Thanks to technology, living has never been easier than it is today.
With tech continuing to supplement the way we operate important tasks in our day-to-day lives, increased tech dependency for important things like our finances has generated a need for more complex routes of access to digital accounts, like long-winded passwords and authenticator apps. While this can significantly reduce risk of exploitation, it also often results in increased accessibility issues for users.
Forgetting passwords can be a headache, but with most commonly-used products today, centrally-operated Web2 applications can easily allow users to resolve log-in dilemmas through a number of recovery measures, like two-factor authentication and helpdesk operators.
While, in the Web2 world, being a consumer may never have been easier than it is today, that is not true for Web3. The current Web3 user experience is like going back to a time when only really hard-core, tech-savvy users could use the internet. It makes anyone looking to make the transition to decentralized finance think twice before even giving it a try – and that’s a big problem. As soon as a user creates an account on a decentralized platform today, years of advancement in user experience across the Web2 space simply vanishes, when it comes to account access and recovery.
Seed Phrases Will Never Enable Mass Adoption
One of the biggest advantages of decentralized finance (DeFi) is the notion of ‘self-custody’ for account management, which, on most existing Web3 networks – like Ethereum – comes in the form of private keys and public keys. These private keys are most often manually backed up using something called a “seed phrase”. While seed phrases are a step in the right direction for self-custody and decentralizing the future financial landscape, a huge downfall tied to seed phrases is the incredibly poor user experience they create.
Today, when most users set up a new wallet, they’re supplied with a ‘seed phrase’ – a randomly generated list of words that can be used to recover access to their account should the need ever arise. To ensure users have sole ownership of their account, seed phrases play a fundamental role in Web3. The problem though, is that they’re really, *really* impractical.
Because a seed phrase can be used to gain complete control of an account, it’s highly recommended that users store a backup copy of their seed phrases offline (to avoid hacks and exploits), and put that backup in a secret place where nobody will ever find it – perhaps even splitting it up, so that if it is found, the person still can’t gain access. If you don’t store it, or, you misspell it, or you misplace it, or your house gets set on fire (you get where this is going), you may lose access to your account permanently. TL;DR, losing your seed phrase can mean your assets are lost forever.
And, the risk with seed phrases doesn’t end with losing your backup. While they offer a thick layer of account protection — there are still a number of hacks and exploits taking place on a regular basis that succeed through phishing and stealing account seed phrases. The thing is, even if you’re incredibly careful with your seed phrase, like keeping it recorded on a steel plate and locked away in a hidden crypt, assets in your account are still vulnerable when you do need to legitimately access them.
By this point, many would-be token holders have more than enough reason not to chuck their life savings into a Web3 wallet (and rightly so), yet, even the savviest of token holders possess some level of anxiety about their seed phases – often taking extreme measures (like dispersing assets across multiple wallets) to ensure their livelihoods won’t be gone in a flash.
While the system of seed phrase backup might be hailed as the hero of DeFi today thanks to their ability to help keep accounts truly decentralized, the reality is, they’ll never be fit to support the demands of a global userbase or enable Web3 to truly become mainstream.
Radix Smart Accounts Will Provide the Solution
On Radix, seed phrase-based backup of private keys will no longer be a required part of the user experience (although for those that want to, they can of course still use one). At #RadFi2022, the minds behind Radix unveiled a radically different approach – one that, once fully launched, will finally enable an infrastructure that can provide a Web3 user experience that anyone can use. In Q2 2023, the Babylon version of the Radix Network will go public, launching a range of innovative features, set to change the way Web3 works forever.
‘Smart Accounts’ will be a fundamental feature of the Radix Network at the 2023 network launch of Babylon. Smart Accounts are an on-ledger container for assets that have logic to enable user-configured on-ledger multi-factor control and/or social recovery.
On networks like Ethereum, ‘accounts’ are essentially just created from a user's public key, meaning losing your private key loses all of the assets controlled by that ‘account’. On Radix, Smart Accounts are an actual component on the ledger which has the ability to function similarly to a Smart Contract – meaning they have more flexibility to meet the demands and needs of users.
Compared to an all-or-nothing seed phrase, Smart Accounts enable multiple factors as a way to recover your account, meaning users can access their account through a variety of options – including keys held in the Radix Wallet on a user’s phone, authenticator devices (such as a Yubikey), ledger hardware wallets, and 3rd party recovery services. In addition, features like ‘social recovery’, which allows users to nominate a trusted person to support with wallet recovery, enable users to set up extra account recovery in the case that primary digital access routes are unavailable. This means they always have multiple routes into their account, giving them peace of mind that their assets are always retrievable.
For the first time in Web3, users can choose what security measures they apply to their accounts and never have to rely on Seed Phrases for account backup and recovery again. While Smart Accounts can still allow the use of seed phrases, they remove the requirement for the user to rely on them, even for a fully non-custodial wallet like the Radix Wallet.
With this innovative technology, Smart Accounts will enable users to confidently use a Web3 wallet as easily as they access their go-to banking apps today… except without any intermediary or centralized authority having the final say in what you can and can’t do with your assets.
Expecting consumers on a global scale to sacrifice and compromise the comforts of their day-to-day will simply never work. Comfort aside, the risks of total loss aligned with all-or-nothing seed phrases are far too dangerous to ever support a wider economic shift for the financial industry as a whole.
If we want Web3 to truly scale for mainstream adoption, we need to make the experience radically better.
With Smart Accounts and the Radix Wallet, it’s about to be.
At #RadFi2022, the team behind Radix unveiled a radically new chapter for Web3. The Radix Wallet – set to launch with Babylon in 2023 – is the first ever Web3 wallet built for a mainstream market. Still not convinced? Watch the Radix Wallet Keynote to learn more about its revolutionary technology and features like Smart Accounts here. To read more about Smart Accounts head here.