This post is part of a 16-part series. This is the second post. For the first post click here and for the next post click here. For a complete summary click here.

This post is an excerpt from an upcoming report entitled The Current and Future State of Digital Wallets. To receive a copy of the report, please click here. In the meantime, please enjoy this excerpt. Cheers, Darrell

The general idea of a Digital Wallet is pretty simple – it’s a Thing that we put our Stuff in. The hard part comes when we have to identify what is that “Thing”, what “Stuff” do we put into it, and even, what does it mean to put “Stuff” in it? What about getting our “Stuff” out? Updating our “Stuff”?

The real-world parallel of a wallet is only so helpful. We all have totally different ideas of what goes into our wallets. Some people put just a bit of cash, a credit card, and likely a driver’s licence. Others have numerous currencies, many credit cards, loyalty cards, multiple identity documents, receipts, photos, tickets, and more.

But we call it all a wallet.

The same is true about Digital Wallets. They have a huge range of capabilities. Crypto Wallets typically store only the keys and addresses of wallets that live in the blockchains underlying each cryptocurrency. Other digital wallets (e.g. Pillar, Connect.Me,, Minerva) are focused on very specific areas of the broad Digital Wallet space.

The Digital Wallet space is broad – and the purpose of this report is multifold:

  • Explain the overall capabilities that define a Digital Wallet – both on a Personal and Enterprise basis (yes, they are different).
  • State an opinion of where each of the capabilities sits – is it real and live in the world yet, or purely aspirational – or somewhere in between?
  • Provide some recommendations and plans for approaching the Digital Wallet space. The space is enormous – and the efforts will exceed the resources of all but the world’s largest companies.

First off, we need to lay down some early terms. More terms will be defined throughout the report but these three terms are critical to understand the viewpoint from which this report was created.

As an introductory concept this wallet, Minerva from Lab10 provides the ability to manage multiple personas. You can see on the right image the personas that splits out an individual’s  citizen, work, and judo lives.

Source: Lab10

​Let’s Clear up Some Terms

The Digital Wallet space is nascent enough that there isn’t enough agreement on terms, so you and I are going to need to agree on a few terms to keep things straight. We need to be aware that these terms will likely change over time. At the end of 2018 this is the best that I can do for you.

OK – the key terms that we’ll use throughout this report are:

  • Wallet Storage – the encrypted database of keys, credentials, and other information that is put into a wallet. This is the Thing that holds your Stuff.
  • Agent – the software service(s) that manage things on your behalf. Agents put Stuff into your wallet, take Stuff out, process Stuff, create Stuff sometimes, and keep you connected

These two building blocks lead us to a Digital Wallet – Wallet Storage and Agent(s) combine to create an application that is going to shake the foundations of the internet and more. It is, in some ways, our digital twin – holding various aspects of our Digital Identity, our relationships, and more.

WARNING The Sovrin developers use a precise definition of Wallet Storage and call it a Wallet – which is potentially misleading for the non-developer type. “A software module, and optionally an associated hardware module, for securely storing and accessing Private Keys, Link Secrets, other sensitive cryptographic key material, and other Private Data used by an Entity. A Wallet [Wallet Storage] is accessed by an Agent. In Sovrin infrastructure, Wallets [Wallet Storage] implement the emerging DKMS standards for interoperable decentralized cryptographic key management.”

We’ll get deeper into each of the above but that’s enough to ground the discussion. I am looking forward to better terms arising. For now, the debate about names, and what is what, is holding us back.

​What Aren’t We Covering


Payments, whether traditional or crypto, are well handled and exploring them further isn’t warranted in this report. Payment rails are well supported in Canada and around the globe. They follow standards that are set by many parties and don’t really impact our discussion in this report. Adding Identity to existing payment rails is certainly relevant but is out of scope for this document. Over time, Digital Wallets and payment rails will need to connect and support each other but again, that’s out of scope for now.

Though some casual mention of payments and transactions may be made throughout, they are considered generic.

​Personal Data Stores

Personal Data Store A personal data store (PDS), vault or data locker is a service to let an individual store, manage and deploy their key personal data in a highly secure and structured way. It lets you keep your own data and also acquire and reuse proofs of claims or of relationships and qualifications (such as bank account, verified address, driving licence or passport).

A Digital Wallet is not a Personal Data Store (PDS). We are not here to talk about where we store all of the digital information that we gather over our lives – though the delineation of what a wallet is as opposed to a Personal Data Store is not clean. We may have immense amounts of information in our PDS – movies and music, health and financial records, emails and messages, and much more. The PDS industry is well suited to the bulk management of personal data – but it will have Digital Wallet needs as well.

As we go through this report we will discuss many topics that related to PDS. We’ll keep them in mind but focus on the Digital Wallet aspects.

​Crypto Wallets

The crypto world has hundreds of Wallet applications that support various different cryptocurrencies. They tend to be either single-currency, supporting only one cryptocurrency, or they can handle multiple currencies. Regardless, they are largely a way to manage the keys that control a Wallet address (or addresses) on a particular blockchain. They handle sending and receiving of transactions. That’s largely it.

Many debates exist about the user experience of Crypto Wallets. Engaging in discussion with the crypto maximalists can show a belief that these Wallets are already done – they work for everyone. The simple reality is that Crypto Wallets are incredibly complex (which leads to a poor user experience) and potentially dangerous (the loss of keys; cold storage approaches). The crypto world does not welcome such discussion, however.

One key point about Crypto Wallets is that over time, their obscure usage will likely just end up being something that Digital Wallets “just do”.

​Hardware Wallets

Related to Crypto Wallets is the early-stage Hardware Wallet Systems that provide “cold storage” for cryptocurrency. At the time of writing there are no Hardware Wallets that provide full Digital Wallet capabilities – they are laser-focused on managing keys for cryptocurrency usage. In time Hardware Wallets may provide self-managed “vault” capabilities but the industry is not close enough to that level to warrant further discussion.

​The Long History of Digital Wallets

Wallets have a long history – decades in fact – of being “the app to watch”. Twenty years ago Microsoft released Microsoft Passport as an attempt to get information managed in one place: single sign-on and credit cards – all managed for you. It failed, devolving into a federated sign-on capability over the last 20 years. Since then there have been innumerable wallet initiatives that have largely failed – though there are nuggets of innovation that will come to fruition as the Digital Wallet forms.

Largely speaking, the historical wallet approaches have failed for some or all of the following:

  • they were closed systems created to serve particular players and they locked in their users
  • they were too ambitious – you can’t eat the elephant in one bite no matter how big you are

But that’s not the point of this report. This report is about what a Digital Wallet is, what is needed to create one, and the business behind those.

​What Can’t a Wallet Do?

If we take the technical/developer view of a Wallet – or look at our physical wallets – we realize that a Wallet is really just a dumb storage device. Our Wallet can’t put anything into itself – nor remove anything. It can’t organize things or take a few pieces of information from one credential and pair that up with more information from another. It really is just a Thing to put Stuff into.

So how do we use a Wallet? In the physical world we use our hands, eyes, and brains to utilize the Stuff that we have in this Thing that we call a Wallet.

But in the Digital Wallet world we need software to do this for us – to act on our behalf. We need to control them and ensure that they are acting on our behalf – not somebody else’s control unless we are totally OK with the idea of somebody else having that control.

That’s where Agents come in.

​What is an Agent?

Simply put, an Agent is a piece of software that acts on the behalf of an Identity Owner – a Person, an Organization, or a Thing. It does a few things at minimum to keep you connected and secure:

  • it routes messages
  • it encrypts and decrypts information to keep your information private
  • it signs digital documents on your behalf
  • it manages information in your Digital Wallet
  • hopefully, it backs up our Stuff and allows us to restore

We’ll dive deeper into what else Agents can do in Agents – Deeper Detail

​The Most Basic Digital Wallet

In this short section we will discuss the most basic of Agents and Wallet Storage – the guts of a wallet. We will go deeper in the next two major sections of the report.

As we mentioned earlier, a Digital Wallet is comprised of an Agent and Wallet Storage. The role of the Agent is at minimum the following:

  • It sends and receives messages – to ask for and add credentials at minimum.
  • It may route messages to another Agent
  • It should provide an ability to back up the contents of a Wallet.

The Wallet must be secure enough to protect the Stuff it contains:

  • Keys
  • Various items stored in Encrypted Storage – such as Credentials

The following figure shows the basic components of a Digital Wallet.

​How Do You Use A Digital Wallet?

Currently you likely have apps on your phone that do portions of what a Digital Wallet will do in the future. We have apps like Apple Wallet and Google Pay that hold payment cards and tickets. We have tools like Google Authenticator that allow us to provide additional authentication security. We have notes in various places with key information. We have photos of key documents – but extremely few authorities recognize the legitimacy of a photo of your driver’s licence. We keep our receipts in various places – photos, emails, and in specific apps like Dropbox. We have apps that let us pay using QR codes though they haven’t taken off in Canada and the US like they have in Asia (e.g. WeChat Pay).

We have a lot of pieces of a wallet, but they are kind of like using a paperclip to hold cash – they do one thing (maybe) reasonably well, but they don’t work together.

We don’t have a single application that mimics what our physical wallets do. We don’t have apps that automatically know what information is being requested – or what information is required to be presented. We don’t have apps that use standards to communicate those requests. We don’t know what many apps are doing with our information either so we don’t (or shouldn’t) trust these apps with our sensitive information.

Story: A Family Trip Today and Tomorrow

When we go on a family trip we gather various information in many places. The author recently went on a trip with three family members. The following information was gathered – in various places:

  • hotel reservations – managed in app
  • apartment rental – managed in VRBO app
  • extra health insurance – paper received from Blue Cross and photos taken as “just in case” measure
  • plane tickets from two airlines that wouldn’t work together – so electronic tickets couldn’t be used. Paper tickets gathered at two different airline counters in two airports
  • passports – held in hand at times, and in lockable hardcase at others
  • cash – portion held in wallet and portion in a lockable hardcase
  • credit cards – held in two wallets (full size and a travel size)
  • rental car agreement – in app, though the rental actually occurred using paper and with carbon-paper based payment slip at smaller rental agency

The check-in process at each location was relatively painless as the family was fairly well organized and the bookings were largely at small facilities that had limited business. Still, the interactions were far from seamless. Concluding the rental car work required destroying the carbon that held the credit card information (in case of additional expense), paying cash for missing fuel, all conducted in a sweltering parking lot while the remainder of the family waited elsewhere.

In the Story (we’ll have a few of these Stories throughout the report) we note that through the whole engagement there were no real linkages between things, e.g. was the insurance on the rental car, as provided by the credit card sufficient? There was no linkage between the handwritten receipt from the hotel and the combination of cash and PayPal payment used to pay for services. The rental car company had no proof that the driver was capable of handling any excess payments had any been required. The driver’s licence that was presented was real but could easily have been a fake.
These gaps create friction in our day-to-day lives. Much of that friction can be reduced in a world where we have Digital Wallets in place. Particularly the linkages – but that raises a major concern: privacy. Let’s take the car rental – and consider that this was all in a developing country that doesn’t have the same privacy protections as Canada. We don’t want a rental car agency in another country knowing everything about us. We don’t want them knowing the credit limit on our credit card; nor the exact limits of insurance. They simply need to know that their needs will be met. That includes that they can trust the information that is presented – without needing to know more than required. We need our Digital Wallet to be able to provide information to others without revealing too much.  In 4.3.20. Selective Disclosure we discuss how such mechanisms can work.

This post is part of a 16-part series. This is the second post. For the first post click here and for the next post click here.

Also published on Medium.

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