Block, Inc. has recently introduced Bitkey, its innovative self-custody bitcoin wallet, offering a unique approach to bitcoin management. Unlike traditional wallets which rely on passwords or seed phrases, Bitkey utilizes a distinctive 2-of-3 multi-signature mechanism for recovery.
Bitkey Wallet Approach Ditches Traditional Seed Phrases
Bitkey, conceived and built by Block, Inc. (formerly Square, Inc.), is a new bitcoin (BTC) wallet that encompasses a mobile app, a hardware device, and a suite of recovery tools. The non-custodial aspect of Bitkey’s design is different as it eliminates the traditional reliance on seed phrases. Instead, the wallet employs a 2-of-3 multi-signature scheme where the user is provided with two keys: one integrated within the mobile app for everyday transactions and another stored in a separate hardware device for additional security. The third key, held by Bitkey, serves as a recovery mechanism.
“People holding bitcoin on exchanges and custodial platforms today are often hesitant to move to self-custody wallets because they are nervous about making mistakes, especially with the historical requirement that you must safely guard 12 or 24-word long passwords called ‘seed phrases,’” Lindsey Grossman, the Business Lead for Bitkey said. “People have often felt stuck: worried about the lack of control they might experience on a custodial platform or exchange, yet also anxious about the unforgiving product experiences that exist in other self-custody wallets historically available.”
Grossman added:
With Bitkey, we wanted to build a product that helps bring everyone to self-custody, combining robust security and recovery options, with a simple customer experience that puts them in control of their money.
Block and Bitkey are not alone in shifting from the conventional seed phrase approach. Binance recently unveiled a self-custody Web3 wallet that utilizes a shared key system. Similarly, Ledger, a prominent hardware wallet maker, has rolled out a shared key shard system for recovery. Although Bitkey retains the third key for the cryptocurrency owner, the company emphasizes its inability to access the funds without the other two keys.
“A third key is on Bitkey’s server and is used for only two things: to help customers move bitcoin with just their phone for the transactions they choose to make on the go without their hardware device, and to help customers recover their wallet if they lose their phone or hardware – or even both,” Bitkey’s announcement details. “Importantly, because Bitkey only has access to one, not two or three keys in this 2-of-3 multi-signature wallet, Bitkey cannot access or move a customer’s bitcoin without them.”
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