- 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.
Self-custody wallets, especially hardware wallets, have grown popular as third-party risks become apparent, as in the case of FTX implosion.
Crypto Twitter starkly reminds users of these risks through a catchy phrase,
“Not your keys, not your crypto.”
However, users can be the biggest risk factor to hardware wallets. They can easily forget their stashed seed or, worse, have it stolen.
Ethereum founder Buterin tips “multi-sig” to solve wallet risk
But Ethereum [ETH] Vitalik Buterin has proposed a solution to this hardware wallet problem and noted,
“The above is why I use a multisig (Safe) for >90% of my personal funds. M-of-N, some keys held by you (but not enough to block recovery), the rest held by other people you trust. Don’t reveal who those other people are, even to each other. Decentralize your own security.”
“Multi-sig” refers to having multiple signatories on a wallet to reduce a single point of failure.
Alternatively, one can use Shamir backup, which typically splits the recovery seed phrase into multiple pieces (shares) across devices.
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,
“It depends who’s storing the shamir shares! I think the questions, (i) “trust your other devices” vs “trust your friends,” (ii) shamir vs multisig, are orthogonal.”
The market for hardware wallets is set to grow from $0.35 billion in 2024 to $1.56 billion by 2029.
The growth is likely to come with the above challenges, but Shamir or “multi-sig” can be possible solutions based on the user’s risk profile.
