harder to steal. Account abstraction on Ethereum has further enhanced onchain security by introducing external security tools like 2FA, social recovery, and customizable authorization logic. Additionally, tools like @Coinbase Developer Platform🛡️ CDP Wallets or @Lit Protocol 🔑 key sharding can be used to manage client keys without ever revealing them, creating a much smaller vulnerability window for hackers while removing the worry of self-custody for users.

Just like crypto can be self-custodied in a Metamask wallet, businesses can attach any metadata they’d like to a digital wallet to manage their users. Account abstraction lets metadata such as emails, phone numbers, or addresses be dynamically stored in a smart contract that acts as that person’s onchain identity. This data can be encrypted and used in the form of ZK proofs that can verify user info to be accurate without ever revealing any of it. Whether tracking client orders through transactions onchain, managing rewards, or securely storing personal info, digital wallets on the blockchain offer a high level of flexibility and automation for businesses to utilize.

Having an open source database through blockchain creates easy interoperability where any business can integrate digital wallets using the same tech stack - just look at all the different dApps that exist on Ethereum. Using digital wallets creates portable data that can be access by different services without being needlessly replicated by tying any personal data to a single address. Whenever you’d need to verify any personal info, you can use your public address to do so while never directly exporting sensitive info to an external site. For example, if a website needed to verify that you are over 21, you could generate a ZK proof that takes your verified ID and generates a proof that proves you meet that age requirement without ever sending the ID itself.

Digital wallets offer native payment integrations that use peer-to-peer transfers instead of going through middlemen like credit cards. Plenty of services such as @MoonPay 🟣 and @Privy offer infrastructure for converting fiat payments into crypto, both through physical card readers and for online payments. Crypto balances can also be easily transferred in/out of wallets, letting customers move funds around without tying them to a sole merchant. By authorizing P2P crypto payments, businesses can drastically cut payment processing costs - just look at @Steak 'n Shake who’s COO shared that “When customers choose to pay in bitcoin instead of credit cards, we are saving about 50% in our processing fees”

Let’s go through a full length example. You have a business selling furniture, and you want to make your store fully Web3 compatible. Here’s how you could do it: 1. Use a L2 like Base or Arbitrum for low fees, high TPS rate, and advanced developer tools 2. Add Web3 functionality to your site using Ethers.js for frontend/Alchemy for backend 3. Create smart wallet accounts for users through @Coinbase Developer Platform🛡️ CDP Wallets or @Privy for social login 4. Process crypto payments through automated smart contracts or onboard fiat into crypto using @MoonPay 🟣 or @Sling Money 5. Track orders by tying order IDs directly to a user’s wallet and storing additional metadata on @Arweave Ecosystem 6. Encrypt user’s personal info like shipping addresses through ZK proofs for security

While it’s not quite perfect yet, blockchain technology is improving by the day. There are already so many solutions that offer higher efficiency and lower costs for businesses through blockchain based solutions. Digital addresses at scale can revolutionize the way we interact with websites and handle personal data online. As infrastructure grows and these tools continue to develop, a lot of opportunities will arise.

If you enjoyed this thread and want to learn more about these types of systems or have any questions, check out http://dcft.site for a free course on the fundamentals of blockchain or to reach out for a consultation! Become a blockchain pro today!