On November 8, 2023, the largest crypto exchange Binance announced the launch of its Web3 wallet. The company's development attracted the attention of many participants in the crypto community and the release became one of the most discussed topics. However, some representatives of the crypto industry had questions about the new exchange product. We tell you what you need to know about the Binance Web3 wallet and what’s wrong with it
Facts about Binance Web3 Wallet
1. The wallet is available to users of the Binance mobile app. According to the head of the crypto exchange, Changpeng Zhao, the new product will be the next step towards the adaptation of cryptocurrencies into the traditional financial system.
2. The developers position their wallet as a tool for immersion in Web3. The term refers to the concept of the third generation Internet, the main distinguishing feature of which is complete decentralization.
3. According to the developers, using the Binance Web3 wallet, users will be able to quickly switch between centralized (CeFi) and decentralized (DeFi) financial markets. Thus, the crypto exchange team wants to “break” barriers to Web3. The developers also propose to consider the wallet as a gateway to decentralized applications (dapps).
4. The main advantages of the Binance Web3 wallet, according to the developers, are simplicity, convenience and security.. Its users will be able to work with more than 30 blockchains. In addition to tools for basic operations with cryptocurrency, the wallet also offers services for staking, processing loans, and earning money by issuing loans.
5. After the announcement of the launch of the Binance wallet, the native token of another Binance crypto wallet, Trust Wallet (TWT), went into decline. Back on November 8, the coin was trading at $1.7. As of the time of writing the review, the cryptocurrency had fallen in price to $1.3. The reason is that the crypto exchange focused on an analogue product. Recall that Binance acquired Trust Wallet in 2018.
Trust Wallet chart. Source: CoinMarketCap
Amid the launch of the Binance Web3 wallet, the Trust Wallet team announced a WaaS service (wallet as a service). According to the developers, the crypto exchange wallet is built on the basis of their WaaS offering.
6. The wallet used multi-party computing (MPC) technology. Its meaning is to separate private access keys into several parts and organize their storage on different servers. According to the developers, MPC reduces the risks of wallet compromise and increases the security of the system as a whole.
Technology has a downside. If the owner of the wallet forgets the password, he will not be able to restore access to the assets.
7. US citizens will not be able to use the new Binance wallet. Local regulators have many questions regarding the activities of the crypto exchange. Regulatory pressure has jeopardized the survival of Binance's US operations.
Binance crypto wallet problems
Not all representatives of the crypto industry shared the enthusiasm of the Binance team. Here are a few points that, according to members of the crypto community, potential wallet users should pay attention to:
Wallet users cannot work anonymously. To access the wallet you need to register on Binance. Trading platform requests personal information from users. This approach violates the basic principles of the crypto community laid down by the creator of Bitcoin, Satoshi Nakamoto. The wallet may not be as secure as the developers claim . Members of the crypto community have questions about MPC technology. In their opinion, a solution that involves storing key information for accessing assets on the company’s servers could allow Binance to control user accounts. Binance will have the last word in controversial situations . Any disputes are resolved according to the rules of the crypto exchange. Members of the crypto community believe that Binance has enough tools and authority to block the assets of Web3 wallet users.
Another controversial point is the new Binance wallet – a copy of Trust Wallet. The parties do not hide the fact that the crypto exchange used the WaaS service of its subsidiary.