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Smart Contract Wallets: Security and Ease of Use for the Mass
Learn what challenges exist with existing cryptocurrency wallets and how smart contract wallets can solve these problems. The article highlights the security and usability issues of traditional wallets and shows how smart contract wallets offer enhanced security measures such as 2FA and daily spending limits. They also enable seamless payment of transaction fees and automatic asset transfer in case of inactivity. Learn how these innovative wallets are paving the way for widespread adoption of non-custodial crypto solutions and building the bridge to the decentralized future.
Smart Contract Wallets: Security and Ease of Use for the Mass
Summary:
The press release is about the current challenges of cryptocurrency wallets and the possible solution through smart contract-based wallets. The traditional wallets have problems in terms of usability and security, especially due to the risk of stolen seed phrases. Smart contract-based wallets offer enhanced security, allow daily spending limits, implement a “deadman switch” feature, and allow transaction fees to be paid with any token. These improvements could make smart contract-based wallets a new standard and promote the widespread use of non-custodial solutions.
Improving wallet security and usability
Current cryptocurrency wallets have some shortcomings in terms of security and usability. A recent report from Chainalysis shows that hundreds of millions of dollars have been stolen from cryptocurrency wallets in recent years. The main problem lies in the use of seed phrases, which serve as the only protection for the user's wallet. Even hardware wallets are ultimately protected by a seed phrase. If the seed phrase is lost or an attacker can access it, the user's funds are at risk. However, seed phrases are vulnerable to phishing attacks and malware.
In addition, the user experience and technical requirements of current wallets also pose challenges. For example, users must pay for transactions with a specific token (the gas token), regardless of the type of transaction or the actual tokens present in the wallet.
The emergence of smart contract-based wallets
Smart contract-based wallets could overcome these shortcomings and usher in a new era of wallets. These wallets consist of two parts: an application layer, which is responsible for signing transactions and submitting them to the blockchain, and a smart contract on the blockchain through which all transactions of the wallet are processed.
This dualism allows wallets to use custom signature verification logic and implement arbitrary execution logic for each transaction. This makes smart contract wallets more secure and user-friendly.
Improvements and features of smart contract-based wallets
Smart contract-based wallets offer various groundbreaking features to overcome the limitations of traditional wallets and meet user expectations in terms of security and convenience.
Improved security is achieved through the use of advanced security chips in mobile devices and laptops that enable 2FA (two-factor authentication). The keys generated within the security chip are tied to the device itself (“something you own”), and transactions can only be authorized through biometric authentication (“something you are”). In addition, transactions are verified by the account's smart contract in the blockchain, which ensures that the account remains protected even if the seed phrase is compromised.
Another feature of smart contract-based wallets is the ability to introduce daily spending limits. This requires additional authentication for transactions that exceed a set spending threshold, such as signatures from two different devices.
Additionally, smart contract-based wallets can implement a “deadman switch,” which allows assets to be transferred to predetermined beneficiaries if the wallet remains inactive for an extended period of time. This prevents assets from being lost in the event of the owner's death.
Smart contract-based wallets also offer the ability to pay for transactions with any token. The account's smart contract automatically exchanges the desired token for the required gas token, simplifying the transaction process. This functionality also enables support for “gasless” transactions, where DApp developers can pool or subsidize gas fees.
The future of wallets
Smart contract-based wallets have the potential to overcome the vulnerabilities of traditional wallet designs and introduce features that users have come to expect from Web 2.0 applications in terms of security and usability. This could lead to smart contract-based wallets becoming the new standard and encourage the widespread use of non-custodial crypto solutions. This development would not only improve the security and usability of wallets, but also mark a significant step towards a more decentralized future for the masses.