Social recovery wallets could reduce crypto fund theft.
There are many drawbacks to electronic wallets in today’s market.
Using trusted guardians could protect public keys
Vitalik Buterin , co-founder of Ethereum, continues to innovate within the industry. His latest suggestion aims to address the growing issue of crypto wallet security.
Thefts and losses are among the main obstacles to the massive adoption of cryptocurrency. Millions of dollars are lost every year to scammers, hackers and wallet security exploits. No wallet is 100% secure, regardless of the business arguments of some electronic wallet manufacturers.
Ledger users have suffered greatly in recent months following the massive data leak from the company’s servers . The then vulnerable hardware e-wallets were emptied and the company did little to compensate its customers or even investigate the thefts.
There is an urgent need to find better security solutions, and Mr Buterin believes that the social recovery wallets are a step in the right direction.
What is a social recovery wallet?
A new type of smart contract wallet , called a social recovery wallet , could potentially offer a high level of security and would be much easier to use than the old options.
Mr. Buterin recognizes that hardware type wallets, or hardware electronic wallets, are not the ideal solution because users have to rely on the company that makes them. They continue to attract hackers and crooks, and remain a major failing point.
The ratio between stolen funds and the number of pirated devices is very high.
Multi-signature wallets are a step towards better security, but social recovery wallets could go even further, Buterin added.
A social recovery system has a single “signing key” that can be used to approve transactions. It also has a set of at least three “guardians”, a majority of whom can cooperate to change the signing key of the account.
Mr. Buterin added that this wallet would work normally, with a single key for signing transactions, but that its security feature would come into play in the event of loss:
The user can simply contact his guardian and ask him to sign a special transaction to change the public signing key recorded in the wallet contract, and replace it with a new one.
Appointing ‚guards‘ could also enhance security, as only trusted people would have access. To reduce the risk of attacks on guards and collusion, they do not need to be known to the public, or even to know the identity of each of them.