- Vitalik Buterin proposes “multi-sig” to solve seed phrase issues with hardware wallets.
- Shamir is another alternative to storing seed phrases, but Buterin downplayed it.
As a seasoned crypto investor, I’ve seen my fair share of risks and losses in this volatile market. The recent FTX implosion is a stark reminder of the importance of self-custody wallets and taking control of our own keys. However, even with hardware wallets, users face the risk of forgetting their seed phrases or having them stolen.
Hardware wallets, which allow users to store their cryptocurrencies themselves, have gained significant popularity due to heightened concerns over potential risks posed by third parties, such as in the recent collapse of FTX.
Crypto Twitter starkly reminds users of these risks through a catchy phrase,
“Not your keys, not your crypto.”
Despite the security benefits of using a hardware wallet, users pose a significant risk due to the possibility of forgetting their seed phrase or having it taken from them.
Ethereum founder Buterin tips “multi-sig” to solve wallet risk
Vitalik Buterin, the co-founder of Ethereum [ETH], has put forth a suggested remedy for this issue.
“I manage over 90% of my personal funds through a multisig wallet (like a Safe). This means that some keys are in your possession, but not enough for you to control the entire amount on your own. The remaining keys are held by trusted individuals whom I’ve chosen not to disclose to one another. By doing this, we decentralize my security and minimize the risk of having all the eggs in one basket.”
“Multi-sig” refers to having multiple signatories on a wallet to reduce a single point of failure.
As a data analyst, I would recommend using Shamir backup as an alternative method for safeguarding your recovery seed phrase. In this approach, the seed phrase is fragmented into several shares that are stored on different devices. This way, you ensure that no single device holds the complete information, thus enhancing security.
However, Buterin downplayed Shamir’s effectiveness and claimed,
“Way easier to screw up than a multisig.”
Throwing his weight behind “multi-sig,” Vitalik emphasized that,
The answer to these queries, (i) whether to trust other devices or friends and (ii) Shamir shares versus multisignature, are unrelated topics. The former refers to the trusted parties in a system, while the latter is a method for distributing secret information among multiple participants.
The demand for hardware wallets is projected to expand significantly, increasing from a value of $0.35 billion in the year 2024 to an estimated $1.56 billion by the end of 2029.
The anticipated expansion may bring about the aforementioned complications, yet potential resolutions such as Shamir or multi-signature methods could be applied depending on the individual’s risk tolerance.
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2024-05-01 16:23