If they are all good, how do you pick the best?
We’ll help you. Usually, those articles start with: do you want a hot or cold wallet? Custodial or non-custodial? But even though those questions are valid, they overcomplicate an already complicated subject and leave you feeling unsatisfied and silly (and that’s not what we want).
Our motto is – “Crypto and web3 should be easy” because it should be; we’re coming to the digital money era, and presumably, in 10-15 years, people will primarily be using digital money instead of fiat. And we want to help to complete this transition as smoothly as possible. And we’ll keep it simple (according to our motto).
The custodial wallet is for you if you value a set-and-forget mindset, don’t want to spend much time doing research and taking care of your crypto, and don’t mind delegating some responsibility to the third part crypto platform/app.
A non-custodial wallet is perfect for control freaks and people ready to be in charge of who, where, and how can access their funds. But bear in mind that more than 100B+ worth of assets were lost because of wrong private key/seed backup management.
The first option is more effortless and lets you recover your access to the funds in case you need it. The second one is more complicated and demands more technical knowledge to use advanced features, and if you lose your keys or seed, they are lost for good. But you are the only one who controls it, and no third parties are involved.
The Dexfin wallet is non-custodial. But not just any non-custodial wallet but a keyless non-custodial wallet. It means you are not scared to lose your private key anymore because there is no private key! Instead, a crypto wallet distributes your security/secret between multiple parties. It’s called a Multi-Party Computation.
Based on SMPC, Dexfin eliminates the need for storing Private Keys, separating control over funds from the responsibility for security. The Private Key is replaced with a set of secrets distributed between your gadgets or devices stored on behalf of chosen institutions or people.
When you create a wallet, we ask you permission to use your facial recognition to access and backup your wallet. Biometric backup (in our case, anonymous biometric backup) means a lot. The neural network converts the face into anonymous biometric code and encrypts the secret from the Wallet Device. When your phone is lost or stolen, you are invited to complete dynamic challenges to identify whether this is an actual user or a photo. Then the neural network decrypts the secret when the user provides his biometrics and completes liveness.
We finished with the basics, and now we can finally move to wallets’ characteristics so you can choose the best (but remember that we are biased because we know that the Dexfin wallet is the most compelling, easy-to-manage, and safe wallet you can get).
When you choose your wallet, you should pay attention to four main points: security level, ease of use, portability, and coins supported because we are here for the one-and-done app you will be able to use with all your crypto. Does the Dexfin wallet provide all those features? Luckily, it does.
1.We offer you the most modern and safe MPC technology and anonymous biometric backup – no risk of losing your keys, embedded backup features, less time spent entering your app, and get access to your assets. Our solution also enables transaction limits and address white listing.
2. We created the most straightforward interface ever. Because we don’t want you to spend time reading a manual on “How to use this app,” you indeed have better things to do. Our app is very intuitive and contains only essentials.
3.Transferring your tokens from one platform to another is not a problem for the Dexfin wallet, and you can move your assets across borders, between individuals, and over long distances. You can use a standard blockchain address, aka. public key or unstoppable domains like, for example, dexfin. eth or create an endless list with your recipients.
4. Dexfin wallet supports 100+ coins and tokens from 6 different chains, and that’s only the beginning! Also, we support NFTs on five different blockchains at the moment.
5.Dexfin wallet enables the purchase of tokens with credit and token swaps across blockchains. We are one of the first wallets enabling truly trustless cross-chain swaps.
Dexfin Wallet solves the two biggest problems we see in crypto before we onboard 100M+ new users.
– Private key management
– UX/UI issues
The benefits outweigh the risks for the average user. The risk of private key loss or phishing in the case of self-custodial wallets is much higher, with a poorer user experience.
MPC presents itself as the first solution to decentralize the private key by splitting it into several parts. This reduces the single point of failure all our wallets currently have, the private key.
We believe it’s only a matter of time.
MPC wallets will likely emerge as a key bridging technology that helps web3 cross over from the early adopter to the early majority phase.
Also, you can gain 11% per year when you stake DXF on our exchange platform.
If you have more questions about our upcoming app, connect us through social media or comment under this post. And remember: crypto is easy with the Dexfin wallet.
You can signup for our waitlist to get access when we launch our public beta: https://bit.ly/3VfBvjc
Expert’s opinion: Kamil Brejcha – the CEO of Dexfin.
The two biggest problems that I see in crypto before we onboard 100M+ new users
– Private key management
– UX/UI issues
Web3 has a user experience problem! But that is changing. And one of the key technologies driving the improvement will be MPC or multi-party computation.
So there are reasons why I see MPC as a future for the WEB3 (especially wallets):
Self-custodial wallets like Metamask, Coinbase wallet, and Phantom, are popular today but have two significant UX issues:
1. They require users to store long seed phrases. If you lose it, there’s no chance of recovery
2. If your seed / private key is compromised, you lose your assets
This is a poor and risky proposition for the average user, who is mostly used to the convenience of SSO.
But with the MPC wallets, a user’s private key is sharded into two parts (one stored on the device, and one stored on the wallet server). To perform a txn, the user’s device and wallet server independently perform a mathematical computation that produces a valid signature when combined.
This gives two big advantages – one, the user no longer needs to store complex seed phrases (replaced by passwords/biometrics). And two, even if the partial secret on your device is compromised, the attacker cannot withdraw your assets without the secret stored on the wallet server.
BUT, there is a catch though – MPC-wallets (like ZenGo or Fireblocks) are not strictly self-custodial.
Well, unlike wallets with centralized exchanges, they can’t move your assets without your explicit consent. However, the wallet providers can prevent you from accessing contracts or transferring funds, by simply not signing the transaction with their secret.
The problem with “not your keys, not your coins”
Ownership in crypto is entirely determined by who owns the private key corresponding to your wallet. Hence giving rise to the popular adage – “Not your keys, not your coins”. As long as you have the private key corresponding to your address, no entity in the world can restrict you from accessing those funds.
However, as always, there’s a catch!
There’s a glaring user experience problem with managing private keys via fully self-custodial wallets (e.g. Metamask, Phantom, etc.) today:
There’s an expectation that users will safely store their private keys. The average user today barely remembers passwords. Remembering a 64-character hex private key is out of the question.
Users tend to store these private keys (or rather seed phrases, which recover private keys) in compromisable locations like digital note apps or written on so metal seed backup solutions.
If a user loses access to the private key, there’s no way to recover it. No customer care, no legal recourse. It is estimated that $100B+ in Bitcoin (alone) is locked away forever due to the loss of the private keys.
Users are also far more comfortable with the authentication methods used today, like a password + OTP combination.
And thus, we’ve now arrived at the core problem statement – how can we ensure digital custody of a user’s assets with sufficient decentralization, while eliminating the friction in storing and managing private keys.
The answer is – MPC wallets! They secure your private keys using a technology called multi-party computation.
And while this is not the only solution to the above problem, MPC wallets are increasingly becoming a popular option because it maintains sufficient self-custody rights of the user, while improving the experience by using familiar authentication methods.
Wallets such as ZenGo, digital asset managers like Fireblocks, and the latest new DeFi app teased by CoinDCX (Okto), all use MPC technology to secure users’ private keys
So, we now attempt to answer three core questions:
What is multi-party computation and how does it work?
How will the user experience improve with an MPC wallet?
Is it fully self-custodial? What are the risks assoicated with it?
Let’s start with the first one – what is multi-party computation?
Multi-party computation is a cryptographic method that allows multiple parties to securely band together and perform an operation, without any party being priviliged to the information of the others
Here’s an analogy – Imagine a SAFE that requires a numerical passcode to unlock. You and your friend store some valuables and are each given a number (different) that, when multiplied together, unlock the safe. Both of you can not independently open the SAFE, but if you both enter your passcodes, the SAFE can be unlocked without either of you knowing what the passcode of the other person is
This is the essence of multi-party computation, but with far more complex mathematical operations than basic multiplication.
In the case of crypto, MPC wallets split the private key, such that a part of it is stored in the user’s device, and another is stored in a server operated by the wallet (excuse some simplification here, please).
Whenever the user wants to make a transaction, the user’s device and the wallet server independently generate a mathematical computation using their part of the secret. Which is then combined to execute the transaction.
The actual math behind this is incredibly complex. If you’d like to attempt it, here’s a link – https://eprint.iacr.org/2020/492.pdf
How will the user experience improve?
MPC wallets ensure that your funds are still self-custodial (i.e. no other entity can transact your funds without your consent), while improving the user experience dramatically, especially on two key fronts:
In the event of a loss of the user’s device, or the need to transfer to another wallet, the user no longer needs to remember complex seed phrases.
MPC wallets like Dexfin have the capability to transfer access to your new device by verifying other attributes like your biometrics, or passwords, or a recovery email that was setup by you at the time of initial setup – a secure, and familiar experience for the users
Even in the event that a user’s device is compromised, the attacker cannot do anything with the stolen key, since they are missing the other part(s), which are stored on the wallet provider’s server
Naturally, this is a huge improvement on the status quo. So what’s stopping this technology to be the default method? What are the risks of using MPC wallets?
Unfortunately, MPC wallets in their current form are not entirely self-custodial.
MPC-wallets are self-custodial in the sense that no transaction can be authorized without your permission (unlike centralized wallets provided by exchanges). However, the wallet entity can theoretically deny you the ability to perform a transaction, by not choosing to perform the computation required at their end.
This could be deliberate at their end (due to malice, compliance to a govt order, etc.) or could be because they are offline OR because they are no longer a running entity.
In any event, your ability to access and transfer your funds becomes compromised. Some wallet providers like ZenGo have extensively detailed an escrow process to unlock your keys in the event that they are no longer a going concern.
But the other concerns still remain. This remains one of the major systemic risks to MPC wallets, and one of the key reasons why hardcore crypto owners are averse to moving to them.
That being said, in my opinion, the benefits clearly outweigh the risks for the average user. The risk of loss of private keys, or phishing in the case of self-custodial wallets is much higher, with a poorer user experience.
MPC presents itself as the first solution available to decentralize the private key by splitting it into several parts. This reduces the single point of failure all our wallets currently have, the private key.
We beleive it’s only a matter of time. MPC wallets are likely to emerge as a key bridging technology that helps web3 cross over from the early adopter to the early majority phase.