Vitalik Buterin has emphasized the importance of self-custody for safeguarding assets. Via a Reddit post, he explains that social recovery and multi-signature solutions can help achieve this goal.
According to Buterin‘s recent post, with multisig wallets, funds are protected from being lost due to a centralized entity. Using a multi-sig wallet allows holders to enjoy the benefits of secure custody without being solely responsible for security measures.
Self-custody is important. And social recovery and multisig is a great way to do it.A quick reddit post on how I think about choosing guardians for social recovery and multisig wallets:https://t.co/FY1iyJ6BFC
— vitalik.eth (@VitalikButerin) March 17, 2023
Social recovery wallets are related to multi-sig wallets, as they allow for a single key to sign transactions, but with the added security of recovering funds if the key is lost through a group of keys held by others.
Buretin explained that social recovery wallets are easier to use than multi-sig wallets, especially with emerging technologies such as ERC-4337 account abstraction and upcoming user-friendly wallets like Soul Wallet.
As social recovery wallets become more mature, it would be advisable to use them for hot wallets that store a small percentage of an individual or organization’s funds. Multisig wallets are more appropriate for cold wallets holding larger savings.
In the post, Buterin touched on how multi-sig and social recovery wallets are important tools for securing cryptocurrency assets. He explained that they both use the concept of guardians or signatories to add a layer of security to transactions. However, they differ in their implementation and use cases.
He highlighted that multi-sig wallets require multiple signatures to authorize a transaction, making them more secure than single-key wallets. This is because an attacker must compromise multiple keys to steal the funds. Multisig wallets are often used for cold storage or high-value transactions, where the added security is worth the inconvenience of coordinating multiple signatures.
On the other hand, he explained that social recovery wallets use a single key for transactions but allow recovery if the key is lost or compromised. Buterin noted that this is achieved using a set of guardians who can collectively authorize a recovery process. Social recovery wallets are often used for hot wallets connected to the internet and for day-to-day transactions.
As the technology for social recovery wallets improves, they may become a more common choice for hot wallets. In contrast, multi-sig wallets continue to be used for cold storage or high-value transactions. Keep watching crypto.news for more educative posts and crypto-related news.
This article has been originally published at: https://crypto.news/vitalik-buterin-urges-to-self-custody-crypto/