cryptocurrency
Bulletins

Block's new bitcoin wallet aims to solve a huge problem

Can a hardware wallet be both easy to use and secure?

Jack Dorsey

Jack Dorsey spoke about bitcoin at Block's investor day.

Photo: Protocol

Block just detailed plans for its self-custody bitcoin hardware wallet, aiming to bring together the often contradictory goals of convenience and crypto security. Block's goal is to monetize the wallet through a subscription service.

The plan, laid out at Block's investor day, aims to make it easier for mainstream individuals to self-custody their own bitcoin — thus enabling total control of it — while offering additional protections that are often not available for self-custody hardware or software wallets. Many other wallets don't have easy backup systems for consumers to access their funds.

To do this, the wallet will include three parts: a mobile app, a hardware device and a self-serve recovery tool. The mobile app, which will presumably be run by Block, will be for everyday, smaller transactions since it is easily accessible for people at all times. "Our wallet breaks up the secret key into three pieces to reduce the stakes of losing any one piece," said Jesse Dorogusker, Block's bitcoin hardware lead.

The hardware wallet, with its "rock" design and fingerprint access, which has been previously detailed, will be used for larger transactions where more security is needed. The hardware wallet would presumably hold the user's private key which a user would set only for transactions above a certain size.

If the mobile app is like a checking account, the hardware wallet is like a savings account, Dorogusker said. "We are designing a system for regular folks, so it has to be resilient and inspire confidence even when things go wrong," he said.

The hardware wallet will also be a security tool if someone loses a phone or switches to a new phone.

The big question: How will this make money for Block? The wallet could be monetized through a subscription service that can help "customers regain access to their funds," Dorogusker said. It could also get referral revenue from sending trading volume to exchanges. Pointing to bitcoin's connection to the rest of Block, Dorogusker said the hardware wallet could connect to Cash App.

"Connecting the wallet and Cash App ecosystems can drive both wallet sales and Cash App trading volume, providing 44 million Cash App actives an easy path to self custody, and providing wallet customers an easy way to buy and sell bitcoin and connect to a broader set of financial services in the markets where Cash App offers them."

Tomio Geron

Tomio Geron ( @tomiogeron) is a San Francisco-based reporter covering fintech. He was previously a reporter and editor at The Wall Street Journal, covering venture capital and startups. He was also as a staff writer at Forbes covering social media and venture capital, and edited the Midas List of top tech investors. He can be reached at tgeron@protocol.com or tgeron@protonmail.com.

blockbitcoincrypto walletcryptocurrency
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