Ethereumco-founder Vitalik Buterin took to social media to emphasize the importance of self-custody and how social recovery and multi-signature wallets can help achieve this goal. “I personally use a multi-signature wallet to store most of my funds, and the Ethereum Foundation does as well,” Buterin said. Once social recovery wallets become mature enough, my suggestion is to use social recovery for hot wallets storing a small portion of personal or organizational funds, and multi-signature for cold wallets storing personal or organizational savings.
Self-custody is important. And social recovery and multisig is a great way to do it.— vitalik.eth (@VitalikButerin) March 17, 2023
A quick reddit post on how I think about choosing guardians for social recovery and multisig wallets:https://t.co/FY1iyJ6BFC
Multi-signature wallets, also known as multisig wallets, require multiple private keys to access funds, making them more secure than single-signature wallets. Social recovery wallets, on the other hand, allow users to recover access to their funds through a social network of trusted contacts.
Buterin’s remarks come at a time when cryptocurrency wallets are becoming increasingly targeted by hackers and scammers, highlighting the need for better security measures. According to a report by blockchain analysis firm Chainalysis, cryptocurrency-related crimes reached $10 billion in 2021, with thefts and scams accounting for more than half of the total.
By using multi-signature wallets, individuals and organizations can reduce the risk of losing their funds to cyber criminals. However, as Buterin pointed out, it is important to use social recovery and other methods to ensure that the funds remain accessible in case the private keys are lost or stolen.
The Ethereum Foundation, which oversees the development of the Ethereum blockchain, has also emphasized the importance of security in the past. In a blog post from 2019, the foundation recommended that users store their funds in multi-signature wallets and avoid using single-signature wallets, which are more vulnerable to attacks.