Coinbase, in its Wednesday, July 12 statement, confirmed introducing the messaging service allowing users to convey encrypted messages using the custodial wallet. The new feature involves an interoperable integration of Telegram and Cash App.
Coinbase disclosed the messaging service involves a project executed through collaborative input from Texas-headquartered startup XMTP. The crypto exchange leverages the XMTP open-source Web3 messaging network.
The feature will facilitate how users engage with crypto assets. Coinbase is rolling out the messaging service to a small subset before opening it to all users.
Coinbase Using Open-source Web3 Messaging
Coinbase restated that leveraging the XMTP’s network allows the messaging service to become interoperable in supporting the human-readable Ethereum addresses. It accommodates addresses that utilize the Ethereum Name Service (ENS) and is not restricted to wallet addresses comprising lengthy strings of characters.
The messaging service expands the scope for Coinbase Wallet users, who can access the customized wallet labels via the Coinbase Decentralized ID (cb. id). The features involved a projected build through collaboration with ENS. Coinbase labels are accessible at no cost, unlike the fees incurred to secure ENS domains.
Web3 is triumphing over the existing internet structures to allow users to exercise control over personal data. Coinbase is leveraging Web3, supported by XMTP, to allow its users to move data to applications such as Leinster and Orb.
XMTP chief executive Matt Galligan observed that the messaging service features a portable and interoperable inbox with the supporting application. He added that a user’s choice to utilize a particular application does not compel the recipient to replicate the same move.
Coinbase Messaging Service Using Portable Inbox
Galligan acknowledged that Telegram and Signal utilize encrypted messaging as a reason for their popularity within the crypto circles. Nonetheless, the messaging feature in the Coinbase Wallet facilitates users in executing crypto payments. It rivals the Cash App provided by Block and Venmo by PayPal.
Coinbase restated that the messaging feature supports thousands of coins during their launch. Also, users conducting transactions using the Circle’s USDC stablecoin are exempted from incurring gas fees.
The move by Coinbase to collaborate with XMTP replicates the exchange’s joint project with Optimism to develop the Ethereum layer-2 scaling network. Galligan considers the collaboration to allow it to integrate existing technology with interoperable features with the Web3 values.
Coinbase Integrating Decentralization by Collaborating with XMTP
Galligan considers the decision by Coinbase to build the messaging service with the XMTP portrays the firm’s commitment to establishing services and products using existing protocols and integrating decentralization. He lauded Coinbase for believing in the existing ecosystems rather than prioritizing building their stack. It demonstrates Coinbase commitment to partnering with existing ecosystems.
Coinbase has integrated additional features to the self-custody wallet since its introduction in 2017 as a mobile application. Today, the exchange has advanced features that offer specialist services such as safety. January saw Coinbase Wallet integrate transaction previews and detectors to flag malicious smart contracts at their inception.
The integration of XMTP’s network is set to nurture Coinbase Wallet into a superior product. Besides facilitating private messaging, the XMTP’s network can handle announcements and alerts. Galligan observes that the interoperable nature of XMTP’s network makes it easy for applications to tap it.
Improving Coinbase Wallet Through Subsequent Features
Coinbase leveraging the XMTP network is noticeable as it leverages existing protocols and ecosystems. XMTP had, in 2021, raised $5 million for its seed round. The seed funding featured California-headquartered Offline Venture as the leading investor.
Coinbase is facing a lengthy legal battle from the lawsuit initiated by the United States Securities and Exchange Commission (SEC). The charges opened last month accuse the Coinbase Wallet of running operations using an unregistered broker. Also, the filing submitted to the court alleges it allows users to route trades SEC labeled as securities.
The move to unveil the messaging services aligns with the pronouncement by Coinbase chief legal executive Paul Grewal that the exchange would execute its business normally. Although embroiled in a legal suit against SEC, adding messaging services is a critical stride for Coinbase to improve the self-custodial wallet.
Editorial credit: rafapress / Shutterstock.com