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Semi-custodial wallets which make up the subcategory of self-custodial ones, are ideal for web3 newcomers. They manage to combine the security of non-custodial wallets with the user-friendliness of custodial ones. If you would like to start your journeys in web3 and make sure that your funds are securely stored, you should look in the direction of semi-custodial wallets.
Please, check out our previous post to find out what’s the difference between custodial, non-custodial, and semi-custodial crypto wallets.
What are the benefits of self-custodial wallets?
1. Security
Self-custodial crypto wallet providers store on their side only one of the two secrets that are used to activate the private key to operate the wallet. It means that a self-custodial wallet has an extra protection layer because there is a third party to guard the access to the digital assets. Nevertheless, the service alone cannot access the funds or set any limitations on transactions. Any activity has to be confirmed with the help of the shard (secret) stored on the user's device.
2. Convenience
Self-custodial crypto wallets offer a short learning curve to let users easily operate them. They are suitable for different kinds of users. MPC takes off various complexities concerning the wallet operation and makes wallets very convenient.
3. User-friendly interface
Users can easily test how self-custodial wallets operate. Try Spatium crypto wallet for free and witness how intuit and easy to navigate the app’s interface is.
4. Biometric backup
Some self-custodial crypto wallets, like Zengo, use biometric backup to restore access to the wallet. Also, the biometric backup could be applied to install the wallet account on the user's other devices.
5. Cloud backup
Instead of biometric backup, or sometimes, in addition to it, cloud backup is performed. Cloud backup helps to restore access to the wallet account if the device is lost or stolen. Spatium Feeless Bitcoin wallet offers cloud back-up that can be performed through Google, iCloud, or QR code activation. Read more about it in Spatium cloud backup recommendations.
6. Flexibility
Self-custodial crypto wallets allow users to make all important financial decisions independently while covering their backs in terms of safety and protection. As an analogy, we can use the work of a personal assistant who is there to help and even do some work while the full ownership of the wallet is still solely in the hands of a user.
Spatium Feeless Bitcoin crypto wallet is a self-custodial wallet powered by MPC technology. It’s secure and easy to operate. Spatium wallet is a perfect match for new users who would like to join web3 and reap its benefits as soon as possible. Also, crypto-savvies will definitely find it convenient and cost-efficient due to our Feeless feature allowing users to pay network fees in the crypto they send, not in the native crypto of the blockchain (currently available for USDC on Ethereum. More chains and tokens will be added soon).
Spatium Bitcoin MPC wallet is free to download. It’s available on Android and iOS devices.
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Probably you already know that web3 hosts different types of crypto wallets. There are cold and hot wallets, mobile and desktop, and external and smart contract wallets. But the most important parameter to classify the wallet is the type of private key storage. Based on who is in charge of the key safety, you will face different financial risks and benefits.
In this post, we would like to discuss custodial and self-custodial wallets. Also, we would like to answer the question of why self-custodial wallets are getting popular.
What are custody and self-custody?
The two big types of wallets based on the ownership of the private key are custodial and self-custodial (which include non-custodial and semi-custodial) wallets. Self-custodial wallets give full control over crypto to users. Either a private key or a part of the private key is stored on the user's device which makes users full custodians of their wallets. Custodial wallets store wallet private keys on third-party servers, users don’t have access to them.
Custodial crypto wallets
Custodial wallets are hosted on a website or come as an app. The most important thing to understand is that the private key is owned by a third party, a provider of crypto wallet services. Whoever owns the key, controls the wallet.
In the majority of cases, crypto wallet service providers are crypto exchanges. If you would like to come to a crypto exchange and get crypto, sell it, trade, or store it, you should have a crypto wallet. Crypto exchanges are happy to provide users with the custodial one.
Of course, such wallets are user-friendly and convenient for users with different technical backgrounds but every operation they want to perform requires approval from the service. There are limits set to the funds to withdraw. Also, the majority of custodial crypto exchanges and wallet providers require you to go through Know Your Customer (KYC) verification.
So, just to be clear: custodial wallet providers hold your private keys and may have access to the wallets for security reasons. They can freeze or limit your access to digital assets. And, most importantly in case of a hack attack, service providers are not responsible for the keys’ loss. If a custodial wallet provider gets compromised, you lose all your assets and this cannot be restored.
Self-custodial crypto wallets
Non-custodial crypto wallets
Non-custodial wallets are a group of wallets, which could be hot or cold, desktop or mobile apps, etc. But the one thing they have in common is that users of such wallets don’t need any third-party approval to perform transactions. If you operate a non-custodial crypto wallet you have full custody over the private key.
At the same time, financial freedom comes with a huge responsibility. You have to protect your private keys. They cannot be stolen, lost, or compromised in any way, because the access to the funds will be lost forever. That’s why private keys are the target of malicious hacker attacks. In addition to all that, non-custodial wallets are usually not convenient to operate, especially for users who are not tech-savvy.
Semi-custodial crypto wallets
A semi-custodial crypto wallet is a wallet that takes the best features out of custodial and non-custodial wallets. The key concept of a semi-custodial crypto wallet is that the authorization for transaction signing is shared among several parties (two or more). At the same time, users of semi-custodial wallets have full ownership over their private keys, which makes them self-custodial.
The good question is how this can be possible. When advanced mathematics and cryptography are in action, everything is possible. Multi-party Computation (MPC) is responsible for splitting a wallet's private key into several secrets (shards) and storing them in different places.
We can describe the process of tackling a wallet's private key as follows: there are two (or more) encrypted pieces of a key. When you would like to sign a transaction these pieces are activated and build a phantom private key. With the help of this phantom key, a transaction is signed.
It means that you don’t have to face the reality of self-protecting your private key and at the same time, if the service gets compromised the hackers will get access only to a part of the key, which is not enough to get access to your digital assets.
Spatium crypto wallet is a self-custodial wallet powered by MPC technology. It’s convenient to use and highly secure. Spatium wallet is ideal for users who are just making their first steps in the crypto world. At the same time, advanced web3 users praise Spatium wallet for its unprecedented level of security and funds protection.
Spatium Feeless Bitcoin MPC wallet is easy to use and free to download. It’s available on Android and iOS devices.
In addition to convenience, it brings a competitive edge by offering feeless transactions.
Try Spatium Feeless Bitcoin Wallet and the feature allowing you to pay a network fee in the currency you send instead of native chain tokens (currently available for USDC on Ethereum. More chains and tokens will be added soon).
Keep a close eye on Spatium Feeless Bitcoin wallet which is building DeFi on Bitcoin and actively working toward the introduction of feeless crypto transactions and cheapest ever peer-to-peer crypto swaps without escrow.
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Taking full responsibility for your finances and figuring out how to make transactions on the blockchain is not easy. It takes self-education and the learning curve may take longer than expected. Moreover, knowing things in theory doesn’t automatically protect you from making mistakes. When theory blends with practice anything may happen. Our post is here to provide you with helpful information concerning blockchain fees, their origin, and what types of fees exist so you are equipped with the required knowledge to make the right financial decisions on web3.
What are Cryptocurrency Fees?
Everything that is connected with paying for extra services you didn’t know about causes a lot of stumbling. Blockchain transactions require various fees when users want to sell, buy, send, or swap cryptocurrencies. Let’s discuss why you should pay these fees.
Network Fees
If we compare web3 with the traditional banking system, blockchain reality seems more complicated. Banks introduce fees for bank customers if they want to exchange currencies, send or receive money. However, there is no analog in the traditional financial system to cryptocurrency network fees. This is a unique concept that exists only in the world of web3. To discuss blockchain fees we have to say a word or two about how blockchains function.
For blockchains to stay decentralized they require nodes run by validators (miners) who verify blockchain transactions and write them into the blockchain.
If you want to send a transaction to the blockchain, you are required to pay network fees to validators. Based on these fees, miners (validators) include the transaction into the block on the blockchain.
Why Can Network Fees Change?
It’s important to keep in mind that each blockchain has different properties. For example, the Bitcoin blockchain has each new block added every 10 minutes, while the Dogecoin blockchain adds every new block once a minute. Blocks on various blockchains differ in size, which means that only a certain amount of transactions can be written there. This means that blockchain fees differ from chain to chain.
To understand how network fees are applied, we can bring an example of a hotel service. A waiter is bringing breakfasts to hotel rooms. Several clients are waiting in different rooms, and the number of plates a waiter can take is limited but you can tip a waiter and speed up the service. It means that the people who can tip a waiter with a bigger sum than the rest will get their breakfast faster. Those who pay less money, get food later.
Something similar is happening in web3. Cryptocurrency transaction fees are a function of demand and supply. The more transactions required to be written in a block, the higher the fees are.
Platform Fees
Platform and trading fees can be compared to banking fees charged for sending, receiving, or exchanging funds. Usually, these fees are applied to users of custodial crypto wallets which are provided by centralized crypto exchanges. When users don’t owe their wallets they cannot control what the fees are. Sometimes, centralized exchanges don’t even show a transparent view of what the fee breakdown is.
Types of Platform Fees
- Processing fees are applied when you buy crypto with the help of a credit card. Before finalizing the transaction, a summary is shown with the full fee breakdown.
- Off-ramp/on-ramp fees are applied when you keep sending funds between the bank account and the crypto wallet. Exchanges provide you with ways to get money on and off the crypto ecosystem and charge extra fees for that.
- Withdrawal fees are applied when you would like to withdraw digital assets from the platform and send them to the crypto wallet. This is a tricky part because exchanges can charge the highest fees in this case. It’s a good idea to double-check the withdrawal fees before finalizing the transaction.
- Trading fees are applied when you swap cryptocurrencies. Depending on the exchange, the fees might differ. Usually, they could be less than 1 percent. The bigger the sum for a transaction, the higher the fees are.
Summary
Blockchain transactions could be stumbling for unprepared users in terms of various fees applied. It’s important to understand the nature of cryptocurrency fees and find better options to cut them. One of the ways is MPC-powered wallets because they minimize the amount of interaction between the wallet and the blockchain protocol. MPC cryptography takes place off-chain and thus, helps you to save on blockchain transactions.
Get the Spatium Wallet App and enjoy how user-friendly and convenient it is. Protect your crypto assets with MPC cryptography and save on fees while sending transactions to blockchains. Moreover, soon Spatium will enable peer-to-peer crypto swaps when you don’t need to go to centralized exchanges to swap cryptocurrencies. Stay tuned!
Spatium Bitcoin MPC wallet is easy to use and free to download. It’s available on Android and iOS devices.
Try Spatium Feeless Bitcoin Wallet and the feature allowing you to pay a network fee in currency you send instead of native chain tokens (currently available for USDC on Ethereum. More chains and tokens will be added soon).
Keep a close eye on Spatium Feeless Bitcoin wallet which is building DeFi on Bitcoin and actively working toward the introduction of feeless crypto transactions and cheapest ever peer-to-peer crypto swaps without escrow.
Follow us on social platforms: X, LinkedIn, Discord, and Telegram.
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For the last decade, blockchain technology has kept changing our view about finances, banks, financial institutions, and our role in it. Blockchain transformed the concept of owning money when banks or other financial institutions are not involved and financial operations are taking place only between users. Web3 users can get access to their online wallets by applying mathematics and cryptography, as well as send and receive assets anonymously. Right now over 1000 blockchains are building the world of web3. Let’s discuss what is a blockchain protocol and what are the principles blockchain protocols operate on.
What is a Protocol?
Protocols are not something new in the modern world of technology. Each computer operates multiple protocols to be able to exchange data safely. Protocols came into existence more than 30 years ago. The well-known hypertext transfer protocol defines how to structure online packets and what type of data can be placed there. Other examples of protocols could be HTTP, SSH, FTP, etc.
What is a Blockchain Protocol?
The blockchain protocol is the essence and the heart of the web3 ecosystem. Similar to standard computing protocols, blockchain protocols provide algorithms, rules, and guidelines defining and controlling how the blockchain network is functioning. They enable blockchain nodes (computers building the network) to exchange data that can be read and understood across all web3. One more very important function of blockchain protocols is to safeguard participants of web3 interaction from malicious players, who can cause damage.
4 Principles Blockchain Protocols Address
1. Decentralization
Blockchain technology, or distributed ledger was created having no central authority in mind. It doesn’t have a Single Point of Failure (SPOF) because it does not have centralized server management. People host blockchain nodes on their computers and if at least one computer node is working, the blockchain can be accessed from anywhere around the world. At the same time, having no central authority means that protocols should authorize the network transactions on their own.
2. Security
As we have mentioned before there is no central authority that’s why blockchain protocols are the ones that safeguard the security of the web3 crypto world. Keeping in mind the fact that web3 involves cryptocurrency transfers, blockchain protocols provide the rules for data structure and secure data transfer.
3. Scalability
Blockchain protocols are supposed to be scalable, which means that they should allow an increase in transactions. First blockchains have some transaction limitations: set number of transactions in a defined time period. Nowadays, modern blockchains are more flexible. There are various ways to increase the scalability of blockchain protocols: add new nodes, increase the size of the block, etc.
4. Consistency
Based on the fact that there is no central authority regulating the consistency and automated update of cryptocurrency networks, blockchain protocols are the ones in charge of it. The creation of every new block should be written into the database and synchronized with all computers that host the nodes of a blockchain.
Summing Up
The importance of blockchain protocols cannot be undermined. They build the structure of the web3 ecosystem and allow safe and protected cryptocurrency transfers. To be able to start your journey in web3, make sure you have a secure and easy-to-use crypto wallet to protect your digital assets.
Stay protected in web3 with Spatium Feeless Bitcoin Wallet. It’s easy to operate and securely to use. Spatium Feeless Bitcoin wallet is free to download. It’s available on Android and iOS devices. Visit our website to learn more about the wallet. Get it on your phone, test it, and enjoy your financial freedom!
Try Spatium Feeless Bitcoin Wallet and the feature allowing you to pay a network fee in currency you send instead of native chain tokens (currently available for USDC on Ethereum. More chains and tokens will be added soon).
Keep a close eye on Spatium Feeless Bitcoin wallet which is building DeFi on Bitcoin and actively working toward the introduction of feeless crypto transactions and cheapest ever peer-to-peer crypto swaps without escrow.
Follow us on social platforms: X, LinkedIn, Discord, and Telegram.
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Crypto wallet backup brings an additional layer of protection to users’ digital assets. Wallet backup is important if the device with the crypto wallet is stolen or lost. Also, there could be technical issues or computer failure and in case there is no backup, the access to the crypto wallet account is lost forever. Another growing problem is that non-custodial crypto wallet holders have a tendency to forget passwords to retrieve their private keys. Nowadays, it’s believed that around $120 billion in crypto is in stranded or lost wallets.
Backup helps to import the wallet, install the account on another device and restore the password to it.
Usually, wallet backup doesn’t take much time, it’s secure and simple. In addition, in the case of the Spatium wallet, crypto wallet backup takes the burden of managing and storing private keys.
Types of crypto wallet backup
Recovery phrase
The recovery phrase is generated at the moment when the user sets up a wallet. It could be 12 words either with or without spaces. Users should be attentive to copy the recovery phrase correctly and not show this set of words to anyone.
Biometric recovery
Biometric backup is an anonymous scanning of a user’s face when mathematical data received from facial biometrics is used to authenticate the wallet owner. The biometric scanning is performed privately and locally. There is no need to store a recovery password, biometric facial scanning guarantees that the same person is accessing the wallet as well as trying to restore the access if required.
Cloud recovery
Cloud backup applies to self-custodial wallets, when there is a third party, helping users communicate with blockchain ecosystems. This is a wallet service provider. As soon as you enable cloud backup in your wallet account, you increase the level of your digital asset protection tenfold. Wallet cloud backup helps you to retrieve the crypto in case of emergency.
Spatium Feeless Bitcoin Wallet cloud backup options
Spatium provides three main options for a cloud backup. These are iCloud backup, Google backup, and QR-code disaster recovery. To get to know more about how to set up Spatium wallet cloud backup, please, read our post.
Conclusion
Though each type of wallet recovery has its advantages and disadvantages, the most important point is that it gives wallet owners a piece of mind providing better wallet account protection.
Spatium Feeless Bitcoin Wallet provides users with cloud backup recovery in addition to MPC cryptography which protects digital assets and makes the wallet as user-friendly as it can be.
Stay protected in web3 with Spatium Feeless Bitcoin Wallet. It’s easy to operate and securely to use. Spatium Bitcoin MPC wallet is easy to use and free to download. It’s available on Android and iOS devices.
Try Spatium Feeless Bitcoin Wallet and the feature allowing you to pay network fee in currency you send instead of native chain tokens (currently available for USDC on Ethereum. More chains and tokens will be added soon).
Keep a close eye on Spatium Feeless Bitcoin wallet which is building DeFi on Bitcoin and actively working toward the introduction of feeless crypto transactions and cheapest ever peer-to-peer crypto swaps without escrow.
Follow us on social platforms: X, LinkedIn, Discord, and Telegram.
Both multi-signature (multisig) and multi-party computation (MPC) wallets provide an additional security layer to your wallet account. If you have a multisig or an MPC wallet, the responsibility for storing and keeping your wallet’s private keys is shared with some other party. In the case of MPC wallets, it’s a wallet service provider. In the case of multisig wallets, it’s other wallet holders. Let’s discuss what is a multisig wallet and what are the differences between MPC and multisig wallets.
What is multisig?
A multisig wallet is crypto software used to store digital assets and provide shared access to funds. This type of wallet is more secure than traditional wallets because it involves several people/entities applying their private keys and signing a transaction. All wallet owners, which could be as many as required, agree on the financial operation and approve the transaction. If someone doesn’t provide their private key to sign a transaction, the operation won’t be fulfilled. Such a way to store digital assets helps to share control over them and at the same time, protect the wallet account from hacking.
What is MPC?
MPC technology is used to facilitate crypto wallet-user interaction and at the same time secure the assets. MPC takes the crypto wallet private key application off the picture and substitutes it with shards. These could be 2 or more shards, based on the wallet settings. A transaction is only signed when both shards are activated at the same time.
Differences between MPC and multisig wallets
Taking into consideration that both MPC and multisig wallets provide shared control over private key management, we can go deeper into the features each type of wallet has. The most important point is to stress that multisig wallets are mostly used by companies and enterprises, they are not very convenient for ordinary users.
On-chain/off-chain transactions
Transaction signing in multisig wallets takes place on-chain, and every signature (blockchain address) is seen by everyone. MPC wallet provides signing operations (activation of shards) off-chain and only then sends a transaction to the blockchain.
Key recover
MPC wallets offer private key recovery mechanisms, while multisig wallets provide no private key recovery.
Transaction speed
MPC wallets provide near-instant transactions because the user-server communication takes place off-chain. Multisig wallets have to send the data about each private key activation to the blockchain. Also, the waiting time is longer because you have to wait for all entities to sign a transaction.
Gas fees
Finally, MPC wallet transactions contain no or very small gas fees, while multisig wallets charge gas fees for each private key activation transaction.
Conclusion
The two types of wallets discussed in the post have one goal: to provide more protection to wallet accounts and help you not to be easy targets for hackers and scammers. The difference is in the technologies behind it. While multisig wallets prefer to go with multiple signatures (private key applications) to sign a transaction, MPC wallet splits the private key into two or more shards thus, the private key is never revealed.
Stay protected in web3 with Spatium Feeless Bitcoin Wallet. It’s easy to operate and securely to use. Spatium Bitcoin MPC wallet is easy to use and free to download. It’s available on Android and iOS devices.
In addition to convenience and safety, it brings a competitive edge by offering feeless transactions.
Try Spatium Feeless Bitcoin Wallet and the feature allowing you to pay network fee in currency you send instead of native chain tokens (currently available for USDC on Ethereum. More chains and tokens will be added soon).
Keep a close eye on Spatium Feeless Bitcoin wallet which is building DeFi on Bitcoin and actively working toward the introduction of feeless crypto transactions and cheapest ever peer-to-peer crypto swaps without escrow.
Follow us on social platforms: X, LinkedIn, Discord, and Telegram.
