More and more often you can hear phrases like: “only non-custodial wallets,” but what does this mean and what kind of wallets are there? Let's delve deeper into this topic and understand what benefits different types of wallets offer.
👛 Main types of wallets:
🔑 Custodial - your key is under the control of the service. Forgot your password? No problem, it can be restored. However, if the service is attacked, it will be impossible to return funds.
🔑 Non-custodial - you personally store the keys. This means that losing the key is equivalent to losing the wallet. Examples: MetaMask, Trust Wallet.
And the most popular direction now:
🔒 MPC Wallet - your key is divided into parts and stored in different locations.
Let's say you have part of the key, the other is on a secure server, and the third is with the service provider.
If you lose your share, access to the assets can still be restored. This requires either control of most of the keys or access to your biometrics, which may also be part of the key.
The main disadvantage is that it is very difficult to develop and ensure uninterrupted operation, and when it comes to full-fledged decentralized MPC Wallets, the complexity of development increases exponentially.
🔗 Difference from multi-signature wallets:
Unlike MPC, in multi-signature wallets each participant has their own unique key. This creates additional difficulties, since as the number of signatories increases, the commission also increases.
Conclusion:
MPC wallets can be an excellent choice due to their convenience and relative security.
However, in any case, cold wallets remain the standard of security. These devices are progressing well and are already being released with fairly large screens (previously there were no screens at all) and an intuitive interface.
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