One of the most powerful experiences I’ve had in my time in Web3 was witnessing the start of the Ukraine war. Beyond the hit to crypto and NFT markets (things have never been the same since), it opened my eyes to the practical importance of digital wallets.

First things first, what is a digital wallet?

By “digital wallet”, I mean a blockchain-based cryptocurrency wallet, not a banking app. Essentially, a digital wallet functions much like a bank account. It is managed by a person or a group of people, and holds cryptocurrencies (money) and other digital assets. Money can be transferred in and out.

The main difference between a bank account and a digital wallet is the intermediary bank. To open a bank account, you need to choose a bank and undergo credit checks. When transferring money, you instruct the bank to carry out that transaction on your behalf. You rely on the bank to handle your money safely and transact accurately.

Ironically, a digital wallet is more like holding a physical wallet full of cash. You are free to transact with your money without going through a third-party and without trusting anyone other than yourself to hold and move your money. This is the essence of self-custody.

Self-custody digital wallets can be accessed on any computer with an internet connection through a wide selection of applications. Think of this as signing in to your email accounts — you can access and set up your mailbox through Gmail, Outlook, Apple Mail and many other applications as long as you have your passwords.

So, what happened in the Ukraine war?

In February 2022, at the beginning of the Ukraine conflict, many had to flee the country. Cash machines were overrun and electronic fund transfers frozen. The stability of banks in a country under siege was uncertain.

Ukraine is a crypto-friendly nation. In the midst of the crisis, some Ukrainian residents with digital wallets and the ability to access money across borders without being dependent on banks, they were able to execute their evacuation and sustain themselves in the crisis. In Dec 2022, the UN High Commissioner of Refugees (UNHCR) started a program to send displaced people financial aid through their digital wallets. Refugees could then convert this to cash at MoneyGram.

In a world where more than 100 million people are displaced and 1.4 billion adults remain unbanked, digital wallets present a solution. They offer vulnerable populations more than just transactional capability but also offer a layer of security against physical theft compared with carrying large amounts of cash.

Could self-custody of health data be the next frontier?

Beyond finances, there is a huge potential for similar innovation in healthcare. Displaced individuals, refugees moving across jurisdictions, and other vulnerable populations who do not have consistent access to a reliable healthcare system, could benefit from a dependable method to take care of and transfer their own health data.

Perhaps as a health community, this is an instance where we should shift our focus from innovating for incremental improvement in advanced systems of high-income economies to invest in innovating for the most vulnerable who need them most.