Binance Launches Web3 Wallet for its 150M Registered Users

Binance Launches Web3 Wallet for its 150M Registered Users – Binance unveiled its latest Web3 wallet during the Binance Blockchain Week conference in Istanbul, and it will soon be accessible to all users through the Binance mobile app. During the launch, Changpeng “CZ” Zhao, CEO of Binance, revealed the intent behind launching the service: “Web3 wallets represent more than just storing digital assets — they are an integral part of the Web3 framework, empowering individuals with the ability for self-sovereign finance.”

To streamline the user experience, Binance has integrated its Web3 wallet directly into the main Binance app, primarily known for cryptocurrency trading. This wallet employs multiparty computation (MPC) to split a user’s private keys into three smaller components referred to as key shares. “Having the key shares split across three different locations mitigates the risk of the keys being compromised and reduces the vulnerability of the system.”

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The user maintains control over two out of the three key shares, ensuring self-custody. A Binance spokesperson verified that the Binance Web3 Wallet remains inaccessible to U.S. users, as is not available in the United States. CZ added: “Binance’s Web3 Wallet lowers the barriers of entry for users to achieve full self-custody of their assets, and it is an important, convenient bridge towards DeFi empowerment.”

“Ultimately, our priority is to ensure users can explore Web3 with us within a user-friendly and protected environment.” As per Richard Teng, who oversees regional markets at Binance, the MPC technology alleviates concerns about losing one’s seed phrase. “We want our users to be assured that they are interacting with Web3 within a secure and protected ecosystem”

“That is why we have incorporated MPC technology as well as Binance’s trusted security infrastructure within the Web3 Wallet,” he added. In a statement to a news outlet, a Binance representative emphasized the importance of users continuing to protect their wallet’s assets and access. “If a user forgets their recovery password AND loses their device/delete the Binance app, they won’t be able to access their Web3 Wallet and Binance will not be able to restore it for them.”

The key shares will be distributed across three locations: the first part held by Binance, the second stored locally on the user’s mobile phone, and the third encrypted with the user’s recovery password and backed up to their personal cloud storage, like iCloud or Google Drive. Binance’s expansion into other cryptocurrency services coincides with challenges in retaining investors within its spot trading business. 

According to a report by blockchain analytics firm 0xScope, Binance’s spot trading market share dropped to 40% in 2023. According to the researchers: “Binance’s spot trading volume has seen a significant decline in the past year, perhaps due to its listing strategy. Most popular coins experienced a downturn immediately after being listed on Binance.”

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Conversely, the Korean cryptocurrency exchange Upbit witnessed substantial growth, as its spot market share surged from 5% to 15.3% over the same timeframe. Similarly, CZ, the CEO of Binance, experienced a 38% reduction in his net worth due to a decline in exchange volumes, as reported by the Bloomberg Billionaires Index.

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