\n
![](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/06\/GettyImages-2089850481-e1718325432607.jpg?w=2048\")
<\/p>\n [ad_1]
\n<\/p>\n
Cathie Wood<\/a>, the CEO of investment management first Ark Invest, thinks the digital wallet industry is set to consolidate. Amid a decline in traditional banking services, whoever monopolizes the wallet market stands to wield significant power in the financial sector, she says.<\/p>\n In conversation with Coinbase\u2019s<\/a> CEO Brian Armstrong<\/a> at the company\u2019s State of Crypto Summit on Thursday, Wood argued that there is a new generation of consumers who want a digital wallet to be their one-stop-shop for all online payments. Citing the absence of traditional banks in the digital wallet space, \u00a0\u201cthis truly is a winner-take-most opportunity,\u201d she said. <\/p>\n Wood made repeated reference to WeChat Pay\u2014the digital wallet from Chinese social media giant WeChat, which lets users make mobile payments and online transactions\u2014saying its set the \u201cmodel\u201d for how the market will evolve.\u00a0WeChat Pay functions like a \u201cbank branch in your pocket,\u201d she said, offering all forms of financial services and commerce. Since its initial release in 2013, the app has accumulated over 1.13 billion active users. Along with Alibaba\u2019s Alipay, the two applications account for over 90% of all over China\u2019s mobile payments. <\/p>\n Digital wallets can be loosely described as phone applications that allow peer-to-peer transactions, real-world purchases and online payments. Major players include PayPal<\/a>, its subsidiary Venmo, Zelle, and Cash App, which are all digitally native with no brick-and-mortar branches.\u00a0<\/p>\n But the services offered by these fintech companies are fast usurping traditional banking. According to Worldpay\u2019s Global Payments<\/a> 2024 Report, digital wallets account for half of all e-commerce transaction value last year.<\/p>\n Citing a generation coming of age that may never see the four walls of a traditional bank, Armstrong said he wants crypto to be treated as a serious contender in the digital wallet race. Like Wood, he predicted that one\u2019s phone will exist interchangeably with one\u2019s wallet, and consumer demand for a single financial account \u201cwhere they get paid, make purchases and send money,\u201d will become the norm.<\/p>\n Despite Coinbase\u2019s reputation as an exchange first and foremost, Armstrong noted \u201cthe real potential in innovation [in crypto], comes from these peer-to-peer transactions.\u201d<\/p>\n Crypto\u2019s presence in the digital wallet space is growing. In April, PayPal<\/a> announced users can make fee-free global transfers of its stablecoin PYUSD<\/a>, while Cash App has let users buy and sell Bitcoin since 2018. Last week, Coinbase<\/a> debuted its Smart Wallet<\/a>, a self-custodial crypto wallet that replaces the laborious recovery phrases, apps, and extensions typically associated with accessing DeFi wallets that keeps some users away, with biometric data, such as FaceID and fingerprints. On top of this, the Smart Wallet can draw funds from both the user\u2019s self-custodial wallet and their Coinbase account balance.<\/p>\n In a competitive, saturated digital wallet market, Armstrong touted \u201cinteroperability\u201d as DeFi\u2019s comparative advantage. In other words, a Coinbase wallet transaction doesn\u2019t need to be met with another Coinbase wallet, unlike, say, PayPal.<\/p>\n The CEO likened payments to flowing water\u2014it follows the path of least resistance. In lieu of that, he predicted that a quarter of global GDP will be on crypto rails\u2014the term for payment platforms that support the transfer of digital assets\u2014within a decade.\u00a0Armstrong concluded with an ambitious, final goal: For Coinbase wallets to be the \u201cprimary financial account\u201d for the next generation. <\/p>\n<\/div>\n\n