The American giant Coinbase continues its expansion strategy at the heart of the blockchain and cryptocurrency industry. Through a blog post, Coinbase announces the launch of its product entitled “Wallet as a service”.
In the blockchain world, the principle of self-custody of one’s assets entails a significant responsibility for the end user. Nevertheless, by forcing the latter to keep his private key carefully, under penalty of seeing his assets fly away, the democratization of the sector is greatly slowed down.
Therefore, asset security is a priority for developers. However, as demonstrated by the integration of Account Abstraction on Ethereum, a new paradigm seems to be emerging in which the user will no longer be entirely responsible for his crypto currencies or other NFTs.
In this sense, Coinbase intends to offer its customers the opportunity to develop their project web3 without the need to integrate external wallets into their application.
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1/ Today we introduce Wallet as a Service, making it easier for any company or brand to seamlessly onboard their users to web3
…even if they have never used cryptocurrency before. pic.twitter.com/5IKUJHpQlS
—Coinbase (@coinbase) March 8, 2023
Coinbase unveils its Wallet as a service
Web3 development focuses on the user in particular by allowing him to participate actively in the life of the project. Thus, the latter could in particular acquire NFTs in the case of a video game or cryptocurrencies in the case of a platform of decentralized finance.
Nevertheless, Coinbase consider that the current complexity of web3 wallets does not really make it possible to achieve this ambition. According to the company, the need to rely on external wallets is one of the strongest barriers to entry in the industry.
In fact, to solve this thorny problem, Coinbase presents its new product: THE Wallet as a Service (WaaS). Concretely, a WaaS is a scalable and secure set of wallet infrastructure APIs. In fact, developers can easily use it to create and deploy fully customizable wallets for their end users.
This service should allow companies to easily integrate wallets into their web3 project. Now, thanks to the Wallet as a Service, users will be able to obtain digital assets without needing to protect a private key or having to remember a recovery phrase.
MPC technology at the heart of this new service
Simplification of the process for the end user is possible thanks to the use of secure multiparty computing (MPC) technology. Concretely, it is a private key management model with no single point of failure since the user’s private key is now divided into several pieces and distributed in several different places.
In fact, in the case of the development of the Wallet as a Service, private keys will be split and shared between the end user and Coinbase in order to avoid the loss of assets in the event of the part of its portfolio. Nevertheless, the storage of part of the private keys on Coinbase’s servers will necessarily be subject to great attention since they could be a privileged target for hackers.
Finally, according to Patrick McGregor, web3 product manager at Coinbase, “the design of MPC wallets means that they are also natively cross-chain, offer lower transaction fees, provide greater privacy to the user, that they avoid the risks associated with smart contracts and that they are interoperable with ecosystem standards”.
An already popular service
Already, some companies have looked into WaaS such as Floor, Moonray, Thirdweb or Tokenproof. Besides, the need to eliminate the blockchain from the eyes of users is a ubiquitous reason for using WaaS.
Thus, Alfonso Olvera, CEO of Tokenproof, is enthusiastic about the idea that “individuals will no longer need to know how the blockchain to interact with the brands they love. It is a big step forward to make space more affordable and accessible”.
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