Coinbase Wallet Feature Takes Aim at User Safety

The Coinbase Wallet has been updated with an order preview screen that allows users to simulate the outcome of a transaction on a decentralized application (dapp) before confirming it.

The wallet is a general-purpose dapp that does not only interact with the Coinbase exchange. Based on a blockchain simulation, the new “Transaction Preview” feature estimates how a user's token balance will change after purchasing a token or an NFT.

The goal of this feature, according to the company, is to give users “better understanding of how a dapp or smart contract will interact with your wallet” and “greater peace of mind.”

Given the number of scams and frauds that have plagued the crypto world this year, this feature may come in handy for retail users wary of bad actors in the space.

The recent FTX saga is one in a series of events that has shed light on the risks of centralized finance, but those who self-custody are vulnerable to fake investment opportunities and romance-related fraud if they are not cautious.

Between the beginning of 2021 and the first half of 2022, losses in crypto-related scams totaled more than $1 billion. The majority of victims were targeted on Instagram, Facebook, WhatsApp, and Telegram before being duped into making transfers on cryptocurrency exchanges such as Coinbase.

Argent, an Ethereum wallet, has a preview trade screen with a transaction summary as well, but Coinbase Wallet provides additional information to users, such as an alert if a URL is associated with a phishing attempt.

The preview feature, according to Auston Bunsen, co-founder of infrastructure provider QuickNode, will make it “significantly more difficult” for hackers and scammers to steal funds from Coinbase Wallet users. He went on to say that it “gives users more visibility and power to protect their funds — making self-custody even more appealing in the aftermath of FTX.”

Coinbase has another screening tool for institutional customers that helps mitigate the risk of transacting at scale. Clients can use the Know Your Transaction (KYT) API to determine whether an entity or transaction is facilitating illegal or fraudulent activity. It also uses the Google Cloud to generate risk scores for user addresses.

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