Vitalik Buterin, the founder of Ethereum, has recommended the use of multisig wallets and social recovery wallets as secure ways to store funds. Multisig wallets require M of N guardians to approve a transaction, while social recovery wallets allow a group of guardians to recover funds if a single key is lost.
Why Multiswig wallets?
These wallets can recover funds if they are lost or stolen. The primary advantage of using one of these wallets is that it protects the user against the possibility of a centralized corporation going out of business without needing the user to take personal responsibility for the full security configuration.
Vitalik underlines the need of selecting guardians who have a low chance of misplacing their keys or working together to steal one’s money. It is also very important to make certain that the danger posed by each protector is optimally uncorrelated. This may be accomplished by reducing the number of similarities that might render too many of your protectors ineffective or vulnerable at the same time.
Vitalik: Guardians should be under supervision just in case you go missing
Another piece of advice is to ensure that you have a sufficient number of guardians who are under the supervision of other people so that, in the event that you go missing, your assets may still be recovered. According to Vitalik, you should have power over at least one guardian and no more than N-M guardians in total. In an ideal situation, each guardian would be on their own individual gadget, and they wouldn’t know or often communicate with one another.
Moreover, Vitalik suggests that guardians ask a security question before allowing an operation. This is done to prevent hackers from analyzing your communications, determining who your guardians are, and stealing your cash. He advises that the guardians should ask a question that only the two of you and a very small number of other people know and that they should only certify the operation if you provide the proper answer to the question.
In conclusion, if you’re going to be undertaking “degen” activities using on-chain contracts, Vitalik suggests staffing your organization with guardians who are able to react swiftly. Yet, he stresses that this is of little concern if you do not participate in the aforementioned activities.
In conclusion, it is essential for people and organizations to practice self-custody in order to safeguard their finances in a way that is decentralized. Although multisig and social recovery wallets provide secure methods to keep assets, it is still important to choose the appropriate guardians to reduce potential dangers. The guidelines that Vitalik has provided serve as a useful guide for choosing guardians for multisig and social recovery wallets. This helps to ensure that assets are safeguarded against loss or theft while also being held safely.