Binance Web3 Wallet offers a revolutionary approach to self-custody that combines multi-party computing technology with user empowerment to ensure users’ true ownership of their crypto assets.
Original title: "Binance Web3 Wallet: Self-hosted Wallet"
Written by: Binance
Main points
- Binance Web3 Wallet is a self-hosted wallet where users have full ownership of their assets and private keys. This is in contrast to custodial wallets, where a third party has control and users must trust their centralized service.
- Binance Web3 Wallet uses MPC technology to store three key shards in different locations, providing strong security without the need for traditional seed phrase. The wallet cannot be accessed by holding a single key shard, while two of the shards are held by the user.
- In order to emphasize user control and commitment to self-custody, Binance Web3 wallet also provides an "emergency export" function to support users to export private keys.
Binance Web3 Wallet provides a transformative self-custody method that combines multi-party computing technology with user empowerment to ensure users’ true ownership of crypto assets.
When managing personal crypto assets, the type of wallet you choose plays a vital role in keeping your funds safe. Among the many different wallets, the concept of a self-hosted wallet stands out because it gives users complete control over their assets. Sound confused? Let’s start with the difference between self-hosted and managed services.
Learn about cryptocurrency wallets and private keys
Self-hosted (non-custodial) wallets : In a self-hosted wallet, the user holds the private keys and therefore has full control over the assets. Users are solely responsible for managing and maintaining the security of their keys. If the key is lost or stolen, it cannot be retrieved by anyone else and the funds are lost irretrievably.
Managed Wallet : In a custodial wallet, a third party, such as a cryptocurrency exchange or custodial wallet service, has control over the private keys. This also means they have control over the funds stored in the wallet. Users rely on service providers to protect their assets and potentially recover them if access data such as passwords are lost. The downside is that if the third party gets hacked, goes out of business, or freezes your assets for any other reason, your funds could be frozen or stolen.
Private Key : Both definitions above assume that you understand what a private key is. In the world of cryptocurrency, a private key is an alphanumeric secret key used to spend your digital assets or send them to another address. This unique and confidential key provides access to your cryptocurrency, just like a physical key to unlocking and entering your home.
Holding a private key essentially holds ownership of your digital tokens. If someone else holds your private keys, they can easily transfer your tokens without your consent. Therefore, it is crucial to keep your private keys safe and confidential.
Private keys are long, complex, and difficult to remember, and if you lose them, you lose access to your personal digital assets forever. For security reasons, wallets usually do not have direct access to private keys, but instead provide you with a "seed phrase," a set of 12-24 words that serves as a recoverable and readable backup, using For recovering and protecting private keys for accessing personal cryptocurrencies.
Binance Web3 Wallet: Supports self-hosting
With Binance Web3 Wallet, you are the true owner of your assets. The wallet empowers users through a self-hosted model, ensuring that only users can access their assets and have full control over them. The most important thing about the Binance Web3 wallet is the multi-party computation (MPC) technology it uses. In short, this technology allows you to use a self-hosted wallet without having to remember a seed phrase, and you have complete control over your assets without restrictions.
How do these technologies work? Read our MPC blog for more details. On the self-hosted side, it’s important to know that the Binance Web3 wallet is protected by three key shards and a recovery password known only to the user. These shards are generated when you create your wallet and are stored in different locations for enhanced security:
- Shard 1: custody by Binance;
- Shard 2: stored on your device;
- Shard 3: Encrypted using the recovery password you entered, then backed up to your personal cloud storage (iCloud or Google Drive).
To access a Web3 wallet, you must have at least two wallet key shards. Binance only holds one of the key shards. Binance has absolutely no access to your wallet without your authorization. But it does mean that if you lose your device (and the key shards on it), you can recover your Web3 wallet and the assets on it because you also have the key shards backed up to your personal cloud storage. shards and key shards kept by Binance.
However, please note that only you have access to two of the three key shards, and the responsibility for securing your assets and access to your personal wallet ultimately lies with you. If you forget your recovery password/cannot access your cloud storage and lose your device/delete the Binance App, you will no longer be able to access your Web3 wallet and Binance will not be able to restore it for you. This wallet does not provide a centralized service to reset your password or recover any key shards you have in your custody. This is a self-hosted wallet!
Export Key: Self-Hosted Proof
A typical feature of self-hosting is the ability to export your own private keys. With Binance Web3 Wallet, users not only have full control over their assets, but also have the option to export their private keys if they want to move their wallet elsewhere.
Traditional wallets often rely on a seed phrase, a set of mnemonic phrases that restores access to all of a user’s keys. In contrast, Binance Web3 wallet utilizes multi-party computation (MPC) for enhanced security. In this setup, the private key shards are split and stored in separate locations, so no seed phrase.
Learn about the Emergency Export feature. This feature is designed to provide users with a way to instantly export their private keys, whenever they wish, for any reason. This is also a testament to Binance’s commitment to Web3 wallet users always retaining control.
However, please note that once the "Emergency Export" function is enabled and the private key is exported, the Web3 wallet will no longer be accessible. This is an immutable operation and a recognition of the wallet’s unwavering support for the self-custody ethos.
Solving App access permission issues
We understand that because the Web3 wallet is tied to the Binance App user interface (UI), some users may be concerned about a scenario that has never arisen before, where access to the Binance App is blocked and they are subsequently unable to interact with the UI. This in turn makes it impossible to interact with Web3 wallets, effectively invalidating self-hosting.
Therefore, we are currently working hard to ensure that the Emergency Export feature is always available, regardless of the status of the Binance App. The core of self-hosting lies in the undeniable fact of owning the private keys, which is something we have been committed to providing Binance Web3 wallet users.
Conclusion
As exemplified by the Binance Web3 Wallet, the concept of self-custody represents the essence of the blockchain and cryptocurrency philosophy of having absolute control and ownership of your assets. Recognizing the importance of private keys and their critical role in securing digital assets, Binance Web3 Wallet provides a unique and innovative way of self-custody through the use of multi-party computation (MPC) technology.
The integration of features like “Emergency Export” solidifies Binance’s commitment to user autonomy and control. While it’s important for users to realize that managing their own assets is their inherent responsibility, Binance has been taking steps to address potential issues and simplify the overall user experience.
The combination of innovation, security and user empowerment marks a major step forward in the evolution of cryptocurrency wallets. Binance makes your Web3 journey easier.
