Traditionally speaking, the banking system works with the help of a vast network of reliable intermediaries. Despite its challenges and shortcomings, we continue to rely on it to protect our funds and valuables – primarily in the virtual safe deposit box. This trust has been built over the centuries by the traditional banking system.

Meanwhile, in the non-traditional landscape of cryptocurrency, the idea of a self-custody wallet has continued to gain traction even though bad actors are constantly in the news for hacking exchanges. While the crypto industry has undergone significant development, it is still very much plagued by scams and hacks that undermine efforts to build trust among millions of potential users.

Crypto has an image problem, despite the promises of a self-custody revolution, and this is only aggravated by the instances of “overnight millionaires”. As a technological innovation, self-custody, which moves the management of assets into the hands of customers, represents a paradigm shift. It eliminates third-party involvement—a feature that can be a lifesaver as many platforms such as Terra, Celsius, and FTX, to mention a few, have crumbled causing significant losses to the tune of $40 billion as per CoinDesk.

Building Trust Over Time

It has taken several years of legal framing and enhancing the security measures of the conventional banking systems for people to develop trust in those systems. For instance when Silicon Valley Bank went bust, requisite measures to deal with customer losses were instituted without any delay.

Crypto business, conversely, is a rather ill-defined and continuously developing market that still has no set rules to follow. Trust in this space has often been lost due to several failures as well as fraud-related cases. Consequently, self-custody appears to be the most viable innovation in such an environment. We can own assets outright and decrease the risk associated with third parties, which makes the process free from their intervention.

The Role of Technology in Enhancing Security

In the future, as this industry develops, we should also see these self-custody technologies reach the same high levels of trust and reliability as the present-day banking sector. Currently, CCData reveals that over one hundred providers can be identified all over the world to provide custodial solutions to retail and institutional investors looking to invest in crypto assets.

The consolidation of the industry is foreseeable, as it is borne out by the experiences of sectors such as banking and the internet when transitions are initiated to tighten up security and instill greater trust in the industry. Distrust of centralized infrastructure is another problem that might appear unfathomable for retail users, but self-custody is imperative. The self-custody market remains to be developing, providing better and more consumer-friendly solutions that handle assets on the user‘s behalf.

Additionally, self-custody is not only about transitioning between one technological paradigm and another – but a paradigm shift in thought. That is an indication of a shift towards self-organization and one’s faith in the financial systems. Unfortunately, self-custody will become one of the standards as crypto develops further for those who want their funds to be secure.

Challenges Facing Web3 Wallet Management

Currently, managing a Web3 wallet comes with the following challenges:

Seed Phrases

A Web3 wallet most importantly comprises the seed phrase recognized as a recovery phrase. It serves the purpose of becoming a unique identifier, allowing users to restore their wallets on various gadgets. It is a 12-24 random word phrase, and losing such a phrase will result in permanent loss of wallet and any of the funds stored in it. Unfortunately, there is no organized service to recover the phrase, and the total burden lies on the user.

The problem lies in the question of how to safely store this seed phrase securely at the same time. It is too long and random that users cannot memorize it easily, and when they write it down or store it in an informatics device, there are some dangers involved. If the physical copy is lost, damaged, or stolen — or if a digital copy of the information is cracked — the user’s wallet could leak or could be locked away forever.

Generating and Remembering Strong Passwords

The majority of Web3 wallets also force users to set essential passwords to enhance the application’s protection. Such passwords must be used so that one is long and different from those used in the other accounts and contains symbols that cannot be subjected to hacking or brute force.

However, this creates a significant challenge: how to achieve the best password creation to meet the standard of secularity while, at the same time be okay with the user to remember it. The reality is that there is no one server that a person can turn to get help, and as such, if the password is gone, so is the wallet.

Worse still, fundamental password reset strategies such as receiving password reset links via email are not feasible in Web 3. As a result, the wallet remains closed for all eternity if the user forgets or loses the password to the wallet. This password is only with the user, so password insecurity is still an issue when managing Web3 wallets.

Protecting Against Phishing Scams and Malware

Crypto phishing scams are one of the most common types of scams actively used in the Web3 ecosystem. The attackers continue hiding behind the replica of any type of service or person, using techniques ranging from private keys to passwords from the user.

As pointed out it has been noted that this kind of scam has evolved in a way that when the individual clicks on the links to the sites involved, these look almost like the real site, putting even the intelligent users at the mercy of the con-men. Malware is another huge problem because it is easy to spread an infected file or program into an organization's network. This can be acquired through downloads or by clicking on links in ads and will surreptitiously steal wallet details.

For example, some malware may keep track of the clipboard of the user to replace the copied wallet address with a fake one, so as to guarantee that users deposit their cash into the wrong wallet. That is why pointing interest from the user and awareness of threats in the information space is needed to prevent these forms of attacks.

Remaining Cautious of Unknown Links and Downloads

Among the most used attack methods in Web3 is using links or downloads, which sound familiar or unknown to the user. If the user clicks on a fraudulent link, then the wallet becomes vulnerable to phishing sites, or the user's device is infected with malware.

These are attacks with the intent of capturing the private key or otherwise phishing users into signing up for fraudulent transactions. Given the fact that Web3 is a decentralized network system, there is effectively no protection, and users are their self-defense line.

This challenge is especially challenging because links can be disguised in several different ways, shapes, and forms. It comes from emails pretending to be from customer support or alert services on social media sites. One can compromise their account easily simply by downloading a well-known wallet plugin from untrusted sources. It makes every exchange that occurs through the platforms a potential risk that needs to be avoided.

How GRVT Is Challenging The Notion of Private Key

The GRVT Wallet simplifies the user experience through Web Authentication (WebAuthn), which allows users to create and access their wallet using a password and passkeys, avoiding the complexities associated with traditional crypto wallets.

The integration of Dfns technology allows users to access their wallets via fingerprint or facial recognition, offering quick and secure authentication similar to traditional online banking. And it blends the user-friendliness of Web2 with the security of self-custody, protecting assets without the technical burdens.

By leveraging off-chain, peer-to-peer networks with multi-party computation (MPC) and public key infrastructure, it is able to guarantee:

No Single Point of Failure: GRVT Wallet supports multiple devices, creating multiple security layers to prevent breaches.

Responsive Recovery: Recovery wallets and backup codes provide fail-safes if credentials are lost.

Uninterrupted Transactions: Linking new devices doesn’t affect public key, allowing continuous transfers.

Conclusion

The question of why the conventional banking system continues to thrive despite its shortcomings and the revolutionary advantage of the self-custody system boils down to trust. Millions around the world still feel safe to keep their money and other valuables in the banks and the incidence of crypto scams and losses has increasingly overshadowed the prospects of a generational transition from modern banking to cryptocurrency and self-custody wallet.

This problem is further aggravated by the technical complexities surrounding the use of a smart contract wallet, which requires a level of skill to operate. Nonetheless, the possibility for both systems to exist side-by-side in the future is worth considering.