In a recent blog post, Vitalik Buterin, the co-founder of Ethereum, delved into the issue of selecting key custodians for wallets with multi-signature transactions and those that offer the option of key recovery.
A multi-signature wallet is a type of wallet where a transaction requires approval from multiple participants, each storing parts of the key necessary for signing transactions.
Wallets that offer “social key recovery” are also being developed, where the wallet owner retains the key, but it can be recovered with the help of several custodians in case of loss. Custodians are other wallets or addresses controlled by individuals or organizations.
Buterin emphasized the importance of decentralizing the selection of custodians. It’s not practical to create multiple wallets on one’s own computer, but rather it’s better to have a sufficient number of custodians who can restore access to funds in case the owner disappears.
The custodians should preferably not know each other, and a secret phrase can be used to confirm the identity of the person sending the transaction to prevent hacks.
Interestingly, one Reddit user revealed that he entrusted his multisig wallet key to five of his ex-girlfriends.
Buterin noted that the speed of signing transactions is also important, especially for those who frequently use decentralized protocols and exchanges.
Custodians who can respond quickly are preferable for such people. Even hodlers should send periodic transactions to test their custodians and ensure the system is working properly.
In his recent book “More Money: What is Ethereum and How Blockchain is Changing the World,” Buterin provides a comprehensive history of Ethereum’s development and its position as the second-largest blockchain in terms of capitalization.