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User Controlled Wallets

You may have heard the wallet terminology already if you have used or are interested in blockchain.

But what is a user controlled wallet? Is there any other wallet?

Wallet Types

Circle Programmable Wallets offer two infrastructure models: `User-Controlled Wallets` and `Developer-Controlled Wallets`. Let's look at their differences and use cases.

What are User Controlled Wallets?

User controlled wallets are exactly how they are sound (no surprises here :). With the user controlled wallet, the user has full control over his/her wallet. Even though they have full control over their wallet, the complexity of using a web3 wallet is hidden by Circle and users can use their wallet just by memorizing a pin code. They also setup security questions and answers in case they lose or forget their pin code. They are still using their private key behind the curtains but instead of dealing with all the burden that web3 brings such as safekeeping seed phrases, they can have the benefits of a fast and secure blockchain with the familiar methods.

Where to Use User Controlled Wallets

In general we need user controlled wallets when we want the user to explicitly authorize transactions.

  • One example can be decentralized exchanges. In this example, we want the user to handle the transaction and approve the necessary transaction for token swap, so it makes sense that we create user controlled wallets.
  • Another example is NFT Marketplaces. Again we want users to control their purchases.
  • As the third example, we can say decentralized social media. Through the transactions, users can control their own data, so we want users in charge and for that reason it makes sense to create a user controlled wallet.

These are some examples and there are many more use cases. The important thing is to understand that we use user controlled wallets whenever we want users to have control over their transactions.

What are Developer Controlled Wallets?

Developer controlled wallets, as the name suggests, are controlled by the developers. Unlike user controlled wallets, the users do not have direct control over these wallets. Instead, the developers manage the wallets on behalf of the users. This can simplify the user experience, as users do not need to remember a pin code or answer security questions. However, it also means that the developers have the responsibility of managing and securing the wallets, which can be a complex task. Despite this, developer controlled wallets can provide a seamless user experience, as all the complexities of blockchain are handled by the developers.

Where to Use Developer Controlled Wallets?

Developer controlled wallets are ideal in scenarios where you want to provide a seamless user experience, without requiring the users to manage their own wallets. They are particularly useful in applications where the users are not familiar with blockchain technology, as they can interact with the application without having to understand the complexities of blockchain. However, they require a high level of trust between the users and the developers, as the developers have control over the wallets.

  • A good example of a use case for developer controlled wallets is a gaming platform that uses blockchain technology. In this scenario, the users of the platform are gamers who may not be familiar with or interested in the intricacies of blockchain technology. They just want to play games and earn or spend in-game currency.
  • Another good example is centralized exchanges, where they want users to deposit digital assets, but manage the digital assets in a pool and a centralized ledger to facilitate high volume orders and reduce transaction cost.

The developers of the gaming platform can use developer controlled wallets to manage the in-game currency on behalf of the users. The gamers can earn or spend the in-game currency without having to manage a wallet or understand blockchain technology. All the complexities of managing the blockchain transactions are handled by the developers, providing a seamless gaming experience for the users.

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