For years, Bitcoiners have repeated the mantra \u201cbe your own bank.\u201d But in truth, storing any type of crypto in a wallet has been a lot closer to stuffing cash under your mattress than to a complex financial institution like a bank.<\/p>\n
Admittedly, it\u2019s an improvement in that crypto can be transferred across the globe in minutes and it\u2019s secured with cryptography \u2014 but it\u2019s also a lot less user-friendly than a bank and doesn\u2019t offer anywhere near as many features.\u00a0<\/p>\n
Your crypto could be stolen in a $5 wrench attack<\/a>. You could lose the seed phrase and your funds forever. And that\u2019s if you were technically minded enough to even figure out the complicated process of setting up a wallet in the first place.<\/p>\n That\u2019s all set to change with the surprise announcement at WalletCon in Denver this week of \u201csmart accounts,\u201d also known as \u201caccount abstraction,\u201d on Ethereum \u2014 and every other chain compatible with the Ethereum Virtual Machine (the EVM is the software responsible for executing Ethereum-based smart contracts).<\/p>\n Chains that can now take advantage of smart accounts include Polygon, Optimism, Arbitrum, BNB Smart Chain, Avalanche and Gnosis Chain.<\/p>\n Years in the making, the new ERC-4337 standard transforms a crypto wallet into something with all the features of a real bank.<\/p>\n \u201cIt gives you the same features a bank would without having to trust a bank,\u201d says Ethereum Foundation security researcher Yoav Weiss, who was one of the co-authors of the Ethereum Improvement Proposal (EIP) alongside Vitalik Buterin.<\/p>\n \u201cAccount abstraction is a way to appeal to the next billion users.\u201d<\/p>\n<\/blockquote>\n The benefits include two-factor authentication, signing transactions on your phone, the setting of monthly spending limits on an account, the use of session keys to play blockchain games without constantly having to approve transactions, decentralized recovery of wallets; smart accounts can be configured to autopay bills and subscriptions \u2014 the list goes on.<\/p>\n Ledger co-founder Nicolas Bacca tells Magazine he\u2019s hugely impressed with the technology\u2019s potential.<\/p>\n \u201cAccount abstraction will completely change the crypto user experience,\u201d he says.\u00a0<\/p>\n Account abstraction is a complicated technical term for something that is actually incredibly user-friendly. Weiss and zkSync hope to replace it with the more descriptive term \u201csmart accounts.\u201d<\/p>\n \u201cAccount abstraction is a confusing term,\u201d says Weiss. \u201cThe accounts are abstracted from the network; they are not abstracted from the user. The user is using a very concrete wallet that does very specific things. From the user\u2019s perspective, it\u2019s not account abstraction \u2014 it\u2019s more like using a smart account.\u201d<\/p>\n Alex Jupiter, senior product manager at MetaMask, says \u201caccount abstraction\u201d means different things to different developers.<\/p>\n In part, that\u2019s due to the fact that non-EVM scaling solutions, including StarkWare and zkSync, have implemented a modified version of ERC-4337 in the protocol itself, while Ethereum implements the standard on top of it.<\/p>\n \u201cI would\u2019t say Ethereum came up with a workaround that\u2019s not quite as good,\u201d Weiss explains. \u201cWe came up with a standard that can work everywhere, focusing on interoperability and defragmentation, and it can be implemented more efficiently at the protocol level, for example, by rollups.\u201d<\/p>\n A variety of EIPs to add smart accounts to the protocol have been suggested but would have required a hard fork and did not get enough support, as they\u2019d take attention away from more important upgrades, such as the Merge.<\/p>\n The native implementations upgrade all user accounts to smart accounts, while Ethereum\u2019s new standard requires users to set up a new account. Weiss explains there will inevitably be a hard fork in future to enable the upgrading of all accounts, but \u201cit\u2019ll take a long time to get there.\u201d<\/p>\n One of the biggest benefits for adoption is that it allows new users to onboard into the decentralized world of crypto without ever having to worry about complicated seed phrases or understand the technical process of setting up a wallet.<\/p>\n They can simply open a smart account via a smartphone app using a fingerprint or face scanner.\u00a0<\/p>\n While there are plenty of crypto wallets currently available as smartphone apps, they come with numerous security risks and are unsuitable for holding larger amounts of cryptocurrency due to the risk of hacks. But because smart accounts enable the cryptographic keys to be stored on the phone\u2019s hardware security module, phone wallets can now be almost as safe as a hardware wallet.<\/p>\n Magazine tries out the onboarding process for noobs at StarkWare Sessions in Tel Aviv, Israel where gaming wallet Cartridge is handing out limited edition Briq NFTs.<\/p>\n The whole process takes less than 30 seconds and is completely intuitive. Users scan a QR code, choose a username, and then create a passkey using the phone\u2019s fingerprint scanner.<\/p>\n Existing crypto users will need to reconceptualize what they thought a crypto wallet was and how to access it. The noncustodial Cartridge Controller is actually a web-based wallet that interacts with StarkNet. Instead of private keys, it makes use of Android or Apple \u201cPasskeys,\u201d which are both based on the WebAuthn standard, an intiative to standardize user authentication for web apps using public-key crytography.\u00a0<\/p>\n While a web wallet sounds like a scary proposition to long-term crypto users, Bacca is impressed with Cartridge\u2019s implementation and says Ledger is building a similar web-based wallet that he says is secure thanks to WebAuthn.<\/p>\n There are a couple of catches to using a smartphone as a hardware wallet. The larger screen on a smartphone still presents a security risk, as it can be hacked to trick users into approving transactions.<\/p>\n However, this risk can be mitigated, as smart accounts enable users to set permissions requiring two-factor authentication for higher value transactions (using a hardware wallet, for example) or to set a daily, monthly or yearly spending limit from the account.<\/p>\n Bacca says Ledger is experimenting with this functionality now. \u201cSo, for example, you could use your phone when you only want to do a small purchase or you could use your hardware wallet when you want to do a bigger purchase, and this can be scripted in the account,\u201d he says. \u201cWe are prototyping a web application for that.\u201d<\/p>\n Read also<\/p>\n Socios boss\u2019 goal? To knock crypto out of the park<\/p>\n <\/a>\n <\/div>\n State of Play: India\u2019s Cryptocurrency Industry Prepares For A Billion Users<\/p>\n <\/a>\n <\/div>\n<\/div>\n<\/div>\n A bigger problem for using a smartphone wallet on Ethereum is that the security module uses a different cryptographic signing system (elliptic curve) than crypto. With smart accounts, the two systems can finally talk to each other, but it requires a lot of work and a lot of gas.<\/p>\n Motty Lavie, founder of StarkNet\u2019s smartphone-based Braavos Wallet, explains it takes 240,000 computational steps to take advantage of the smartphone security module:<\/p>\n \u201cOn Ethereum, to implement that, each transaction would be very, very costly. On StarkNet, this is a marginal cost that\u2019ll add a few cents to the transaction, which makes it viable.\u201d<\/p>\n<\/blockquote>\n Ludicrously high gas fees are a problem unique to Ethereum, however, and gas costs are more than low enough on all the other EVM blockchains and layer 2s for smartphone wallets to work just fine. Various teams are also working on gas-optimized versions of the process and, longer term, a precompile could be added to Ethereum, making the process a cheap EVM operation rather than a smart contract. (A precompiled contract carries out common cryptographic functions without using a lot of bandwidth.)<\/p>\n \u201cWhen these wallets gain traction and users get used to this great usability, it\u2019ll be easier to promote this change in Ethereum itself,\u201d says Weiss. \u201cIf we can add this precompile, it\u2019ll be a game-changer for the ecosystem.\u201d<\/p>\n For crypto users who don\u2019t trust the cloud, smart accounts also provide other recovery options than a seed phrase.<\/p>\n If a user loses their phone, time-locked social recovery means a group of trusted friends or even a commercial service can help them recover it without putting the enclosed funds at risk.<\/p>\n \u201cYou don\u2019t ever expect to lose access [to a bank account] because if you lose your password you can always call your bank, they will verify your identity and reset your password,\u201d Weiss explains. <\/p>\n \u201cSo, you can actually use a recovery service that lets you reset the password for your mobile phone \u2014 your wallet \u2014 but they cannot steal your wallet; they can only help you recover it.\u201d<\/p>\n Braavos employs a version of a time-locked recovery process that involves creating a seed phrase. Unlike normal seed phrases, this one can only put in a request to regain access to the account after four days.<\/p>\n \u201cNow the benefit here is that if your phone indeed gets lost or wrecked or whatever, then, you can get control on your account back in four days.\u201d\u00a0<\/p>\n<\/blockquote>\n \u201cBut if an attacker stole your seed, then you would automatically get notified that someone has got control over your account,\u201d he adds, noting that\u2019s plenty of time to withdraw the funds before the hacker can get them.<\/p>\n Braavos is also working toward using zero-knowledge proofs to put the seed phrase \u201cunder the hood\u201d so that the user can just interact with a decentralized \u201cforgot password\u201d-style prompt.<\/p>\n \u201cI think that will be a major move in terms of UX [user experience],\u201d he says.<\/p>\n Read also<\/p>\n What it\u2019s actually like to use Bitcoin in El Salvador<\/p>\n <\/a>\n <\/div>\n Inside the Iranian Bitcoin mining industry<\/p>\n <\/a>\n <\/div>\n<\/div>\n<\/div>\n Bacca explains that Ledger is already working along with Argent and Cartridge on \u201cplugins\u201d that enable gamers in StarkWare to set a session key, enabling numerous low-value transactions to go through automatically so they don\u2019t have to painstakingly approve each one.<\/p>\n \u201cYou could load a small piece of code to your account so it will modify the way it\u2019s acting with a specific game. So, you could say, \u2018If I am going to play that game\u2026\u2019 actions can be signed automatically for one hour,\u201d he says.<\/p>\n \u201cThat\u2019s why I\u2019m thinking that account abstraction will completely change the crypto user experience.\u201d<\/p>\n As an added bonus, smart accounts mean the game developer could decide to become the \u201cpaymaster\u201d and cover the cost of the transaction fees to encourage use.<\/p>\n Transactions can also be bundled together to save on gas fees, explains Jupiter. \u201cLike a shopping cart scenario, I\u2019m going to reserve these 10 items and then pay for them all at once,\u201d he says.<\/p>\n MetaMask is building a new addition called Snaps <\/a>that will crowdsource development of new features for the wallet. This will likely enable innovative uses of smart accounts that nobody\u2019s even thought of yet. A Snap that enables smart accounts was built at ETH India where it won \u201cBest ERC-4337 Tool.\u201d\u00a0<\/p>\n Back in December, Visa\u2019s crypto research team published a paper<\/a> demonstrating how smart accounts on StarkWare can be used to pay \u0430 mortgage, TV subscription and utility bills automatically from self-custodial crypto wallets.<\/p>\n They gave a hypothetical example of someone who wants to go on holidays and have their bills paid automatically from their crypto wallet, after they get paid in two weeks\u2019 time.<\/p>\n\n
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What does account abstraction mean?<\/strong><\/h2>\n
What are the benefits of smart accounts?<\/strong><\/h2>\n
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Using a smartphone as a hardware wallet<\/h2>\n
\n Columns<\/span><\/p>\n
\n Features<\/span><\/p>\n\n
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How to recover your account <\/h2>\n
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\n Features<\/span><\/p>\n
\n Features<\/span><\/p>\nBlockchain gaming smart <\/strong>wallet<\/h2>\n
Smart accounts make crypto subscriptions possible<\/strong><\/h2>\n
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