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Cryptocurrency wallets are the most straightforward option for users to engage in self-custody. However, the traditional approach of seed phrases and recovery seeds warrants improvements. ZenGo, a non-custodial Polygon wallet, offers a glimpse of what that future may look like.
Seed Phrases May Be Phased Out
Anyone who interfaced with a crypto wallet will have encountered a seed phrase or recovery seed. The string of words - often 12 or 24 words long - lets users restore their crypto wallet on a new device or within another software client. It is a big improvement over remembering the private key, a string of random letters and numbers. However, users still bear responsibility for handling their seed phrases correctly.
Unfortunately, that is often where the issue begins. Writing down the seed phrase on a piece of paper isn't a good idea. Users often leave that paper out in the open, exposing their seed phrases to anyone who passes by it. It is a terrible security practice, although a very common one. Storing the data digitally - in a text document on an internet-connected device - is an even worse idea.
Therefore, it seems evident a new solution will be introduced eventually. Industry experts, like Udi Wertheimer, have publicly talked about how seed phrases need to go. He even deems it a "cop-out by wallet developers" and remains convinced builders can develop more secure solutions. More importantly, those new solutions should not result in less convenience.
The debate regarding seed phrases is pivotal for the crypto industry. Since the collapse of FTX, more people have moved funds off centralized exchanges. It is plausible to assume the funds moved to non-custodial wallets secured by recovery seeds. Unfortunately, most people will not conduct the correct security precautions to keep that sensitive data safe. As such, wallets without seed phrases may be the next frontier.
Seedless Without Compromising Security
On paper, it sounds straightforward to come up with a replacement for a seed phrase. However, it requires a security-oriented mindset to pull this off successfully. One wallet exploring the opportunity is ZenGo, a wallet for the Polygon ecosystem. It also supports ETH, BTC, and other assets. Rather than using a seed phrase, the wallet protects user funds through advanced biometrics and MPC cryptography.
Rather than using a private key, wallet users receive mathematical shares. One share resides on the user's phone or tablet, while the other is on ZenGo's servers. That ensures there is always a recovery option without having to worry about a single point of failure.
The primary benefit of this approach is the ease of use when setting up the wallet while removing a single point of failure. Its non-seed phrase approach has proven successful, as no ZenGo wallet was breached since the company's launch in 2018.
In addition to biometrics, there is also a native Web3 firewall dubbed ClearSign. It is designed to provide more insight into what users sign off on when engaging with decentralized applications and smart contracts. That should also help prevent the signing of dangerous and malicious transactions.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.