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Binance's Web3 Wallet is a non-custodial wallet that gives users complete control over their assets and private keys. It does not require trust in a third party, unlike custodial wallets that are managed by a centralized service.
Binance's Web3 wallet uses MPC technology, which splits the key into three pieces that are stored in different places, and provides strong security without a traditional seed phrase. It is impossible to gain access to the wallet using one key fragment, and the user always has two of them.
Binance's Web3 wallet also offers an emergency export feature that allows the owner to export their private keys.
Binance's Web3 wallet offers a revolutionary approach to non-custodial storage. It combines distributed computing technology with user empowerment to provide full ownership of crypto assets.
The type of wallet affects the features of managing crypto assets and protecting funds. Non-custodial wallets differ from other storage solutions because they provide owners with complete control over assets. Want to know more? First, let's figure out what the difference is between non-custodial and custodial storage.
Cryptocurrency wallets and private keys
Non-custodial wallet. The user of a non-custodial wallet has full control of his funds and is fully responsible for the safety of private keys. If the key is lost or stolen, the owner will not be able to turn to a third-party service for help, and the funds will be irretrievably lost.
Custodial wallet. The user of a custodial wallet transfers control of his private keys to a third party (for example, a cryptocurrency exchange or wallet management service). This means that the assets in the wallet are managed by a service provider who ensures their security. If the owner of the funds loses access to them (for example, loses a password), the funds provider can return the assets. The main disadvantage of custodial storage is the likelihood of funds being frozen or stolen. This could happen if the third party is hacked, goes out of business, or decides to freeze the user's assets for some reason.
Private keys. The above definitions include the concept of “private key”. This is a unique alphanumeric password used to send digital assets to another address, as well as pay for goods and services. The private key is kept secret and works like a regular door key: it restricts access to the property.
The presence of a private key determines ownership of digital coins. If an outsider takes possession of someone else's private key, he can easily transfer assets without the owner's consent. Therefore, it is very important to store private keys in a safe and secure place.
Private keys are long and complex sets of characters. They're hard to remember, but if you lose them, you won't be able to access your digital assets. Typically, wallets do not provide direct access to private keys for security reasons. Instead, they generate a seed phrase - a set of 12-24 words that is easy to read and can be used as a backup to recover and protect the private keys that provide access to cryptocurrency assets.
Binance Web3 Wallet: Non-Custodial Storage
Users of Binance's Web3 wallet are the true owners of their assets. This wallet allows you to independently manage your funds, gain exclusive access and complete control over your assets. One of the key features of Binance's Web3 wallet is its distributed computing (MPC) technology. It allows you to use a non-custodial wallet without a seed phrase, but maintaining full control over your assets.
Read more about this technology in our MPC blog. Please note that Binance's Web3 wallet is protected by three key fragments and a recovery password that is known only to the user. These fragments are generated when the wallet is created and are stored in different places for additional security:
Fragment 1 - stored on Binance;
Fragment 2 - stored on your device;
Fragment 3 - encrypted with the recovery password you provided and stored in your personal cloud storage (iCloud or Google Drive).
To access a Web3 wallet, you will need at least two key fragments. Since Binance only owns one shard, there is no way for the platform to gain access to your wallet without your participation. However, if you lose your device (and the key fragment on it), you can recover your Web3 wallet and your assets thanks to the key fragment from your personal cloud storage and the key fragment from Binance.
Please note that you and only you have access to two of the three key fragments and, therefore, are responsible for the safety of your assets and access to your wallet. If you forget your recovery password/lose access to cloud storage AND lose your device/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. You won't have a centralized service that can reset your password or recover key fragments that you're monitoring. This is a non-custodial wallet!
Exporting keys: a feature of non-custodial storage
A distinctive feature of non-custodial wallets is the function of exporting private keys. Binance's Web3 wallet not only allows you to fully control your assets, but also allows you to export private keys when moving to another platform.
Traditional wallets often use seed phrases—mnemonic phrases designed to restore access to all of a user's keys. Instead, Binance's Web3 wallet uses distributed computing (MPC) technology. It is more secure than a seed phrase because it allows you to split the private key fragments and store them in different places. Due to this, there is no need for a seed phrase.
The emergency export feature gives users the ability to quickly extract their private keys if necessary. Thanks to this, Web3 wallet users can always maintain control over their assets.
However, after activating emergency export and extracting private keys, the Web3 wallet will become inaccessible. This action is irreversible and indicates a non-custodial wallet mechanism.
Linking your wallet to the Binance app
We understand that our Web3 Wallet is closely tied to the user interface (UI) of the Binance App, so some users may be concerned that if they lose access to the App, they will lose access to assets in the Web3 Wallet.
We are currently working to ensure that the emergency export feature is always available, regardless of the state of the Binance app. Since the essence of non-custodial storage is ownership of private keys, we strive to ensure that users of Binance's Web3 wallet always remain in control.
Conclusion
Binance's Web3 wallet is based on the concept of non-custodial storage, which reflects the principles of blockchain and cryptocurrencies - absolute control and ownership of your own assets. Binance's Web3 Wallet recognizes the importance of private keys and their role in protecting digital assets and offers a unique and innovative approach to non-custodial storage through distributed computing (MPC).
Emergency export and other Binance features give users complete autonomy and control over their assets. Managing your own assets comes with its own risks, but Binance is committed to eliminating potential issues and streamlining the process.
This combination of innovation, security and user empowerment is a significant advance in the evolution of cryptocurrency wallets. Web3 made easier with Binance.
Additional Information
What is Binance Web3 Wallet and how does it work?
How to Manage Binance Web3 Wallet
Why do you need to back up your Binance Web3 wallet and how to do it?
Disclaimer: Binance Web3 Wallet is an optional product and you are responsible for your decision whether to use it. Binance is not responsible for your access to or use of third party applications integrated into the Binance Web3 Wallet, and is not responsible for any of your activities within these applications, including any disputed transactions that may occur. Please read the Binance Web3 Wallet Terms of Use carefully and always do your own research.