Block, Inc. has unveiled Bitkey, an innovative self-custody Bitcoin wallet that revolutionizes Bitcoin management. Diverging from conventional wallets dependent on passwords or seed phrases, Bitkey employs a distinctive 2-of-3 multi-signature mechanism for recovery.
Bitkey, developed by Block, Inc. (formerly Square, Inc.), introduces a novel bitcoin (BTC) wallet encompassing a mobile app, hardware device, and recovery tools. Its distinctive non-custodial design eliminates the traditional reliance on seed phrases. Instead, Bitkey employs a 2-of-3 multi-signature scheme, providing users with two keys: one integrated into the mobile app for everyday transactions and another stored in a separate hardware device for enhanced security. The third key, managed by Bitkey, serves as a recovery mechanism.
“People holding bitcoin on exchanges and custodial platforms today often hesitate to transition to self-custody wallets due to concerns about potential mistakes, especially with the historical requirement of safeguarding 12 or 24-word long passwords known as ‘seed phrases,'” explained Lindsey Grossman, Business Lead for Bitkey. “Individuals have frequently felt trapped, torn between concerns about the lack of control on custodial platforms or exchanges and anxiety over the less forgiving user experiences found in historically available self-custody wallets.”
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.
Grossman added
Block and Bitkey are part of a broader trend moving away from the traditional seed phrase approach. Binance recently introduced a self-custody Web3 wallet employing a shared key system. Likewise, Ledger, a leading hardware wallet manufacturer, has launched a shared key shard system for recovery. While Bitkey includes a third key for the cryptocurrency owner, the company underscores its inability to access funds without the other two keys.
“The third key resides on Bitkey’s server and serves two specific purposes: facilitating customers to move bitcoin seamlessly using only their phone for on-the-go transactions, and aiding customers in recovering their wallet in case of losing their phone, hardware, or both,” details Bitkey’s announcement. “Crucially, since Bitkey has access to only one out of the two or three keys in this 2-of-3 multi-signature wallet, the company cannot access or transfer a customer’s bitcoin without their involvement.”
