Why Mark Cuban Says Crypto Wallets Are ‘Horrible’
When you open a crypto wallet there is a steep learning curve – is it worth it?
The cryptocurrency industry has grown in leaps and bounds in recent years. Previously, it was difficult to buy digital currencies securely. Now all you need is an account with a top notch crypto exchange or brokerage, and you can buy most of the major digital currencies. You can even earn interest on some of them.
It was difficult to spend cryptocurrency. Now, more and more retailers are accepting major cryptocurrencies – either directly or through a third party. And several exchanges will give you a prepaid crypto debit card so that you can convert your coins and pay just like you would with a regular card. We will also be seeing crypto rewards credit cards this year.
However, parts of the crypto industry still have a way to go, including crypto wallets. Read on to see what billionaire investor Mark Cuban thinks about portfolios, and why he might be right.
Crypto wallets are too hard to understand
About 17% of American adults now own cryptocurrency, according to a study by the New York Digital Investment Group. Gone are the days when digital currencies were traded by a small niche with a high technical knowledge base. As cryptocurrencies have become more mainstream, products have become easier to use.
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Cuban thinks this is crucial. He recently told a Delphi Podcast that companies must continue to improve to retain their customers. He noted, “If your solution isn’t the least resistance, low friction path, someone is going to kick your ass.”
Cuban then gave his opinion on crypto wallets. “Wallets are horrible,” he says. “Finding a wallet – period – is the worst thing ever.”
If you’ve tried using a crypto wallet, you’ll understand why.
The two main types of wallets are hot wallets and cold wallets. Cold wallets are usually a small piece of hardware the size of a USB flash drive. They are more secure because they are not online. Active wallets are connected to the internet, whether on your computer, mobile phone or the cloud. This makes it a more convenient way to store small amounts of money.
How portfolios could improve
People mainly use wallets to store and manage their crypto assets. There have been high profile crypto exchange hacks in the past, so some people prefer to store their coins in a wallet that they control.
However, nowadays, many people choose to leave their crypto on the exchange where they bought it. This is partly because trading is much more secure than it used to be. But it’s also because – as Cuban points out – wallets are not easy to use.
Here are some of the issues with crypto wallets:
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- Fresh. There are almost always transaction fees involved in moving coins to or from a wallet. Indeed, miners must validate each transaction, and it takes computer power, which costs money. The fees vary from wallet to wallet and from room to room. You will be able to see the cost before you move your pieces.
- Ease of use. You can’t just move money from one wallet to another with the click of a button. You will need the wallet address, which is a long string of numbers and characters. If you get the wrong address, it will be almost impossible to get your money back. In addition, different wallets are compatible with different coins. Imagine traveling around the world without being able to carry a mixture of euros, dollars and pounds in your physical wallet.
- Safety vs accessibility. When you put cryptocurrency in a wallet, you somehow become your own bank. This has its advantages, but it also comes with additional risks and responsibilities. You must be your own bank teller and your own security guard. If you have a cold wallet, you will need to back it up and keep your access codes in a safe place. If you are using an active wallet, you will need to make sure your computer’s firewall is up to date and be on the lookout for malware.
Using a wallet gives you more control over your cryptocurrency. Done correctly, it can give you more security and flexibility in how you spend your coins. However, portfolios have not grown as quickly as other parts of the industry and there is a lot to be done.
If you want to use a wallet, there is a lot of help available online. Make sure you understand how to secure it and what fees will be involved before you start. Hopefully in the years to come, crypto wallets will become as easy to use as your bank account.