What are Smart Contract Wallets?

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September 13, 2022
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What are Smart Contract Wallets?

Due to the strength of smart contract technology, smart contract wallets are wallets with distinctive capabilities. They give consumers access to more security and backup tools. From what we know, there are multitudes of wallets and several options to choose from among the Ethereum wallets. And as you must have already guessed, they also serve different purposes and come with varied features. 

They are broadly divided into hot crypto wallets and cold crypto wallets respectively. 

“Hot" cryptocurrency wallets, like the smartphone Coinbase Wallet app (not to be mistaken for the Coinbase.com app) and the browser-based MetaMask, are always online and enable quick and simple transactions. 

Hardware wallets that use a "cold" connection to the internet, like Ledger and Trezor, are only active while still being used. Cold wallets are less user-friendly, but they provide better security since their private keys are never made public on the internet. 

While not new to the market and not backed by all exchanges and dapps, smart contract wallets, or "smart wallets," are coming to draw increased recognition due to their superior blend of confidentiality, scalability, and usability versus more traditional wallet options.  

Because of this, users can benefit from cutting-edge features like multi-signature purchases, regular transfer caps, emergency account suspension, and safer account retrieval. 

Features of Smart Contract Wallets

Now that we know what Smart Wallets really are, let’s discuss just in brief about its unique features; listed below : 

1. Two-step verification

2. Social recovery is possible through friends or family

3. Withdrawals with a rate cap, like an ATM

4. Whitelists and blacklists for yourself

5. Alerts about fraud and a lockdown situation


How Do Smart Contract Wallets Work?

Now that you know about all these amazing features of smart contract wallets, you might want to know “but how, how do they really work?”. Well, we got you. Here are a few ways how smart contract wallets really work. 

Smart contract code is used to access and administer funds in smart wallets, providing users with nearly limitless flexibility, increased asset management, and more trust in DeFi. The wallet can have functions like social recovery, transaction limits, and account freezing programmed into it thanks to smart contracts. As a result, they may integrate security with accessibility. 

Externally Owned Accounts (EOAs), which can be accessed with a private key or seed phrase, and Contract Accounts, which are managed by smart contract code, are the two categories of accounts that are accepted by the Ethereum platform. 

Currently, Ethereum wallets are either centered on one or the other, but with the release of Ethereum 2.0, they will be integrated into one another. 

The bulk of Ethereum wallets only has basic functions considering they manage EOA transactions. However, smart wallets make use of Contract Account features; they manage money using encrypting instructions that specify who can obtain it, how, and much more. 

Top 4 Smart Contract Wallets of 2022

1. Metamask

For the purpose of making purchases, maintaining, sending, and receiving tokens via different procedures, Metamask offers a key vault. You have complete control over the ownership of your tokens, and you can transfer them undisturbed to a variety of decentralized applications. 

Metamask is something that blockchain enthusiasts will certainly appreciate. It is as a result of the statistics they utilize to enhance the application. Twitter and Discord users have been tricked into linking their cryptocurrency wallets to malevolent smart contracts, which has resulted in the loss of their NFTs and other tokens. 

Social media frauds are rampant in the NFT arena. The most popular Ethereum wallet, MetaMask, has modified its user interface in an effort to aid users in detecting and avoiding such scams. 

2. Pokketo

With the aid of the Poketto payment software, you could send and receive funds from anybody. To cut the transaction cost and enable quick payments, it leverages xDai. You can share addresses with your connections and make payments by connecting the contacts’ addresses to the wallet’s payee list. 

It is also an open-source program, so open that they have posted the source code for their open-source wallet on Github in order to receive suggestions on how to make it better as needed.

The private key is produced by Pokketo wallet, which then saves the data on your phone. Therefore, accessing the wallet also becomes really simple. 

3. Zerion 

Zerion implements several interfaces and offers certain important financial services. In addition, you can use it to trade in, swap, borrow, or lend your valuables. Searching, eliminating, and managing the Defi asset as you see fit is very simple. 

Due to its decentralized nature, the Defi Account and tool are completely your choice, and you are capable of investing in a variety of protocols. With more sophisticated ROI statistics, you may analyze your transactions more extensively and browse across the entire transaction history.

You can handle your trading using your phone in addition to monitoring your portfolio over the full Defi market.

4. Argent

In addition to providing a free ENS name, aiming to make the address simple; Argent will also waive the transaction cost for all of your trades. As a result, it is quite useful to send your friends crypto because as you can understand that every Argent wallet shall get a recognizable name.

You can use argent to acquire tokens from decentralized exchanges in addition to keeping your own tokens there. This wallet is particularly intended to enable users to trade and invest in cryptocurrencies and Ethereum easily along with a beautiful user interface and a convenient trading portfolio. 

Top 3 Uses of Smart Contracts In Different Domains 

1. Government Vote Casting 

Smart contracts provide a secure environment, making the voting system less susceptible to exploitation. Votes in an intelligent contract, however, may be ledger-protected, which is exceedingly difficult to crack.

Furthermore, smart contracts might wish to boost citizen turnover, which is relatively low due to the cumbersome system that requires individuals to queue up, present identity, and submit documentation.

Finally, voting can boost the diversity of members in a vote-casting device while being transferred online via smart contracts.

2. Health and Welfare 

Health insurance can leverage smart contracts on a routine basis, which would improve the overall efficiency of the system in many ways. All information about a patient's policies will be kept secure in their patient profile if they pay their insurance through smart contracts. 

The blockchain, a safe and secure ledger that is less susceptible to hackers than a standard database, is then used to preserve this information. 

The ledger can also be utilised for complex roles including handling supplies, regulating medications, and complying with the law. Due to privacy reasons, only particular individuals can access the information. Similarly, using smart contracts allows for confidential and safe study execution. 

3. Efficiency in Supply Chain

Supply chains often operate because of paper-based arrangements where documents must pass through several processes to receive permissions. The laborious process will raise the likelihood of fraud and harm.

By providing chain participants with an efficient and trustworthy digital model, blockchain can eradicate such risks. Stock control, bill automation, and task automation are made possible as a result of utilizing smart contracts.


With all the qualities and efficiency that smart contract wallets provide, the downside to this is that they are far more difficult to deploy on blockchains like Bitcoin which is deficient in Ethereum’s smart contract technology. 

The good side is that users shall privilege from the hardcore and strong security that banks cannot provide to them at the same time they are at the benefit of accessing control over their own money. For a newbie, it is advisable to check through thorough reviews of a smart contract wallet, then lay their hands on one. 

From All the HyperGrowth Team
Your Crypto Startup Accelerator
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