In a post on Reddit’s r/ethereum community on March 16th, Ethereum (ETH) co- founder Vitalik Buterin shared his approach to wallet security and emphasized the importance of having a varied set of guardians to secure maximum safety for cryptocurrency assets held in self-custody through multisig and social recovery wallets. With an increasing number of cryptocurrency scams and hacks in recent years, and plenty of major cryptocurrency corporations going bust in 2022, self-custody and maintaining sufficient wallet safety procedures have become more critical than ever.
Multisig and social recovery wallets rely on guardians, which are external sources that can recover funds or approve transactions. Buterin pointed out that while the structures of these wallets differ, the guardians they rely on should be decentralized, meaning that they should be controlled by other people to minimize the concentration of power and danger of hacking, coercion, incapacitation, or death. Buterin advised that enough guardians should be controlled by other people, so if the wallet owner disappears, there are still enough other guardians left to recover their funds.
Furthermore, Buterin suggested that someone’s set of guardians should not know each other, as this reduces the danger of collusion to attack their wallets and assets. Nonetheless, they should still be able to find each other in case something happens to the wallet owner. Buterin likewise recommended that guardians ask a security question that only they and the owner know when confirming an operation, which should only be confirmed when the correct answer is given.
For degen traders or those not making longstanding hodl plays, Buterin stressed the must use guardians that can respond quickly to suit their fast-moving needs. In such cases, guardians should be able to act quickly on short notice to pull money out if a contract becomes vulnerable, move money around if they are next to being liquidated, etc.
In the end, Buterin recommended testing each guardian at least once a year, as this will confirm that they haven’t forgotten or lost their accounts. With the increasing price of cryptocurrency scams and hacks in recent years, maintaining sufficient wallet safety procedures has evolved more important than ever, and following Buterin’s advice on choosing guardians for multisig and social recovery wallets can help maximize the safety of cryptocurrency assets held in self-custody.