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Coinbase ‘Wallet-as-a-Service' for businesses launches to facilitate adoption

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(Kitco News) - Coinbase, the leading U.S.-based cryptocurrency exchange, has announced the launch of a new wallet-as-a-service (WaaS) for businesses that is designed to help simplify the process of providing cryptocurrency wallets to customers as part of normal business operations.

Web3 wallets store digital assets, facilitate transactions, and serve as a user’s digital identity, but up to this point, many companies have faced significant challenges in supplying their users with a crypto wallet, preventing them from capitalizing on new opportunities.

“By engaging in web3, companies can create new revenue streams, strengthen user engagement, and encourage reward redemption across participating businesses,” the blog from Coinbase said.

The main obstacle when it comes to web3 wallets is their complicated technical nature, which includes the need to secure complex mnemonic seed phrases and operate on counterintuitive user interfaces.

WaaS is designed to overcome those challenges to offer a scalable and secure set of wallet infrastructure APIs that enable companies to create and deploy fully customizable onchain wallets to their customers.

“Companies can offer their users wallets directly in their apps with onboarding as simple as a username and password,” Coinbase said. “Whether enabling gamers to trade in-game items and currency or creating new avenues for loyalty programs such as token-based rewards, WaaS is a powerful tool for companies looking to tap into the potential of web3.”

Thanks to the integration of multi-party computation (MPC) cryptographic technology, users are no longer required to manage complicated 24-word recovery phrases as “MPC allows a ‘key’ to be split between the end user and Coinbase.”

This means that a user’s self-custody keys are safe in the event that their device is compromised, the blog said, and even if they lose access to their device, “the key to their web3 wallet is safe and can be securely stored.”

According to Coinbase, companies like Floor, Moonray, thirdweb, and tokenproof have already started building with WaaS as they work to onboard users to web3 gaming experiences across gaming, digital marketplaces and token-gated events.

“Tokenproof is on a mission to make web3 more accessible to a new wave of users,” said Fonz, the founder of Tokenproof. “When users download the tokenproof app, we’ll help welcome them into web3 by creating their first wallet, which will be powered by Coinbase. This is a huge step towards making the space more approachable and accessible and we’re excited by the opportunity to work with such a highly trusted partner.”

The APIs offered through WaaS are fully customizable and designed to help companies focus on delivering more value and innovative products to their customers. They enable users to create, access, and restore their wallets with simple authentication methods, like a username and password, and offer advanced MPC for added security by dividing, encrypting, and distributing keys among multiple parties. Users maintain full control over their assets, and companies are able to build native wallets directly into their applications, which negates the need to redirect users to separate websites or applications.

“Coinbase's Wallet as a Service (WaaS) offers a solution to the complex nature of web3 wallets, enabling companies to provide their users with safe, secure, and easy access to web3 wallets,” the blog said.

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Cryptocurrency wallets have long been considered a barrier to the adoption of blockchain technology as their complicated nature has been a turn-off to many who have explored the ecosystem. This new service from Coinbase is intended to address those concerns, and Coinbase is not alone in recognizing this opportunity.

In January, the popular U.S.-based retail trading firm Robinhood began rolling out its Robinhood wallet to users on its waitlist as it looks to integrate the self-custody aspect of crypto into its platform.

Even large banks like JPMorgan have made preparations to offer their customers cryptocurrency wallets, with the largest bank by assets in the U.S. registering a trademark with the United States Patent and Trademark Office (USPTO) in November for the “J.P. MORGAN WALLET.” According to the trademark filing, the J.P. MORGAN WALLET will offer a host of services for users that cover everything from account creation to risk management.

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