Binance Web3 Wallet – A Self-Custody Wallet
Highlights
The Binance Web3 wallet is a self-custody wallet with which users have full ownership of their assets and private keys. This is in contrast to custodial wallets where a third party has control and the user must trust that centralized service.
Binance's Web3 wallet uses MPC technology, splitting access into three key fragments stored in separate locations, providing tremendous security without having to rely on the traditional seed phrase. The wallet cannot be accessed with a single key fragment. The user always has two of the three fragments.
To emphasize user control and commitment to self-custody, Binance's Web3 wallet also offers an “Emergency Export” feature that allows users to export their private keys.
Binance's Web3 wallet offers a revolutionary approach to self-custody that combines multi-party computing technology with user empowerment, thereby ensuring true ownership over crypto assets.
When managing your crypto assets, the type of wallet you choose plays a fundamental role in ensuring the security of your funds. Among the various options available, the concept of self-custody wallets stands out due to the fact that they give users full control over their own assets. Is all this still new to you? Let's look at the difference between self-custodial and custodial services as a starting point.
About crypto wallets and private keys
Self-custodial (non-custodial) wallet: In a self-custody wallet, the user owns the private keys and is therefore in full control of their funds. The user is completely responsible for managing their keys and keeping them secure. If the keys are lost or stolen, no one else can recover them and the funds would be irretrievably lost.
Custodial Wallet: In a custodial wallet, a third party (such as a cryptocurrency exchange or managed wallet service) has control of the private keys. This means that you have control of the funds stored in the wallet. Users rely on the service provider to protect funds and be able to recover them if access data such as passwords are lost. However, the downside is that your funds can be frozen or stolen if the third-party provider is hacked, bankrupt, or chooses to freeze your assets for whatever reason.
Private keys: In the world of cryptocurrencies a private key is a secret password in alphanumeric format that is used to spend digital assets or to send them to another address. It is this secret and unique key that gives you access to your crypto, just like a physical key allows you to open your house and get inside.
Having a private key is fundamentally what defines ownership over your digital currencies. If someone else has your private key, they can easily transfer your coins without your consent. Therefore, keeping your private keys secure and confidential is essential.
Private keys are long, complex, and difficult to memorize. Additionally, if you lose them, you permanently lose access to your digital assets. Wallets typically do not provide direct access to keys for security reasons. Instead, they provide you with a “seed phrase,” a fixed list of 12 or 24 words that acts as a human-readable backup, the purpose of which is to restore and protect your private keys so you can access your cryptocurrencies.
Binance Web3 Wallet: We adopt self-custody
With the Binance Web3 wallet, you truly have ownership of your assets. This wallet enhances your capabilities with a self-custody model, therefore ensuring that only you have exclusive access to your funds and full control of your assets. One of the most important things to consider about the Binance Web3 wallet is that it uses multi-party computing (MPC) technology. Simply put, it means you can enjoy a self-custody wallet experience without having to remember a seed phrase and still having full and unlimited control of your own assets.
How does this technology work? You can explore our blog about MPC. But in terms of self-custody, the thing to remember is that the Binance Web3 wallet is protected by three key fragments and a recovery password that only the user knows. These three key fragments are generated when you create the wallet and are stored in different locations for greater security:
Fragment 1: Secured by Binance
Snippet 2: Stored on your device
Fragment 3: It is encrypted by the recovery password you entered and backed up by a backup that is saved in your personal cloud storage space (iCloud or Google Drive).
To access your Web3 wallet, you must have at least two wallet key fragments. Binance only has a key fragment. So, there is no way for Binance to access your wallet without your permission. But what this means is that if you lose your device (and the key fragment stored on it), you can restore your Web3 wallet and its assets thanks to the key fragment in your personal cloud storage space and the key fragment protected by Binance.
However, keep in mind that only you have access to two of the three key fragments, so you are ultimately also responsible for protecting the assets and access to your wallet. If you forget your recovery password or lose access to your cloud storage space AND lose your device or delete the Binance app, you will not be able to access your Web3 wallet and Binance will not be able to recover it for you. There is no centralized service that can reset your password or recover any of the key fragments you were guarding. This is a self-custody wallet.
How to export your keys: a testimony to self-custody
A typical distinguishing feature of self-custody is the ability to export the user's private keys. With Binance's Web3 wallet, users not only have full control of their assets, but they also have the option to export their private keys in case they wish to migrate them elsewhere.
Traditional wallets often employ seed phrases, mnemonic phrases designed to restore access to all of the user's keys. Unlike this, Binance's Web3 wallet uses multi-party computing (MPC) to promote optimized security. With this setup, key fragments are split and stored in different locations, negating the need for a seed phrase.
Introducing the “Emergency Export” feature, which is designed to give users a way to immediately export their private keys should they wish to do so, for any reason. It is a testament to Binance's commitment to ensuring Web3 wallet users always remain in control.
However, please note that once the “Emergency Export” feature is activated and the private keys are exported, the Web3 wallet can no longer be accessed. It is a definitive measure in accordance with the spirit of self-custody of the wallet.
Let's address concerns about app access
We recognize that as the Web3 wallet is intertwined with the user interface (UI) of the Binance app, some users may be concerned that in some unprecedented situation where access to the Binance app may be obstructed, the inability to interact then with the UI and consequently your Web3 wallet, you could effectively override your self-custody.
We are currently working on ensuring that the “Emergency Export” feature is always available, regardless of the status of the Binance app. At the heart of self-custody lies an undeniable truth: the user owns the private keys. That's why we are committed to always delivering for Binance Web3 wallet users.
Conclusions
The concept of self-custody, as illustrated by Binance's Web3 wallet, represents the essence of blockchain technology and cryptocurrencies: absolute control and ownership over your own assets. Recognizing the importance of private keys and the critical role they play in the security of digital assets, Binance's Web3 wallet offers a unique and innovative approach to self-custody using multi-party computing (MPC) technology.
The addition of features such as “Emergency Export” supports Binance's commitment to user autonomy and control. While it is important to recognize the inherent responsibilities of managing your own assets, Binance is taking steps to address potential concerns and optimize the entire user experience.
This combination of innovation, security and user empowerment marks a significant step forward in the evolution of crypto wallets. Web3 is easier with Binance.
Further reading
What is Binance Web3 wallet and how does it work?
How to manage my Binance Web3 wallet
Why do I need to backup my Binance Web3 wallet and how do I do it?
Risk warning: Investment in crypto assets is not regulated, may not be suitable for retail investors and the entire amount invested may be lost. It is important to read and understand the risks of this investment, which are explained in detail at: www.binance.com/es/risk-warning