Rise in Multi-Wallet Usage Highlights Crypto Fragmentation Challenges

A new report indicates a 16% rise in multi-wallet use among cryptocurrency holders, underscoring fragmentation and user experience hurdles. While many users cite security concerns, emerging trends include smarter wallets integrating AI and increased preference for hardware, despite its still limited adoption. Social wallets are notably reshaping user experiences, but trust remains a vital issue for users.

A recent report highlights that multi-wallet usage has surged by 16%, with the majority of cryptocurrency users now managing multiple wallets. Fragmentation and user experience issues continue to be key hurdles preventing crypto from becoming mainstream. The study by Reown, a platform focused on user experience, and crypto analytics firm Nansen, reveals that 62% of crypto users utilised at least two wallets in the last three months, up from 45% in the past year.

The report indicates that security concerns dominate wallet user feedback, with over 18% of participants ranking it as their main issue. Additionally, 10.6% of respondents pointed to poor user experience as another significant factor. This showcases a clear demand for improvement in wallet solutions amidst increasing user engagement.

Eowyn Chen, CEO of Trust Wallet, remarked on the evolution of wallet user experience, calling it a crucial turning point. With many new users emerging from traditional sectors, there are fresh expectations regarding how wallets should function. As Chen put it, wallets are transitioning from simple asset holders to gateways linking users to various Web3 services, including digital financial products and governance.

Increasingly, wallets are expected not just to store assets, but to act as smart, personalised companions that align with user behaviours and preferences. The potential integration of AI could facilitate navigation through Web3, making it as straightforward as online shopping. Additionally, it could help mitigate risks such as phishing scams, where attackers deceive individuals into sending cryptocurrency to fraudulent addresses.

The necessity for secure wallets has been underscored following a $330 million Bitcoin theft from an elderly user, which involved sophisticated social engineering tactics. This incident revealed vulnerabilities within the crypto ecosystem that highlight urgent needs for better security measures.

In exploring wallet preferences, research found 51% of those surveyed leaned towards mobile wallets, although this figure is slightly down from 54.8% the previous year. Hardware wallets are slowly gaining traction, with usage rising to 10% from 7%, indicating more advanced users are starting to adopt them. Nevertheless, only 3% of new investors in cryptocurrencies reported using hardware wallets, showing a need for further education on this option.

Interestingly, social wallets—which link to social media accounts and eliminate the need for seed phrases—are hailed for their role in transforming the user onboarding experience, according to Derek Rein, CTO of Reown. He emphasised the importance of straightforward designs, stating users shouldn’t need extensive knowledge about gas fees or blockchain intricacies to execute transactions. However, there remains caution among users, with 39% expressing that heightened security and reliability would encourage them to choose social wallets.