Vitalik Buterin, the chief developer of Etherium, is actively involved in the development of the digital asset industry. This includes sharing his ideas, experiences and other curious parts of his life.

For example, earlier this month, Buterin published an article in which he talked about his problems when interacting with cryptocurrencies. For example, he once couldn’t immediately pay in coins for an order at a restaurant because of a poor internet connection, and he also had to overpay for drinks in Argentina. The reason is that the owner of the place used exchanger for deposit, but the exchanger didn’t accept less than 0.01 ETH.

Most importantly, Buterin immediately offers options for possible solutions to existing problems. In this way, he voices his thoughts and essentially suggests other developers to pay attention to what is going on and even create a new project in the future. Read more about Vitalik’s recent story in a separate article.

How to store cryptocurrencies properly?

In a post on social platform Reddit, Buterin stressed the importance of using multi-signature wallets. He also shared some specifics about storing assets both in his personal possession and under the control of Ethereum Foundation.

As a reminder, multi-signature means the need for multiple signatures of a transaction to hold it. In this way, a cryptocurrency owner is insured against possible hacking and theft of crypto-assets by a hacker, as moving digital assets requires the involvement of multiple addresses and people. Such a tool is very popular among top employees of cryptocurrency exchanges, who thus protect users' assets from possible problems.

According to Buterin, he uses multi-signature wallets to store most of his assets, and the Ethereum Foundation does the same. In this way, a cryptocurrency user gets all the perks of storing their own crypto with an added layer of security.

A similar principle is implemented in wallets with the option of “social recovery”. Here, transactions can be sent using a single secret combination, but if it is lost, it can be recovered by trusted people using their own keys. They are called “custodians”. Vitalik has drawn the readers’ attention to the importance of choosing these people and in fact listed the criteria for selecting the right one.

What we need from custodians:

– Minimize the probability of losing their keys;
– Minimize the probability of collusion between them to steal funds from the wallet;
– To the extent that the above two risks are unavoidable, each custodian’s risk should be as independent as possible – you need to minimize situations that will compromise too many of your custodians at once.

Vitalik insists that at least one custodian should simply be another wallet owner’s device. However, assigning authority to all custodians only to their individual devices is not a good idea. This leads to the risk of a hacker attack or trivial destruction of some devices’ memory, reports Cointelegraph.

For people who act as custodians, Buterin suggests using the following rule.

Ideally, custodians should not know each other. This greatly reduces the risk of them colluding. Also, they don’t need to know each other at all. If something happens to you, they can still find each other, because there are obvious standard protocols that naturally come to mind for people in such a situation – for example, contacting family.


The risk of collusion in such cases does exist. It assumes that the owners of several pieces of the access key will find each other and use the components at their disposal to hijack the corresponding address. It is also important to realise that it usually does not take all custodians to regain access to a wallet, but, for example, two out of three or three out of five. It is therefore really safer to choose people who do not cross paths with each other and do not communicate.


That is, the more independence each element of such a system has, the more stable it will be. For a wallet with relatively little capital, the procedure of finding and maintaining contact with custodians may be too time consuming, but for the security of the bulk of the funds it is really important.

A secret verification question must be used to communicate between custodians. Even if a hacker somehow manages to gain access to the chat room of the key holders, he will not be able to obtain the secret combinations by cheating without the information on the secret question. This is another layer of protection offered by Vitalik.

Finally, those investors who often practice extreme things in the form of investing in dubious projects with high risks and high potential returns need to be in touch with their custodians at all times. Or at least be able to contact them quickly. Generally speaking, a wallet with “social recovery” is not the best option for this practice, i.e. an ordinary hot wallet with an internet connection is sufficient here.

For everything else, the methods described by Vitalik are ideal. They also reflect the basic idea of cryptoworld – multiple layers of protection of one’s own funds, which are based solely on the actions of their owner. It is the investor who chooses the custodians and establishes interaction with them, so he can be fully confident in the safety of his coins.


We believe that multi-signature will be needed for very wealthy crypto investors who do not plan to interact with their large stock of coins for many years, but still want to be protected from various scenarios. For regular digital asset lovers, the already familiar Ledger hardware wallets can be recommended for proper storage. The main thing in this case is to choose a secure place to store the recovery paper, which ideally should not be in the same location as the device itself.

But so-called social recovery is a really interesting idea, which has already been implemented in Argent and Loopring projects. Obviously it will become more and more popular over time.


Read about other useful and interesting things in our cryptochat. There we dream about new Bitcoin exchange rate records – and other coins at the same time.

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