The Binance Web3 wallet provides a revolutionary self-custody method that combines multi-party computation technology with user empowerment to ensure true ownership of encrypted assets by users.

Original Title: "Binance Web3 Wallet: Self-Custody Wallet"

Author: Binance

Key Points

• The Binance Web3 wallet is a self-custody wallet, where users have complete ownership of their assets and private keys. This is in stark contrast to custodial wallets, where third parties have control and users must trust centralized services.
• The Binance Web3 wallet uses MPC technology to store three key shards in different locations, providing strong security without the need for traditional mnemonic phrases. Holding a single key shard does not grant access to the wallet, while two shards are held by the user.
• To emphasize user control and commitment to self-custody, the Binance Web3 wallet also offers an "emergency export" feature, supporting users in exporting their private keys.

The Binance Web3 wallet provides a revolutionary self-custody method that combines multi-party computation technology with user empowerment, ensuring true ownership of encrypted assets by users.

When managing personal encrypted assets, the choice of wallet type plays a crucial role in ensuring fund security. Among various wallet types, the concept of self-custody wallets stands out because it allows users to have full control over their assets. Confused? Let's start by discussing the difference between self-custody and custodial services.

Understanding Cryptocurrency Wallets and Private Keys

Self-Custody (Non-Custodial) Wallet: In a self-custody wallet, users hold the private keys, thus having complete control over the assets. Users are fully responsible for managing and maintaining the security of their keys. If the keys are lost or stolen, no one else can retrieve them, and the funds will be lost and irrecoverable.

Custodial Wallet: In a custodial wallet, a third party (such as a cryptocurrency exchange or custodial wallet service) can control the private keys. This means they can also control the funds stored in the wallet. Users rely on service providers to protect their assets, and there is a possibility of recovering assets in case of lost access data like passwords. However, the downside is that if the third party is hacked, goes bankrupt, or freezes your assets for any reason, your funds may be frozen or stolen.

Private Key: Both of the above definitions assume that you understand what a private key is. In the cryptocurrency realm, a private key is a secret alphanumeric key used to spend your digital assets or send them to another address. This unique and confidential key allows access to your cryptocurrency, much like using a physical key to unlock and enter your house.

Holding the private key essentially means holding ownership of your digital tokens. If someone else holds your private key, they can easily transfer your tokens without your consent. Therefore, maintaining the security and confidentiality of the private key is crucial.

Private keys are long, complex, and difficult to remember. If you lose your private key, you permanently lose access to your personal digital assets. For security reasons, wallets usually do not directly access the private key, but provide you with a "mnemonic phrase," which is a set of 12-24 words serving as a recoverable and readable backup to restore and protect access to your personal cryptocurrency private keys.

Binance Web3 Wallet: Supporting Self-Custody

With the Binance Web3 wallet, you are the true owner of your assets. The wallet empowers users through a self-custody model, ensuring that only users can access their assets and have complete control over them. The most important aspect of the Binance Web3 wallet is its use of multi-party computation (MPC) technology. In simple terms, through this technology, you can use a self-custody wallet without needing to remember a mnemonic phrase and have unrestricted control over your assets.

How do these technologies work? Read our MPC blog for more details. In terms of self-custody, 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 the wallet and are stored in different locations to enhance security:

• Shard 1: Held by Binance;
• Shard 2: Stored on your device;
• Shard 3: Encrypted with your input recovery password, then backed up to your personal cloud storage (iCloud or Google Drive).

To access the Web3 wallet, you must have at least two wallet key shards. Binance holds only one key shard without your authorization, and cannot access your wallet at all. However, this also means that if you lose your device (and the key shard on the device), you can recover your Web3 wallet and the assets within it because you still have the key shards backed up to your personal cloud storage and the key shard held by Binance.

However, please note that the ultimate responsibility for securing the assets and access to the personal wallet lies with you, as only you have the authority to access two of the three key shards. If you forget the recovery password/cannot access your cloud storage and lose the device/delete the Binance App, you will no longer be able to access your Web3 wallet, and Binance cannot assist with recovery. This is a self-custody wallet!

Exporting Keys: Proof of Self-Custody

A typical characteristic of self-custody is the ability to export your private keys. With the Binance Web3 wallet, users not only have complete control over their assets, but can also choose to export their private keys if they want to move the wallet elsewhere.

Traditional wallets often rely on mnemonic phrases, which are a set of words that can restore access to all of a user's keys. In contrast, the Binance Web3 wallet enhances security through multi-party computation (MPC). In this setup, private key shards are split and stored in different locations, eliminating the need for mnemonic phrases.

Learn about the "emergency export" feature. This feature is designed to provide users with a way to immediately export their private keys if they wish, serving as proof of Binance's commitment to always retaining control for Web3 wallet users.

However, please note that once the "emergency export" feature is enabled and the private key is exported, the Web3 wallet will no longer be accessible. This is an irreversible operation and a recognition of the wallet's unwavering support for the spirit of self-custody.

Addressing App Access Permission Issues

We understand that due to the association of the Web3 wallet with the Binance App's user interface (UI), some users may be concerned about a scenario where being unable to access the Binance App would subsequently prevent interaction with the UI interface, rendering self-custody ineffective.

Therefore, we have been working to ensure that the "emergency export" feature is always available, regardless of the status of the Binance App. The core of self-custody lies in the undeniable fact of having the private key, which is what we have been committed to providing for Binance Web3 wallet users.

Conclusion

As exemplified by the Binance Web3 wallet, the concept of self-custody represents the essence of blockchain and cryptocurrency ideals, ensuring absolute control and ownership of one's assets. The Binance Web3 wallet recognizes the importance of private keys and their critical role in safeguarding the security of digital assets, providing a unique and innovative self-custody method through the use of multi-party computation (MPC) technology.

Integration of features such as "emergency export" reinforces Binance's commitment to user autonomy and control. While it's crucial for users to realize that managing their assets is their inherent responsibility, Binance has been taking steps to address potential issues and streamline the overall user experience.

The combination of innovation, security, and user empowerment marks an important step forward in the development of cryptocurrency wallets. Binance makes the journey to Web3 easier.

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