How Blockchain is Disrupting the Future of Wealth Protection, from Wallets to Vaults

FinanceFeeds Editorial Team

Protecting one’s wealth is more relevant today than it has ever been before. Safeguarding money is just one aspect, as everyone needs to find ways to retain wealth or even generate more whenever possible. The digital asset protection market can benefit tremendously from blockchain technology, and significant progress has been made over the past few years. 

Wealth Management Is Crucial

In an ideal world, everyone on the planet can use their existing wealth to generate more revenue over time without too much hassle. The more passive the revenue stream is, the better. For decades, savings accounts have provided a way for consumers to manage their wealth and slowly accrue more over time. That is no longer possible today due to inflation, negative interest rates, and more global financial uncertainty than ever before. 

As savings accounts are no longer viable, wealth management becomes a crucial frontier. More specifically, wealth management serves as an investment advisory service combining financial services to address clients’ needs. Although it requires intermediaries, this solution can lead to personalized strategies to manage wealth and unlock new revenue opportunities. 

Wealth management can span numerous services and products, including:

  • estate planning
  • investment advice
  • retirement planning
  • tax services
  • accounting
  • etc. 

Unfortunately, the traditional approach to wealth management primarily caters to high-net-worth individuals. The personalized strategy is based on one’s assets under management and expectations. However, some wealth managers will specialize in particular fields, slowly opening the door to more clients. Even so, these services involve a team of experts and professionals, making it a rather costly endeavour. 

Solving Inefficiencies With Blockchain

The advent of blockchain technology can bring numerous changes and benefits to wealth management. However, it will also threaten the most significant revenue stream: transaction fees in a traditional setting. As blockchain is more efficient and can facilitate real-time settlement, bringing down transaction costs, counterparty risk, and capital efficiency. 

Another crucial benefit, per Deloitte, is the data privacy protection blockchain provides. Again, it is simpler and cheaper to use smart contracts and a single encrypted point of truth to bundle a client’s data, risk, financial history, investment profile, and KYC information. As a result, exchanging data becomes more efficient and reliable. Additionally, it paves the way for faster client onboarding and provider switching.

Digital investments portfolios will, per Deloitte, play an increasing role of importance. Moreover, investor demand for exposure to crypto-assets is rising. Blockchain facilitates that transition and introduces autonomous financial instruments and investment vehicles. These tools will threaten traditional wealth management sources of income but lead to more efficient processes. 

Speaking of digital investments, cryptocurrency vaults have proven rather popular. Users organize their crypto holdings into a vault, where they can be kept safe, or used to generate yield over time. It is one of the more popular concepts in decentralized finance today, and a powerful approach to on-chain asset and wealth management. 

Pushing The Boundaries Of Wealth Management

There is still much room for progress and improvements in this industry. A further cross-over between traditional wealth management and decentralized finance seems inevitable. The latter industry brings a new financial experience to millions of users and removes intermediaries from the equation wherever possible. Fewer people involved is more efficient, cheaper, and it makes diversification much more straightforward.

Projects like BlockWallet continue to push the boundaries of innovation for wealth management. Its non-custodial Ethereum browser extension wallet focuses on privacy. More specifically, users interact with privacy smart contracts to hide amounts and origins of funds. Every withdrawal is made to a newly generated wallet address and uses cryptographic proofs to break links between the user and the original deposit address. 

In a future version of BlockWallet, users will benefit from DeFi Web3 integration. It is an essential step toward modern and non-custodial wealth management solutions. Privacy is a key concern with traditional wealth management, as a lot of information is shared with many parties. This browser extension breaks links between users and funds, adding an extra and necessary privacy layer to all activities. 

Investors share BlockWallet’s approach to unlocking better privacy n the wealth management space. The company raised $1.8 million in a funding round from investors, including Woodstock Fund, X21 Digital, and GBV Capital. As more people seek out wealth management via cryptocurrency, achieving privacy becomes all the more important. 

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