ETHDenver: Ethereum for the next billion new users
In this podcast episode, Janine and Patrick talk about ETHDenver and what the future holds for Ethereum
ETHDenver was one of the biggest annual blockchain-themed conferences that brought together the pioneers of crypto innovators. Thousands descended upon Denver, Colorado in the United States from 24 February through 5 March.
Among the crowd of enthusiasts and startup founders is Janine Grainger, CEO and co-founder of Easy Crypto. She was at Denver for a week, and was taking in all the creative energy to bring back home to share with us.
We put together a quick podcast / sharing session where Janine talks about the event and the latest innovation on Ethereum — account abstraction (EIP-4437) which will make Ethereum even more friendly for ordinary people. The session was co-hosted by Patrick Elleway, Easy Crypto’s commercial analyst and financial tech enthusiast.
What is Account Abstraction on Ethereum?
Account abstraction is one of the most talked-about Ethereum Improvement Proposal (EIP) that allows Ethereum wallet developers to create non-custodial user-friendly wallets that can be recovered or unlocked by other means apart from the traditional seed phrase recovery method.
This means, in the future, we can potentially see users creating an Ethereum wallet using Google or Facebook login (Social Media Login), multi-party authentication (Social Recovery), two-factor authentication, and even fraud safeguards (e.g. daily withdrawal limits).
This was made possible because Ethereum accounts can now be created through smart contracts. Traditionally, smart contracts and user accounts are two separate types of accounts. While both can contain funds, only user accounts have the ability to authorise (or sign) transactions.
With account abstraction, a user can authorise transactions directly through smart contracts, without having a traditional user account interacting with it, which was not possible previously.
Why is Account Abstraction such a big deal?
Conventional crypto wallets that have existed since Bitcoin rely on two access keys — private and public keys. The private key is what users must use to prove that a wallet or account on the blockchain is theirs. The public key exists to verify that the private key is valid.
Most crypto wallet users don’t deal with these key pairs directly. They’d make a PIN, password, or use biometrics to unlock their wallet on top of the base security layer. The private key is often translated to a set of 12 to 24 seed phrases. These are pre-defined recovery “passwords” that act as a backup in case a user loses the PIN, password or cannot gain access with any of the top-layer security features.
In theory, this is a good system because users don’t have to touch their recovery seed phrases, which can remain locked in a secure place such as a safe, unless it’s an emergency. In reality, not many people know or care about the recovery seed phrase security best practices. Even the most tech-savvy crypto users are still prone to losing their seed phrases due to a short moment of clumsiness.
With account abstraction, users can delegate the security heavy-lifting to a third-party without compromising their seed phrase / private keys. This means, if the third-party ever gets compromised, the hacker won’t be able to gain user private keys. This is because it is tied to user credentials with the service (like a password or even government-issued ID).
Another cool feature that was made possible with account abstraction is social recovery. An account can be programmed such that a threshold number of trusted individuals with a close social relationship to the account owner can help unlock it. Another possibility is programming an account so that when the owner hasn’t used it for a set period of time, it can be unlocked by an “heir”.
Account abstraction unlocks so many possibilities, that it could potentially bring about the next billion or more new users to the crypto space.
Stay curious and informed
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Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.
Last updated April 5, 2023