A social recovery wallet is a type of wallet that allows the user to restore their wallet in the event of loss of access by using a recovery phrase shared with a network of trusted people. How does it work and which wallets natively offer this option?
The crypto wallet, an essential
Before diving into the social recovery wallets (social recovery portfolios in French), it is important to understand the basics of cryptocurrency wallets. A crypto wallet (whether digital or hardware) stores private and public keys and interacts with various blockchains to allow users to store, send, and receive cryptocurrencies. If you own cryptocurrencies, you will need a wallet to manage your funds as securely as possible.
One of the most popular models of crypto wallets is the Ledger Nano S Plus. It is a hardware wallet, which means it stores the user’s private keys on a physical device rather than on a computer or server. The Ledger Nano S Plus is a safe way to store cryptocurrenciesbecause the private keys are kept on the device and cannot be accessed by hackers or other third parties.
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The Importance of the Recovery Phrase
The recovery phrasealso known as a “seed phrase” or a mnemonic phrase, is a series of words that is used to retrieve access to a cryptocurrency wallet. It acts as a wallet backup and allows the user to regain control of their funds if they lose access to their wallet for some reason.
This recovery phrase is usually a random combination of 12 or 24 words that is generated when the wallet is first set up. It is important for the user to keep the recovery phrase in a safe and secure placebecause anyone with access to the recovery phrase in its entirety can seize the wallet and its funds.
👉 All About Crypto Wallet Recovery Phrases
So how does a social recovery wallet differ from a regular crypto wallet? A social recovery wallet allows its user to set up a network of trusted people who can help him recover his wallet if he loses access to it. This is usually done by providing each trusted person with part of the recovery phrase.
For example, if the recovery phrase for a social recovery wallet starts with “apple banana cherry dog elephant cat”, the user can give the first two words to a trusted person, the next two words to another trusted person, and so on. If the user loses access to their wallet and needs to recover it, they can contact their trusted people and combine the parts of the recovery phrase in order to regain control of their wallet.
Social recovery wallets can be particularly useful for people who are concerned about losing access to their cryptocurrencies in circumstances such as a lost or stolen device, a forgotten password or other unforeseen events. By setting up a network of trusted people, the user can ensure that they have a way to recover their wallet even if they lose access to it, but we must wisely select the people to whom we grant our confidence.
Thus, it is possible to use this method with any wallet. For example, with a Ledger Nano S Plus which is a hardware wallet that comes with a 24-word recovery phrase, you can choose three trusted people around you and give them 8 words each. Be careful though, the order is very important in a recovery phrase, you must take this parameter into account before resorting to this method.
💡 You Shouldn’t Overlook the Importance of Your Wallet Recovery Phrase. If someone knows your entire recovery phrase, they can easily access your wallet and take control of your cryptocurrencies.
Which wallets natively offer this option?
At the time of writing, the two main digital wallets that have implemented social recovery are the Argent and Loopring wallets.
Money Wallet
Quite popular mobile wallet, Argent has made social recovery one of its main strengths. Argent includes an interface dedicated to this option allowing to add and remove trusted persons, called ” guardians “.
Guardians are people and/or devices you choose to help keep your wallet at an even higher level of security. You can ask them to help you approve the recovery of your wallet, but also lock it.
Here are different types of “guardians” that can be affiliated with your Argent wallet :
- A hardware wallet or other device (e.g. another phone) that you own;
- A trusted person who himself has a suitable device (a money wallet, a hardware wallet, etc.);
- A third-party service like two-factor authentication.
Configure social recovery on the Argent wallet is relatively simple
Loopring Wallet
Less known than the Silver wallet, the Loopring wallet was created by the developers of the Loopring protocol, a ZK Rollup of the Ethereum blockchain. This wallet also has a social clawback feature, which works very similarly to Argent.
Example of recovering access to a Loopring wallet with this method
In conclusion, social clawback wallets provide an important layer of protection for crypto wallet holders allowing them to recover their wallet in case of loss of access.
However, this system is mainly based on the degree of trust you have in the people to whom you provide part of your recovery phrase. While no system is foolproof, having such a recovery plan in place for your cryptocurrency wallet can give you some peace of mind.
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Editor-in-chief of Cryptoast, I discovered Bitcoin and blockchain technology in 2017. Since then, I have been striving to share quality content so that the sector becomes more democratic for everyone.
Clement Wardzala
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