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Cryptocurrency wallets as a form of Functional Identity

by Mikerah Quintyne-Collins and Abdulwasay Mehar - ChainSafe Systems

Introduction to wallets

Cryptocurrency wallet(s) is a form of a digital tool that allows people to have full control over their crypto-assets. Not only does it give full control but it also eliminates the knowledge required by the user to view their balances for different cryptocurrencies, viewing their transaction history, and also being able to provide a visual representation of their public address. Since we are living in the digital world of blockchain there is currently no definite way of representing a identity that is 100% true digitally and in the real world. However; by incorporating the concept of Web of Trust in a crypto wallet, an identity can be created to display throughout the entire web; the level of confidence there is in a specific address. Since cryptocurrency wallets can be considered a form of identity, functional identity can give us the framework in which to view this identity system based on how it works.

Wallets as a form of functional identity

As a reminder, recall the definition of Functional identity by Joe Andrieu,

Identity is how we keep track of people and things and, in turn, how they keep track of us. That’s it. We learn people’s names, we observe them and hear gossip and consume media. We then apply that sense of who they are to our dealings with them. Others do the same in return.

Now, the question is: How can we apply this definition to cryptocurrency wallets?

Here’s a potential answer through a simple analogy:

A wallet is a case that stores money and a bunch of identity cards such as a driver’s license, a health card, credit cards, etc. If one were to lose their wallet, then they would lose access to a bunch of identifying documents that would let them prove their identity in everyday life. As such, losing access to a physical wallet is a worrying aspect of one’s life.

Similarly, a cryptocurrency wallet is essentially a digital physical wallet. It contains not only our access to private and public to cryptocurrencies but a view of our spending and investing habits. Even though cryptocurrency wallets are pseudonymous by nature, by building a transaction graph of a set of transactions, we can start to add pieces together in order to identify an individual’s use of cryptocurrency. When one loses access to their private keys, they lose complete access to anything that was stored in the wallet to begin with. As such, losing a cryptocurrency wallet may be more worrying than losing a physical wallet. As cryptocurrencies start to represent real world assets, they have the potential to be even more identifying than a physical wallet. In fact, as more and more cryptocurrency wallets start incorporating features such as mnemonics, they will act exactly as a unique identity for their holders. Cryptocurrency wallets will start to reach beyond digital crypto-assets as large institutions such as banks start incorporating blockchain-like structures in their infrastructure. In the future, a cryptocurrency wallet will be the de facto physical wallet.


In short, cryptocurrency wallets, just like physical wallets, are a form of functional identity on the web. As we near mainstream adoption of blockchain infrastructure, cryptocurrency wallets and physical wallets will merge into a single identity system that people will be able to use both online and offline. Functional identity gives us several ways in which we can improve the experience of handling cryptocurrency wallets and is a powerful tool that can enable us to build robust, secure and privacy-enabling identity systems for the web and the real world.


  1. Andrieu Joe, Functional Identity Primer. In Rebooting the Web of Trust Advanced Readings and Primers. 2017
  2. Andrieu Joe, Speaking of Identity. In 2017
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