Spatium Blog

With more than 425 million crypto users worldwide, companies are scrambling to offer them the best service. However, creating a cryptocurrency wallet from the ground up requires extensive expertise in blockchain and cybersecurity, not to mention a lot of time and a large budget. For this reason, newcomers to the market often preferred to speed up the development by using white label solutions. In recent times the trend has buckled towards crypto wallet SDKs (software development kits), thanks to their greater flexibility.

In this article, we will show the difference between the approaches, highlight the most fitting scenarios for each, and explain how to make your own app with them.

When making a new cryptocurrency-related application, a company can either make everything from scratch or use premade solutions. The latter approach to crypto wallet development is cheaper and faster, but there are many ways to go about it. We will cover the two core ones: a white label solution and an SDK (software development kit).

White label crypto wallets

A “white label” solution is a pre-made application that only needs design adaptations to the new brand. It is usually sold “as is,” but might involve deeper customization for additional price. White label crypto wallets include all the core features like hot/cold storage, sending and receiving cryptocurrency, monitoring coin prices and exchange rates, etc.

Such solutions are a popular choice for companies looking to offer their customers a seamless branded cryptocurrency experience. On the one hand, they require far less resources to implement, as all the major aspects from crypto storage to cybersecurity are already covered. On the other, they look and feel professional, instilling customers with a sense of confidence.

Advantages:

• The fastest option. The entire point of white label crypto wallets is having all the most important features already included. You only need to change the UI to fit your company’s style, and you’re good to go.
• Minimal upkeep. The supplier usually takes responsibility for maintaining their white label application, allowing you to allocate your development resources elsewhere.
• Reduced initial outlay. Purchasing an annual license for a ready-made software is significantly less expensive than creating one from the ground up. This allows you to divert more funds towards marketing, customer service, and other areas. Furthermore, there's no certainty of business success. A smaller initial expenditure implies less financial risk.

Disadvantages:

• Limited Customization: While you can brand white label solutions, the level of customization is limited compared to a fully custom-built solution. This can impact your ability to differentiate your product.

• Lack of Uniqueness: Since many other companies may use the same white label solution, your product may not stand out in a crowded market.

• Dependency: You are dependent on the white label provider for updates, support, and maintenance, which can be a limitation if they don't meet your expectations.

• Costs Over Time: While white label solutions may reduce initial development costs, ongoing licensing fees or revenue sharing arrangements can add up over time.

• Scalability Limits: Some white label solutions may have scalability limits that can hinder your business growth.

• Limited Control: You have less control over the development roadmap, which means you may need to adapt to changes made by the provider.

• Security Concerns: Sharing a pre-built solution with other businesses can pose security risks if the provider doesn't maintain robust security measures.
• Less Innovation: Relying on pre-built solutions may limit your ability to innovate and offer unique features to your users.

White label solutions are the best fit for:

• Startups. Cash-strapped companies that are only beginning to enter the market could benefit from the cost savings that white label crypto wallets provide.
• SMEs. Small and medium businesses rarely have a development team that could create reliable and secure DeFi software. Buying a pre-made one would work fine for them.

Financial Institutions. Banks and financial institutions can use white label solutions to provide customers with digital banking, mobile wallets, or investment platforms without building them from scratch.

Crypto Wallet SDK

A crypto wallet SDK is a collection of programming tools, libraries, and APIs that developers can use to create and customize a cryptocurrency wallet. With it, the development process can be streamlined and completed much faster than when building similar functionality from the ground up. Overall, a crypto wallet SDK makes integrating a digital wallet more accessible and convenient for small businesses and established corporations alike.

Advantages:

• Rapid development. A software development kit helps programmers to create an application or its part much faster than making everything from the ground up.

• Expansive feature set. A crypto wallet SDK can include much more than just storing public and private keys. Multichain support, cold/warm storage, multi-party computation (MPC) and much more can go alongside the core options.

• Maximum flexibility. You can integrate all the available features or some of them, depending on what you need and can afford. Moreover, unlike white-label solutions, you can easily add more functionalities.

• Compatibility. A crypto wallet SDK provider will usually have versions available for every platform or most of them. This means you’ll be able to reach users wherever they are.

• Third-party integrations. SDKs often include tools to quickly establish important connections to other software. In the case of a crypto wallet, this might be connecting to exchanges, biometrics, analytics, etc.

Disadvantages:

• Some assembly required. Many crypto wallet SDKs only need a few minutes or a few days to be integrated. However, if you want to customize it, you will need your own development team for that.

• More responsibility. While the vendor will develop their product further and update it from time to time, ensuring that it runs smoothly with your app is on you.

• Vulnerability. A commonly used SDK can be reverse-engineered by malicious actors looking for security vulnerabilities. While this is difficult to execute, it still makes this approach more risky compared to making everything from scratch.

• Increased complexity. Even well-documented SDKs can make an application more difficult to maintain. This is especially pertinent to applications that use multiple SDKs for different purposes, as it adds the task of making sure all of them work together.

Which companies benefit the most from using an SDK?:

• Web2 companies. Businesses that have a development team that is only in the beginning of their Web3 journey, would benefit greatly from using a crypto wallet SDK, as it streamlines the transition into new technology stack..
• Enterprises. Companies that are less budget-restricted would enjoy the development velocity, flexibility, and scalability that comes from using an SDK.
• Third-party Integrators. Companies that specialize in integrating software solutions into existing systems can benefit from using SDKs provided by the software vendors. SDKs offer standardized interfaces, documentation, and support, making it easier for integrators to connect different systems and deliver seamless experiences to their clients.
• Budget-constrained companies. Businesses that don’t have to money to create and maintain crypto infrastructure from the ground up can use an SDK and focus on end-user experience.

How to create a wallet using a white label solution

There are several steps to the process.

Select a provider

Finding a white label crypto wallet development company is easy. Finding the right one for you is much harder. Here’s what you can do to find a vendor that will give you exactly what you need.

1. Research their pricing vs. feature set. Paying  $100K for a Prius is outrageous. The same price for a Bugatti Veyron is a bargain.
2. Check their references. A reputable company will have customers that you can contact to ensure quality. In addition, check out reviews on independent platforms like Clutch.
3. See how they handle communication. If the managers understand your needs and are working to help you, not just sell their product, this is a good sign.

Customize

White label solutions allow for some customization. So at this step you need to have a designer adapt the color scheme, logos, and other visual elements of the app to your brand. If you need extra features, the white label crypto wallet development company might do them for you as an additional service.

Test

The testing is necessary to give you peace of mind and ensure that the application works as intended. Usually it is done by the vendor. But you can bring a third-party company if you think it’s necessary.

Release

This covers more than just uploading the app to the store. You need to market the product, create documentation, and prepare your team for questions from the customers.

How to build a crypto wallet using a crypto wallet SDK? 

Overall, the process is similar. However, the need to do some development adds a few more steps.

Select the right vendor

For a crypto wallet SDK provider,  you can follow the same steps as for a white label solution vendor. However, pay special attention to the following aspects:

• Documentation. A well-documented product is easier to work with. And if your developers finish the job faster, you save money and get to market sooner.

• Integrations. Third-party functionalities like authentication, biometrics, signing, analytics, and much more are crucial for a modern crypto wallet. An SDK that includes connectivity to APIs that provide these features offers much more value.

Integration

Once you have the SDK, you’ll need to connect it to the rest of your app. This is often as simple as writing a few lines of code. However, checking whether everything works as intended could take some time. Especially if you are using several different SDKs in one app.

Testing

Working with an SDK requires at least some programming. So thoroughly testing the app is mandatory. Ideally, you should also conduct user acceptance testing. Letting a group of people from your target audience use the app and gathering their feedback could help you make important adjustments before you go live.

Deployment

Once your app is live, you need to be on the lookout for surprises. For example, you might get many more users than you anticipated. 

Conclusion

A white label solution and a crypto wallet SDK both have their uses. The former is a better fit for a company that needs to go to market as soon as possible and start getting audience feedback. The latter is better suited for more tech-savvy businesses that want more control and flexibility in how they approach their product or lack the resources to create and maintain crypto infrastructure. And if you want to start choosing a crypto wallet SDK right away, feel free to request a free demo from Spatium.

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One of the reasons why the adoption of web3 is slowed down and still lacks a lot to fully compete with web2 is the high level of fragmentation existing there.

Some blockchain ecosystems are bigger, and some are smaller but there is no efficient interoperability across them yet. The most sensitive part of web3 which is especially vulnerable to blockchain isolation is DeFi (Decentralized Finance). If we try to compare traditional banking and financial services to web3 ones, we end up comparing typography with handwriting services. 

Most blockchains lack communication with each other. They can not easily share data and assets, which means that the application of DeFi technology and the benefits coming with it are limited. 

One of the burning questions for DeFi is how to facilitate transactions across chains, switch platforms, and promote DeFi protocols integration with existing systems. 

The answer to this question is to increase interoperability across blockchain networks with the help of various tools and protocols to break the siloed nature of existing ecosystems.

What is DeFi?

Decentralized Finance is an emerging technology that allows its adopters to challenge the existing traditional centralized financial systems. It comes with less or zero fees for transactions. Also, it promotes peer-to-peer financial services eliminating third-party involvement, and enables financial services for unbanked and underbanked parts of the world. 

Being built on blockchain, DeFi technology offers similar to the rest of web3 advantages: security, immutability, and transparency. At the same time, taking into consideration that each blockchain has its properties, it offers various conditions for DeFi protocols hosted there. 

In the situation when blockchains are not tuned, DeFi solutions require an intermediary to connect. One such intermediary is a multi-chain crypto wallet. This is why they are anticipated to become a game changer for DeFi allowing users to access the services hosted on various chains through one interface.

Multi-chain Blockchain Wallet as a Service

Since multi-chain wallets have been introduced, they are, indeed, changing the way DeFi is developing. There is no more need to operate several wallets if you can make any asset transaction in one click. Also, it helps users to minimize gas fees, because all the assets are stored in one wallet

 That's great news for businesses who are planning to onboard new users to web3 and don’t expect the latter to have solid technical skills and experience. 

Also, if a company requires a quick start to prove their ideation and see how the community reacts to new products and services, it’s highly recommended to go with blockchain Wallet as a Service (WaaS) providing the development of multi-chain crypto wallets in no time. One of the providers of facilitated multi-chain crypto wallet development is Spatium. Our blockchain WaaS platform helps to mint wallets with:

• engaging user-friendly interface;
• additional protection layers and enhanced security (MPC, ZK-proof technologies);
• non-custodial nature, allowing wallet providers to operate right away without licenses and certifications. 
• user full control over private keys.
• future-proof asset storage, when any emerging blockchains that become prominent are added to the wallet SDK;
• global access to digital assets from any location worldwide regardless of your bank statement.

Moreover, the Wallet SDK which can be implemented by your in-house development team in less than a month is written in native Swift, Kotlin, or Typescript, depending on the platform.

Multi-chain wallets give users the flexibility they request. They could seamlessly access a broader range of decentralized services and apps fostering the growth of the web3 ecosystem. 

Multi-chain wallets have a greater potential of connecting users of different technical backgrounds to DeFi services and web3. In addition to reducing the isolated state of blockchains, multi-chain wallets are giving users more freedom to diversify their crypto assets across multiple blockchains: facilitating capitalization on versatile opportunities and spreading the risk.

Benefits Provided by Multi-chain Crypto Wallets 

1. Enhanced Scalability 

Leveraging blockchain interoperability tools, multi-chain wallets add to the increasing scalability of the web3 ecosystem. They allow web3 to handle a bigger number of users and transactions.

2. Better Communication 

Multi-chain wallets promote seamless communication across various entities operating on different blockchains. This also cannot but stimulate the development of web3 infrastructure.

3. Fragmentation Reduction 

The application of blockchain-interoperability tools and services contributes to greater decentralization rather than the promotion of several isolated chains dominating the ecosystem. 

Spatium Blockchain Wallet as a Service Multi-chain Platform 

Blockchains Supported

Spatium blockchain WaaS platform offers three main components facilitating the development of multi-chain crypto wallets: Wallet SDK, Wallet Cloud, and Wallet UI Kit. 

While Wallet SDK is the core encryption part of the wallet, Wallet UI Kit is a set of pre-built design templates to speed up the wallet development. Wallet Cloud is the place where all the interoperability magic happens.

Spatium Wallet Cloud is connected to the following blockchains:

• Bitcoin;
• Ethereum;
• Avalanche;
• BSC;
• Bitcoin Cash;
• Arbitrium;
• Stellar;
• Litecoin;
• Polygon;
• Tron;
• Solana. 

Several other blockchain integrations are on the way. All EVM-compatible chains are connected by default.

Portfolio Management

Spatium Wallet SDK allows developers to build wallets with full user-centric management. Users are able to add, delete, or hide any blockchains. Wallets built based on Spatium technology help to gather all digital assets: coins, NFT, and tokens in one place and use one interface to manage them. Also, wallets let you watch cryptocurrency prices fluctuate over any selected period of time. 

Tracking Activity

All actions performed could be tracked in the wallet Activity section. Such operations as sending and receiving crypto, and buying and selling could be easily monitored. Moreover, security events, such as registrations into accounts, backups, logins, 2FA, email, and social logins could be also tracked. 

Operations Supported 

The given below is the list of all operations either active or still under development. For detailed information, please contact the Spatium sales team. 

1. Sending and Receiving Crypto

First of all, a user has to identify the recipient. There are several options for that: get data from the clipboard, contacts, or type the recipient info in the domain name. Then, the requested amount for sending has to be specified. This could be done either in fiat or crypto. 

Also, there are several ways to accommodate gas policies. A user could choose slow, normal, or high fees, taking into consideration that each of the options affects the speed of transactions in its own way. Technically advanced users could go for a manual fee option based on the unique parameters of each blockchain.  

2. On/Off Ramp

On/Off Ramp is a vital operation for any crypto wallet. Spatium blockchain Wallet as a Service platform allows for crypto to be purchased through a debit or credit card, as well as sold back to the bank account. 

On-ramp activities are supported through Moonpay, Mercuryo, Utorg, and Changelly. As soon as a user would like to fulfill such an operation, they are sent to the browser to perform KYC, provide the card details, and accept the exchange rate. 

Moonpay is the provider for off-ramp transactions. It’s important to mention that any of the providers could be easily changed in case the goals of your businesses require that.

3. Exchanging Crypto

Crypto swap operations could be performed in three main forms: on-chain swap, off-chain swap, and bridge. On-chain swaps are provided by 1Inch and Paraswap by default and include exchange operations with native tokens and coins. 1Inch is a Decentralized Exchange (DEX) aggregator working across all blockchains picking up the best prices for crypo and offering the data to its partners. 

Off-chain swaps are performed through ChangeNOW. Such swaps allow the exchange of crypto between different blockchains. 

4. Wallet Connect

Wallet Connect is a universal means to connect web3 wallets to decentralized apps (dApps). The connection is performed through displaying a QR code or a deep link and the protocol establishes a connection between devices/apps. Just after a counter-party approves the connection request, a standard WalletConnect URI is established. 

5. Exploring DApps

For the needs of your business, alternatives to Wallet Connect could be used. In the near future Spatium blockchain Wallet as a Service platform is enabling dApp Explorer and letting businesses configure what dApps their end-users will use. This will eliminate friction in crypto wallet UX and let users connect to dApps within the crypto wallet. 

Conclusion

The development of an easy-to-use and -operate multi-chain wallet development infrastructure is critical to the evolution of DeFi and web3 in general. Blockchain Wallet as a Service is ideal for wallet providers to supply users with highly secured multi-chain non-custodial wallets cost-effectively. 

The wallets are connected to multiple blockchains and various third-party protocols to provide a high-class user experience and offer requested services: selling and buying crypto, sending and receiving it, on/off Ramp services, and the connection to decentralized apps through Wallet Connect or dApp Explorer.

Wallets built on the Spatium platform are easy to use, simple, and safe. The more accessible the DeFi system is, the better chance it has to grow and evolve.

Send us a line to get to know more about the Spatium blockchain Wallet as a Service platform and the development of reliable, user-friendly multi-chain wallets.

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Smart contract wallets are evolving, forcing more rapid massive Web3 adoption. Multisig wallets - that offer higher security and new features - significantly upgrade the entire Web3 wallet experience for both seasoned users and newcomers.

Users report that the existing wallet experience has long been poor, with most popular wallets like MetaMask, Rainbow, and Coinbase Wallets remaining risky and complex to use. That is where smart accounts come into the picture with a much better solution. 

Thanks to Etherium's introduction of ERC-4337 (also known as account abstraction), many providers now want to provide a better wallet experience by using different types of smart wallets.

And one of the most popular types of Web3 wallets is Multisig (or Multi-signature) wallets. But what does it even mean, and how does it make the wallet experience better? 

We created this article to showcase all the information you may look for related to Web3 multi-signature wallets, how they work, how they differ from the rest of the options, and their key features. Let's get to the point.

Understanding Multi-Signature Wallets

A multi-signature wallet (Multisig wallet for short) is a cryptocurrency wallet that performs a transaction by collecting many signatures. In contrast to using one signature to execute transactions, such wallets use different cryptographic private keys, though a defined threshold of keys signs a transaction for validation.

The workflow of a multi-signature wallet remains the same irrespective of the number of signees. Therefore, all parties can initiate a transaction signed with their private key, but the transaction will only be displayed as pending when other parties sign it.

The most popular working process is an N-of-N setup where all parties must validate the transaction in advance. Another similar example is a 2-of-2 method, meaning two signers should validate a transaction for it to happen.

Alternatively, an N-of-M setup will require a specific subset of parties to approve a transaction. Let's take a 3-of-4 wallet as a tangible example. Here, three out of four parties should sign the transaction for it to be executed. 

The key idea behind multisig wallets is the ability to sign different documents as a group rather than as an individual. Parties using a multisig wallet are named "copayers". 

What are the Types of a Multisig Wallet?

The multisignature wallet will differ depending on the number of keys required for a transaction. Let’s explore three of the most popular options in use today:

• 1-of-2 Signatures - Two parties (preferably those who trust each other) could use a wallet to share crypto coins without the need for translation to be verified by the other.
• 2-of-3 Signatures - Being the most popular type of multisig wallet, this setup requires two private keys to execute a transaction. The common practice here will be having one key online and another offline, while the third one is stored in a security company.
• 3-of-5 Signatures - Here, wallet owners store their private keys in different offline or online locations, while the fifths remain with the provider of the wallet or a security company. Access to multiple cryptocurrencies is possible when two of the four keys are available.
  

Multisignature Wallets vs Single-Signature | Difference

There are three most popular ways you can use to manage your cryptographic keys or secure your cryptocurrency. These include Single Signature (Single-sig), Multisignature (multisig) wallets as well as Multi-Party-Computation (MPC).

The main difference between multi-signature and MPC wallets is the signing process. A multi-sig wallet employs separate signatures from several private keys for security, while MPC uses just one signature, regardless of how many private key shards contribute.

Below, you will see an overview of multi-sig and single-sig wallets with a focus on their difference, functionality, and security aspects.

Single-Signature Wallets

Single-sign wallets tend to have the lowest security level, though they are still a preferable option thanks to their convenience element, making them easy to use for both experienced and newcomers. As you might have expected, a single-signature wallet uses only one private key that can verify a transaction, which is the most vulnerable approach.

Pros

Easy to use - users are able to gain access just by setting up a single account (username and password) and getting access to multiple wallet functionalities.

Efficiency - single-signature wallets require only one signature, which saves time and is much more convenient for users since it reduces the need to create and remember multiple passwords and usernames.

Streamlined access - these wallets let users transfer from one functionality or survive to another without re-authentication.

Cons

Low-security level - using one signature makes it easier for hackers to compromise a set of credentials, potentially enabling access to many services, applications, and systems.

Higher chances of failure - failure here means a higher risk of losing access to all resources in case of losing your single set of credentials.

Privacy issues - typically, a provider or an authority is managing users` credentials, which raises concerns about tracking users        

Multisignature Wallets

In contrast to the single-signature method, multisig wallet is exactly what the name implies. It uses two or more private keys and has several parties responsible for verifying the transaction. All signatures are equally required for a transaction to be considered valid.

Pros

Higher security level - multisignature acts as an extra security layer that requires all signees to be involved in the authorization and validation process. This layer makes it much harder for unauthorized parties to gain access to a wallet.

Reduced risk of unwanted access - In case any of the parties lose their credentials, attackers would not be able to gain access unless all signees participate in the transaction.

Customization - users can assign different roles and levels of authority to other parties, which increases control and significantly reduces the risks of internal threats.

Cons

Increased complexity - the number of users involved in the process makes it harder to create a multisig wallet and use it.

Risks associated with delays - transactions could be delayed because of multiple parties required to validate them, which could potentially be a disadvantage in time-bounded operations.

Dependencies on parties - transactions within multisig wallets depend on all parties involved, meaning someone may become unavailable, or the transaction would not be possible if there are internal coordination issues within signees.

What are the Use Cases of Multisig Wallets?

With their increased security and opportunity to collaborate, multisig wallets are often used in the following scenarios:

Escrow Transaction Protection

Escrow transactions happening between two parties could benefit from using 2-of-3 multisig wallets. Considering the fact that two parties are involved in the agreement, the transaction proceeds without a hitch. And in case of any errors, lost keys, or disputes, the third party could act as arbitrate, deciding on the transaction direction.

Decentralized Finance

Decentralized finance could use the multisig wallet for trading, borrowing, and lending, enabling seamless collective decision-making without involving intermediate parties. In that case, a transaction is considered valid when there is a consensus among the minimum threshold of key holders.

Collaborative Ownership

There are cases when parties collectively own crypto assets. That is where a multisig wallet makes it easier to build trust among key owners. Here, the transaction that involves several shared assets would happen when all wallet users agree to use the funds.

The crypto industry is known for several huge fraud cases, so making your wallet secure is paramount. Additionally, the business exit scams make collaboration and investment an issue. Changing the crypto landscape and the evolution of the Web3 idea makes multisig wallets an excellent option to address all the challenges mentioned above and grant asset holders better control of their assets while keeping them secure.

Increase Asset Security

As we mentioned, multisig wallets are highly secure. Using them means asset owners can rest assured knowing that even in case of one key being lost or compromised, the funds will still remain safe.

For example, you can create a 2-of-3 multisig wallet, storing each private key in different places (offline) or devices (online crypto storage). So even if the phone was stolen, attackers won't be able to access your funds using only 1 out of 3 keys.

Overall, multi-signature technology also prevents other types of hacking, like malware infections and phishing attacks, since the attacker would most likely have access only to one key or device.

Two-Factor Authentication

If you create multisig wallets requiring two keys, then you also create a two-factor authentication mechanism to access the funds. Therefore, multisignature wallets can act as a trusted two-factor authentication requiring users to provide both keys to access assets.

Decision Uniformity

Let's take a corporation made up of four boards of directors as an example. Setting up a 4-of-6 wallet gives each board member access to one private key. Therefore, it eliminates the chances of one member misusing the funds since the decision agreed only upon by the majority of members can be executed.    

The Best MultiSig Wallet in 2023 

Spatium, as one of the leading Web3 wallet providers, advocates for open access to the blockchain ecosystem for everyone. Following this goal, Spatium developed an unbeatable tech stack that significantly facilitates web3 wallet creation.

Spatium offers three key solutions:

Wallet SDK

The crypto Wallet SDK provided by Spatium allows users to build a fully featured wallet or integrate an existing wallet provider with third-party SDKs. They offer everything you need to create your Web3 wallet easily based on business needs.

Wallet Cloud

Spatium makes a reliable and scalable cloud Web3 wallet by letting users align wallet cloud API with Wallet SDK. With Spatium, you will have an easy-to-set-up wallet infrastructure that manages 500+ types of coins, NFTs, and tokens. This infrastructure will store, receive, and send your assets, allow you to buy and sell crypto, and assess DeFi and dApp functionality.

Spatium Wallet UI

Spatium Wallet UI includes modular and reusable components that are designed to match the brand's stylistic and business needs.

• Spatium's Crypto Wallet UI Kit is compatible with Figma, so it is automatically responsive to different screens.
• Wallet UI Kit uses well-thought UX that could be integrated into ready-to-use workflows. In addition, UD logic could be customized when required.
• Spatium Crypto Wallet UI elements reduce the need to design every visual from scratch, making locating and finding layers easy and quick.
• All components of Spatium's Wallet UI could be easily integrated into the app front-end while also perfectly matching with Spatium's Wallet SDK.

Wrapping Up

Multisig wallets are used to enhance security and control over digital assets by involving several parties in transaction approvals instead of one. Multisig wallets, requiring signatures from different parties to make the transaction valid, are usually set up with an "M-of-N" scheme. Here, M signatures out of N total participants are needed to approve a transaction. In addition, the private key is not divided; each participant gets their own distinct private key.

The functionalities that underlie the concept of multisig wallets are considered to be promising instruments for the future of crypto. With the use of multiple private keys, these wallets provide assurance of better security and opportunities for collaboration. While the multisig wallet requires technical knowledge, Spatium, as a trusted Web3 wallet provider, makes the process of Web3 wallet creation and use as easy and convenient as possible.

FAQ

What is a multisig wallet?

As the name suggests, the multisig crypto wallet is a wallet that acts based on smart contracts (a code that happens only when a specific set of conditions is met) that requires several signatures to make a transaction valid. 

What type of wallet is a multisig wallet?

A multisig wallet is a type of wallet laying under the umbrella of a smart contract wallet term. Therefore, it works on smart contract technology, where a set of conditions should be met to perform a transaction.

Is MetaMask a multisig wallet?

The short answer is no. In contrast to a popular Bitcoin multisig wallet, MetaMask is a single-signature wallet. Even though it has one key by default, it can integrate with multisig wallet smart contracts to perform transactions.

Can a multisig wallet get hacked?

Multisig wallets have higher security compared to other types. However, they are still not immune to hacking. We recommend following best security practices to keep crypto safe. For example, encrypt the wallet with a strong password, opt for a hardware wallet disconnected from the internet and store your backups in multiple locations after wallet backup.

What is the difference between hot or cold wallets?

The key difference between hot wallets and cold wallets is that hot wallets could be connected to the internet through phone or a laptop, while cold wallets are hardware devices keeping your data offline.

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It’s hard to imagine the modern world without instant money transfer apps, investment apps, and digital wallets, enabling users to pay online and at marketplaces. Users don't care much about how these transactions are performed as long as they are seemingly safe, instant, and don’t take much of the learning curve of how to use an app. 

All these became possible because the niche of innovative banking experience is occupied by neobanks, which operate on top of existing financial infrastructure. Being a wrapper for the traditional banking experience, neobanks share similar strategies and ways of industry development. One of the recent tendencies existing among banks and other financial institutions is embracing crypto. 

Based on recent research, more than half of the top 50 world banks have already started working with crypto. Bank of America, JPMorgan, HSBC, Wells Fargo, Goldman Sachs Group, just to name a few.  

Of course, such financial giants have all the capabilities to build their private blockchains specifically designed for the needs of the institution, rather than being stuck with existing blockchain infrastructure. But it’s obvious that they refocused and are genuinely interested in blockchain and its benefits. 

Due to neobanks’ flexibility and eagerness to experiment, their interaction with web3 is brighter and more in-depth. Let’s discuss why neobanks should create crypto wallet apps and use blockchain. 

Neobanks are in Avantgarde of FinTech Banking Transformation

Neobanks are well-known for disrupting traditional banking through innovative technologies. Their distinct features are a user-centric approach and appealing UI. The term ‘neobank’ was coined around 2016 and since that time the overall number of neobanks has exceeded 400. The majority of them are feature-rich and profitable. 

Unlike traditional banking institutions, there is no need for physical contact with the branch of the bank while setting up an account. One can access neobanks through mobile phones or websites, they don’t have a physical office. Neobanks are appealing to users because they are flexible, user-friendly, and offer various benefits. 

At the same time, the sky’s the limit and if there are new disrupting technologies that could be beneficial for users, neobanks are ready to plunge. One of such technologies is blockchain. 

Some of the prominent neobanks have already enabled crypto transactions through the creation of their own crypto wallets. Paypal, Square, and Revolut are one of them. Let’s discuss the reasons for it.

Why Do Neobanks and Banks Move toward Crypto? 

• One of the reasons is new revenue streams added to traditional ones. By providing access to cryptocurrency exchanges, neobanks increase customers’ chances to generate extra money on buying and selling crypto.
• Attracting new customers is another reason. There is no doubt that the number of crypto users is growing. That's why adding crypto helps a neobank stand out and be competitive by embracing more users.
• Retaining current customers. When a neobank embraces crypto, it makes its customers’ lives easier. Now there is no need for a separate app for crypto payments and transactions. For example, PayPal claimed that after they launched their crypto trading platform, the amount of logins into the app increased twofold. 

Blockchain Technology in a Nutshell

Blockchain technology was introduced in the 2000s with the launch of the Bitcoin blockchain. It's a decentralized immutable ledger where all transactions are written and stored indefinitely. Each transaction that is performed through a crypto wallet is written in the block. The block has to be validated and then added to the blockchain permanently. 

The blockchain network is designed based on high-profile mathematics and top-notch cryptography practices, which makes any alterations of blockchain blocks infeasible. 

Everyone who has a crypto wallet, which is the gate to web3, can view all transaction history of the blockchain since the moment of its creation.

In the beginning, there was only one blockchain and now the variety of web3 ecosystem is presented by more than 1000 chains delivering various decentralized services.

What are the Benefits of Blockchain for Banks and Neobanks?

• Security, Immutability, and Transparency

Blockchain technology helps financial institutions and neobanks to eliminate intermediaries. Also, in a situation when there is zero trust environment the more protected cryptography is, the better. There is not a single activity in blockchain that doesn’t involve cryptography, but from wallet to wallet encryption implementation differs. 

The immutability of the distributed ledger and the high level of user protection helps companies build trust with their clients. Moreover, all transactions are transparent and anyone can see, monitor, and audit them. It means that there is less space for fraud. 

• Simplified International Payments

In the world of web2, there are no straight ways to make a transaction. If we talk about international payments, a dozen intermediaries are required. Moreover, they are expensive and time-consuming. Blockchain has the potential to change it. 

Direct peer-to-peer transactions are available on blockchain, cost-effectively and instantly. Streamlining international transfers and making them secure and instant is a good point in making users loyal and satisfied. 

• Cutting-Edge Identity Verification

One of the negative sides of traditional financing institutions' practices is the fact that they have to repeatedly perform identity verification on their customers, for security reasons. Blockchain-powered identity software could facilitate verification processes and give users full control over their personal information, minimizing any data breaches. 

Also, if several banks and other financial institutions are operating in web3, even if not on the same blockchain, there is a possibility to facilitate the sharing of customer’s data in a safe way, speeding up various banking operations.  

• Precise Scoring and Improved Lending Practices

Two main properties of blockchain are revolutionizing the lending processes. These are transparency and immutability. Banks and neobanks can access decentralized customers’ financial records, which paves the way to instant and precise score evaluations. Smart contracts are a valuable asset to lending practices because they are capable of loan agreement automation. 

Spatium Helps Banks and Neobanks Create Crypto Wallet Apps 

Seamless Wallet Deployment

Spatium wallet development infrastructure consists of two main components: Wallet SDK and Wallet Cloud. These two core elements are efficiently and easily used to create crypto wallet apps. A skilled team can integrate Wallet SDK in less than a month. Just after that, blockchain security and convenience could finally meet traditional banking experience, making funds transfer frictionless and instant. 

Security and Protection

Crypto-banking solutions on average provide an impressively higher security level than any other Fintech apps. Wallet SDK comes with multi-layered cryptographic and MPC key and wallet management, which makes wallets unhackable and eliminates unauthorized access and digital asset theft. 

Reporting and Transaction Monitoring

The wallet infrastructure features three transaction signing parties. One of them is a user, who always initiates the transaction. The second one is a service provider and the third one is Spatium. If requested, Wallet SDK can enable programmable signing, which helps the service provider comply with KYC and AML requirements.

To Sum Up

Spatium’s experience and deep understanding of how blockchain technologies work provide an extra secure and increasingly fast way for banks and neobanks to take an idea that is just a project to production. In a very short period, backed up by Wallet as a Service SDK, banks and neobanks can create crypto wallet apps and let their customers reap the benefits of web3.  

A powerful argument for partnering with us is the fact that the wallets developed on top of Wallet SDK are non-custodial, which means that they don’t require any licenses to operate. One more plus is facilitated onboarding and the extremely user-friendly interface of the wallet, in addition to the fact that users have total control over the funds. Let your customers enjoy using protected, feature-rich MPC wallets while you save on development and design. 

Eager to get to know more about Wallet as a Service platform, let us know. Our sales representatives get back to you and pick up a convenient time for a call.

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Computation (MPC) is expected to create an economic value of nearly one trillion US Dollars. It will happen because MPC acquires more and more trust in the market of data privacy and security. For example, with MPC, a bank determines joint account totals without revealing individual balances, digital crypto wallet boosts security by spreading private keys, etc.

Stick around this blog post and find out, when a multi-party computation was born, how it works for the crypto wallets now, and why it’s important for the dev businesses.

What’s the MPC meaning? 

The first MPC concept was introduced by Andrew Yao in 1982. He published a document “Protocols for Secure Computations.” There, he has mentioned the two-party computation, providing security only against passive adversaries. 

In the middle of 80s, MPC was just a theoretical concept, with limited practical applications. However, as the field progressed, researchers started exploring the potential applications of MPC in finance, healthcare, and data privacy.
The multi-party format first appeared in 1987 when Oded Goldreich, Silvio Micali, and Avi Wigderson released the Goldreich-Micali-Wigderson protocol. It provides a boolean-circuit representation for the function being computed and is designed to be secure against a semi-honest adversary controlling any number of corrupted parties.

One of the significant milestones in the history of MPC was the release of the Yao’s Garbled Circuits protocol in 1990. It allowed two parties to securely check a function without revealing their inputs to each other. 

A key point in the transition of MPC from theory to practice is the 2004 Fairplay paper. This was the first full-fledged system that implemented generic secure function evaluation.

The long-awaited first practical application of MPC occurred in 2008 at scale in Denmark.

During the 2010s, MPC found a natural fit in blockchain wallet security. By distributing key shares among multiple parties, they provided enhanced protection against attacks.

What is the difference between MPC wallets and MultiSig wallets?

At first glance, they may appear similar to each other. They are both cryptographic solutions designed to secure cryptocurrency and other digital assets as well.

A MultiSig uses M-of-N keys per wallet, and MPC uses M-of-N parts of a key for a single signature wallet. However, the key distinction lies in their methodologies for managing cryptographic keys.

On the one hand, MPC wallets divide a private key into multiple shares, distributing them among different parties or devices. This ensures that no single entity possesses complete control over the security key. 

On the other hand, MultiSig wallets require multiple private keys to authorize transactions. This is achieved by specifying a predetermined number of signatures needed for a transaction to be executed. 

While both methods provide enhanced security, MPC’s unique approach offers additional layers of protection. It simply eliminates the need for a single party to hold the complete key. This difference underlines the advantage of a multi-party computation technology in the way on how to protect cryptocurrency in the wallet. 

How does MPC work for crypto wallets? 

The MPC’s secure way to store crypto consists of several steps. 

First of all, MPC divides the private key into several parts, with each part being kept by different participants or devices.

Then, MPC wallets use a threshold signature scheme in which the KeyGen and Sign algorithms are distributed across multiple parties to create shares of the private key. A threshold must be met before a transaction can be authorized. The scheme refers to the number of key-shareholders who can sign on behalf of the entire group. 

Following, when a user wants to perform a transaction, the parties holding the key shares must work together to create a public key and sign the transaction. Here, MPC ensures that no single party can access the user’s complete private key, providing increased security against attacks.

After that, the technology creates a security structure that is resilient against single points of failure and threats. Attackers would need to compromise multiple parties simultaneously to gain access to the wallet, minimizing the chances of a complete breach.

Finally, the result serves as the signature of the transaction.

It might appear that the MPC wallet structure is complicated and may present several issues for users in terms of UI experience. However, this is a misconception. Interacting with an MPC-based wallet is often quite similar to using a traditional wallet. The additional security measures are typically seamless and transparent.

How MPC secures assets in crypto wallet app?

There are three ways MPC provides the protection of the assets in the wallets.

• MPC wallets store keys in a distributed way. They spread the private key across 

servers providing the best way to secure your crypto. Even if there’ll be an unauthorized authentication attempt, the attacker would not have enough information to access the funds.

• They control the authorization process. Wallets can be configured to require several 

signatures for transactions, which means that no single individual can authorize a transaction on their own.

• They are auditable. Wallets can be configured to generate audit trails of all 

transactions, which can be used to detect wallet hacks and investigate any suspicious activity. This can help to deter fraud and theft, and also to comply with regulatory requirements.

In general words, MPC assures crypto wallet security by distributing control and requiring collaboration for access. 

Advantages of MPC in crypto wallets for business

MPC wallet offers a range of valuable features that overcome smart contract based, web, mobile and other wallet types. 

1. They can effortlessly scale, accommodating a high volume of users and transactions. It renders them particularly well-suited for businesses tasked with managing a substantial influx of cryptocurrency transactions.
   2. Also, MPC wallet configurations are highly adaptable. This encompasses the freedom to determine the number of servers utilized, specify the requisite number of signatures for transactions, and select the type of audit trails generated.
2. Take into account that MPC wallets facilitate compliance with Know Your Customer, Anti-Money Laundering, the General Data Protection Regulation standard. By integrating MPC technology, businesses can navigate the regulatory landscape with greater confidence and efficiency.
3. Additionally, they can sustain various blockchain protocols and support new crypto assets and chains. This flexibility allows users to access a wide range of digital assets while maintaining the security and privacy features.

With those features,  MPC-based solutions are convenient for businesses seeking to optimize their cryptocurrency management practices.

Challenges of MPC for crypto wallets

Despite the crypto wallet security best practices, MPC solutions still represent some challenges that need to be addressed before they can be widely adopted.
One of them is complexity. The solution requires more computational resources than traditional wallets, and the management of key shares can be complex, requiring organizational policies and procedures. 

The performance issues. MPC involves extensive communication among the parties participating in the protocol, which can lead to increased communication costs, to slower transaction times and higher transaction fees.

Cost of the production. It can be more expensive to implement and maintain than traditional hot wallet, as MPC requires additional infrastructure and resources to manage the distributed key generation and threshold signature scheme

A growing user adoption. This is still a new technology, and not so many users may be familiar with the concept of distributed key generation and threshold signatures. This lack of familiarity can make it challenging to convince users to trust them with their crypto coins.

But, as the technology continues to evolve and improve, MPC wallets are likely to become the most secure crypto wallets and more user-friendly than other hot and cold wallets.

What are the benefits of using Spatium MPC Protocol?

The Spatium MPC Protocol offers a range of benefits for businesses. To ensure security, it includes ECDH algorithm, homomorphic encryption scheme, EDDSA, and ECDSA extension.

With the MPC Protocol, a user’s wallet can be stored across multiple physical devices and servers, each containing independently generated shards. These shards replace the traditional Private Key used for transaction signing. The current model includes two main shards and guarantors as backups that protect digital assets against wallet hacks.

The first shard, End-users shard 1, is generated autonomously on the user’s mobile device during registration. The second shard, Business (Service) shard 2, is generated autonomously on the server either in the Spatium cloud or on-premise on the business infrastructure. These two shards are used to generate a single public key and are utilized during the MPC signature procedure.

The backup shards are held by guarantors, who receive shard 1 from the end-user and shard 2 from the business. These shards are securely encrypted. Guarantors cannot use the encrypted shards for any operations but are responsible for their integrity. They define and perform procedures where one encrypted shard may be passed to the opposite side. Guarantors can be legal parties or organizations that ensure the security of received information and establish rules for accessing it.

The presence of guarantors is crucial for businesses to provide maximum crypto wallet security to their customers. In the event of a business or user ceasing to exist, the assets on the blockchain can still be accessed. Spatium employs a multi-signature system based on cryptography. Technically, it requires 2 out of 2 parties, but actually, it requires 2 out of 3 parties. This ensures that even if one party becomes unavailable, access to funds can be restored. In the future, we plan to introduce more complex cryptography, allowing users to define their own threshold.

This joint control over the wallet and the ability to moderate user transactions also provides numerous benefits. Businesses can implement scoring, AML/KYC/KYB checks, and anti-fraud mechanisms to enhance security without directly storing assets. Users, on the other hand, have a non-custodial wallet with access to additional functionality typically found in centralized solutions. They can also restore full access to their crypto assets if the business becomes unavailable.

Overall, the Spatium MPC Protocol offers enhanced secure crypto wallet, flexibility, and control for both businesses and end-users, ensuring the safe storage and management of crypto assets.

How to create a safe crypto wallet?

In simpler terms, just use the Spatium Wallet SDK solution. This is an effortless process providing a non-custodial MPC crypto wallet creation. There’s no more need for excessive coding, testing, and implementation. businesses might focus directly on achieving their goals. Here is a breakdown of how it might look.

1. Go to the @spatium/sdk and install it. This is the main package for Spatium SDK. It includes the protocol logic and essential cryptography.
2. Download an auxiliary package from @spatium/signer-client. It consists of the specific components for working with the SDK and Spatium Signer Service.
3. After that, find both packages in the private NPM registry of Spatium. To get access, request it directly from the Spatium team:
   

npm login --scope=@spatium --registry=https://files.spatium.net/repository/npm-public-sdk

npm notice Log in on https://files.spatium.net/repository/npm-public-sdk

Username: sdk-distribution-user

Password: 

Email: (this IS public) 

Logged in as sdk-distribution-user on https://files.spatium.net/repository/npm-public-sdk.
4. Now, you can proceed with the installation. Make sure that yarn is set up correctly by adding to .yarnrc “”@spatium:registry” , “https://files.spatium.net/repository/npm-public-sdk/””. Then run “yarn add @spatium/sdk @spatium/signer-client”.
5. The same procedure needs to be done with NPM. Firstly, add to .npmrc “”@spatium:registry” “https://files.spatium.net/repository/npm-public-sdk/””. Then run npm by “install @spatium/sdk @spatium/signer-client”.
6. As a result, a snippet appears. It verifies a connection by registering a new secret pair and synchronizing the public key.

import {
 uuid,
   randomBytes,
   generateDistributedSecret,
   syncDistributedEcdsaKey,
} from '@spatium/sdk';
import { SignerClient, ServiceStorage } from '@spatium/signer-client';
const test = async () => {
  const client = '783c8beb-5820-40a7-84f8-776acb67407c';
  const secretId = '205ad897-1def-47d3-8b4e-24a49f7deb3e';
  const token = 'eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJwZXJtaXNzaW9ucyI6WyJyZWFkIiwid3JpdGUiXSwiaWF0IjoxNjgzOTY1NDI4fQ.-O3z_QIDTnbj2MhcDEcN9JN6et6YDIE-b3kh3fhMYrg';
  const storage = new ServiceStorage('https://cloud.spatium.net/storage/v1', token, client);
  const signer = new SignerClient('https://cloud.spatium.net/signer/v1', token, client, storage, 10 * 1000);
 try {
   await signer.connect(10 * 1000);
   await generateDistributedSecret(signer, secretId);
   const publicKey = await syncDistributedEcdsaKey(signer, secretId, uuid(randomBytes), 'secp256k1', 0, 0);
   console.log('Your public key is', publicKey);
 } finally {
   await signer.disconnect();
 }
};

To achieve a scalable cloud web3 wallet, it is essential to align the Wallet SDK with the Wallet Cloud API. This integration allows the crypto wallet infrastructure to efficiently manage over 500 types of coins, NFTs, and tokens. Additionally, to create a user-friendly and visually appealing wallet interface, utilize the UI Kit. It’s compatible with Swift, Kotlin, and Typescript, and offers modular and reusable components. By implementing these solutions, you can ensure a seamless and comprehensive wallet experience.

Conclusion

In today’s world, where cryptocurrencies are becoming increasingly popular, it is essential to take steps to protect your crypto wallet. MPC wallets offer numerous advantages over traditional crypto wallets, such as increased security, reduced potential risk of loss, and ease of use. For developers and companies, MPC wallet’s the best secure crypto wallet and ideal solution for storing and managing digital assets.
If you are serious about protecting your business's digital assets, then an MPC wallet is the right solution for you.

F.A.Q.

Are there any technical limits on the types of computations that can be completed with secure MPC?

In principle, any computation is possible to perform under MPC. However, the computation’s cost may grow as the complexity of the computation and the amount of input data grow.

What is the difference between smart contract and MPC?

With smart contracts, parties all know all the input values, whereas in MPC parties only know their own input values. Because of this difference, MPC parties must execute a protocol, whereas with smart contracts parties can directly compute the program independently from the other parties.

How do secure MPC and Differential Privacy technologies compare to de-indentification/anonymization practices?

Unlike de-identification and anonymization protocols, MPC and DP technologies do not rely on hiding or suppressing sensitive information at the record level, while releasing other information. MPC and DP protect the entirety of the records and provide mathematical guarantees about what information can be gleaned. In general MPC ensures that no information is “leaked” about the individual records or data sets other than what was intended and pre-approved, whereas DP ensures that the information leaked cannot be used to ascertain whether an individual record was present or not in the data set.

How do I recover my MPC wallet?

Recovering a user’s MPC share is done by retrieving the encryption key from the user’s cloud storage provider. Then you’ll encrypt bitcoin wallet shares within your infrastructure.

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Table of contents:

• First Things First: What is Web3?
• Web3 Infrastructure Breakdown
• Who Needs Web3 Infrastructure?
• Web3 Use Cases 
• Web3 Infrastructure Companies
• The Best Web3 Infrastructure Solution for Web3 Development
• Wrapping Up
• FAQ

Developers require effective, reliable, and efficient Web3 infrastructure. While the market is overloaded with a range of tools at your disposal, new ones are emerging almost on a monthly basis.

According to this Cognitive Research, the global Web3 market size was estimated at $3.34 Billion in 2022 and is suggested to reach $49.10 Billion by the end of 2030, growing at a CAGR of 46.7% during the forecast period.

Experts say that the key drivers of such growth are the ability of the Web3 infrastructure to enhance the user experience and provide highly interactive advertising opportunities. For example, companies could use NFTs as a marketing tool, creating limited-edition assets or collaborating with artists for exclusive NFT collections.

Web3 infrastructure also acts as a foundation of the decentralized blockchain systems that boost Web3. The infrastructure is an umbrella term for a rich list of technologies, tools, and solutions developers need to build and operate with decentralized applications.

In this article, we are going to dive deeper into what Web3 infrastructure is, its essential components, and tools and resources for Web3 infrastructure you can consider now.

First Things First: What is Web3?

Before we move to the elements of the Web3 infrastructure, let's learn more about the technology itself. 

Web3 is the next version of the World Wide Web we are all already familiar with. Simply put, it's a user interface that offers access to documents, apps, and multimedia on the Internet.

Even though Web3 has grown in popularity, it is still in the development stage, so there is no accurate definition accepted worldwide. What is clear, though, is that Web3 places a strong emphasis on decentralized applications and makes extensive use of blockchain-based technologies. 

With the popularity of AI and ML, it is also expected that Web3 will also use both technologies to deliver a more intelligent and adaptive web.

Quick Overview of the Web Evolution

It is hard to understand Web3 and the opportunities it has to offer without talking about the past.

The first generation, known as Web3, was invented in 1989. The public wasn't much aware of the web until the release of Mosaic in 1993. Then, many similar graphical browsers were developed, such as Microsoft Internet Explorer and, much later, Apple Safari. 

Even though many other popular search engines like Yahoo! Search, Lycos, and AltaVista also entered the global scene, Google remained the leader and put most of them out of business.

Experts then started to promote the idea of upgrading the Web with the goal of making it more interactive; that's pretty much how Web2 was introduced. However, it took several years to develop an interactive version of the Web and was mostly driven by the extreme popularity of social networks like Facebook.

Then, The World Wide Web Consortium (which is the web's standards body) released a Semantic Web standard. Around that time, the tech world introduced two Web3 essential technologies: blockchain ledger and cryptocurrency. 

Later, well-known technologists, journalists, and even a co-founder of Ethereum started to popularize the idea and terms Web 3.0 and Web 3 (which are the same) to signify a decentralized, semantically aware version of the web we will soon see.

Web3 Infrastructure Breakdown

The main elements of the Web3 infrastructure intend to address issues related to centralization, privacy, and trust. Offering a more secure and open method of exchanging data and conducting transactions. Already established Web3 infrastructure gives users more control over their data and digital identities, leading the way to a more decentralized Internet.

These are the key components of the infrastructure of Web3:

Blockchain Technology

As you might expect, blockchain and its decentralization is an essential aspect of Web3 Infrastructure. Blockchain technology records transactions or digital information, enabling transparent and tamper-proof interactions between Web3 ecosystem players. 

A recent survey also highlights that only 24% of respondents globally are aware of the concept of Web3 though they are familiar with the blockchain.

Cryptocurrencies

Cryptocurrencies offer a medium of exchange within decentralized systems working on a blockchain ledger. Digital currencies remove the need for conventional financial systems and enable peer-to-peer transactions with lower fees and twice as high security. Since the crypto market evolves rapidly, the demand for Web3 wallets is also growing to power up the Web3 infrastructure.  

Decentralized Storage

Web3 infrastructure is able to store a large volume of data, so it requires robust and decentralized storage systems to guarantee data security and availability. 

In contrast to traditional centralized storage solutions that have singular points of failure, Web3 data infrastructure achieved through distributed storage networks is more resistant to censorship and failure because of data being distributed across numerous nodes.

Identity and Reputation Systems

Web3 promotes the idea of self-sovereign identity. In contrast, traditional centralized systems rely solely on central authorities to verify identities. Therefore, the Web3 stack requires Identity and reputation systems for establishing security and enough trust within the ecosystem. 

The report shows that 79% of survey participants want more control over their identity on the Internet.

The Web3 Infrastructure Layer

The Web3 infrastructure layer stays on top of the protocol layer. This one is made up of interoperable tools and solutions allowing dApps and users to interact with a blockchain network. It is a vital and diverse layer for Web3, with Web3 infrastructure projects being developed on a broad range of tasks.

Consensus Mechanisms

Consensus mechanisms within Web3 are used to assure agreement and validity in decentralized systems. These mechanisms help achieve distributed understanding, while traditional methods work on centralized authorities to validate the transaction. 

For example, Proof of Work (PoW) is currently the most popular consensus mechanism used by Bitcoin, which needs mines to resolve complex cryptographic riddles required for transaction validation.

Interoperability and Standards

Interoperability and standards are essential since they connect many components of the Web3 infrastructure technology. With the growth of protocols and applications on the blockchain, interoperability ensures communication and functionality across diverse platforms. 

Standardization of both data formats and protocols enables seamless collaboration, reduced fragmentation, and the development of interoperable DApps. 

Decentralized Governance

Traditional internet systems are administered by a centralized authority which has vast control and decision-making opportunities. The goal of Web3 is to introduce the idea of decentralized governance, allowing participants to make decisions collectively instead of granting control to one authority.

Decentralized governance is achieved through concepts like decentralized autonomous organizations (DAOs), where stakeholders can vote on proposals, suggest changes and adjustments, and actively participate in the decision-making process. 

Scalability and Performance

Being a key element of the Web3 infrastructure, scalability and performance is also one of the biggest challenges that prevent Web3's widespread adoption. 

Well-known blockchain ledgers have transaction throughput and processing speed limitations. Sharding and advanced consensus mechanisms like Proof of Stake are used to improve scalability without compromising data security. 

Privacy and Security

Privacy and security are also crucial elements of Web3 infrastructure. Data privacy and transaction secrecy are achieved through protocols that prioritize privacy, like zero-knowledge proofs and secure multi-party computation. The same report we mentioned adobe says 83% of respondents globally say that data privacy in Web3 is important for them.

Who Needs Web3 Infrastructure?

Providing a secure platform for data storage, decentralization and speed, Web3 infrastructure is beneficial for anyone interested in developing decentralized applications (DApps) or using blockchain technology can benefit from Web3 itself and its infrastructure.

For example, mobile app development companies building dApps, crypto wallets and Neobanks will be pioneers reaping the benefits of the Web3 platform today. That is because the market already offers Web3 solutions, like Web3 wallets and pre-written smart contact code, allowing businesses to speed up the development process without sacrificing quality of the end product.

Almost any Web3 business, Web3 developer, as well as regular companies and brands can harness the potential of Web3 technology with the goal of building secure, transparent, and efficient systems.

Programmers can use Web3 to build dApps that offer unique features or address intricate issues. Businesses are also able to enhance security in trustless systems by reducing vulnerability to manipulation or data leakage.

Web3 Use Cases

Web3 applications and use cases are expected to draw heavily considering the web's emerging AI uses and its ability to understand users' behavior and deliver tailored content based on data collected. 

Being powered by blockchain, Web3 enables new services and applications in active use today. Some of the key ones are:

Non-Fungible Tokens (NFTs)

NFTs are digital tokens used to represent ownership of unique items. These tokens allow creators to digitize various items, like art, collectibles, or even real estate, which is known as real estate tokenization. NFTs are expected to play a vital role in how things of value will be created and exchanged on Web3.

Decentralized Finance (DeFi)

Decentralized finance (DeFi) is suggested to reduce the need for traditional finance systems, serving as the basis of the Web3 platform of decentralized financial services.

Cryptocurrency

Cryptocurrencies, used to generate monetary units, conduct transactions, and verify changes of ownership, will become the Web 3.0 coin of the realm, according to the technology supporters.

Decentralized Applications (dApps)

The dApps refer to open source applications developed on blockchain ledger. There are many dApps available today, including those for middleware, charitable donations as well as social media platforms.

Smart Contracts

Smart contracts are already the basis for upcoming blockchain apps and are suggested to act as a foundation of Web3 infrastructure. Even though the legal status of smart contracts should still be determined in most jurisdictions, they are more responsive to changing conditions compared to traditional ones. For that reason, some developers and mobile app development companies seeking Web3 opportunities started to implement contract-developing frameworks that simplify the process of writing smart contracts for different purposes.

Web3 Infrastructure Companies

In addition to key market players you already know such as Binance, Coinbase and Open Sea, we would like to showcase other companies that are either currently implementing or already have Web3 infrastructure. Let’s explore two of Spatium’s clients.

Wirexapp

Being on the crypto market since 2014, Wirex is already trusted by 6 million people with 20+ billion in crypto transactions.

Wirex is a financial services platform providing a range of services, where the Wirex card is the most popular one. This card acts as a debit one, allowing users to spend their cryptocurrency and traditional currencies in the same way they would use a regular debit card. This card was specifically developed to work as a banking alternative designed for Web3. 

Wirex cross-chain wallet built for DeFi and NFTs makes storing crypto safe and easy. It is the world’s first non-custodial wallet that has no seed phrase vulnerability and supports 8 blockchains.

DEXFIN

DEXFIN, as a one-stop solution to buy, store and manage digital assets, reduces the legacy of crypto’s early days and offers the highest level of security. It allows users to store digital assets, get profit from staking, save on fees, leverage tokenization and more.

The goal of DEXFIN is to build the infrastructure for the next generation of Web3 financial markets. Supporting 9 blockchains, DEXFIn self-custodial seedless wallet is one account for everything: over 100 coins, tokens and addresses.

The Best Web3 Infrastructure Solution for Web3 Development

Among all the solutions for Web3 development being available today, Spatium is the leader in the field of Web3 wallet development. Being a Web3 wallet infrastructure provider and promoting the idea of open access to the blockchain ecosystem for everyone, Spatium developed an unbeatable tech stack that will significantly boost the process of Web3 wallet creation. 

Web3 Wallet Overview

A Web3 wallet refers to a software program storing private keys that are required to access blockchain networks and conduct transactions. In contrast to traditional wallets that store physical currency, Web3 wallets store both cryptocurrencies and NFTs.‍

Spatium as a Trusted Web3 Wallet Infrastructure Provider 

Spatium lets developers integrate crypto wallet SDK, wallet cloud, or wallet UI at any stage of the process to enjoy the simplicity and reduced time and costs needed for wallet creation. Using Spatium means building user-friendly and convenient Web3 wallets, which creation doesn't always need technical skills or background.

Wrapping Up

Web3 infrastructure is going to determine the future of the Internet. Blockchain, cryptocurrencies, decentralized storage, NFT, smart contracts as elements, and best practices for Web3 infrastructure are being actively developed and improved to create a new decentralized version of the global Web.

The decentralization in the infrastructure of Web3 will also return the control to the users, giving them the power to control their data and online interactions. As Web3 tools and technologies develop and Web3 communities grow, businesses should stay updated regarding the latest tech evolutions and solutions that can be used to power up the development process.

FAQ

What is Web3 Infrastructure?

Web3 Infrastructure is an umbrella of a rich set of tools and technologies that create the decentralized and blockchain-based ecosystem used by the Web3 platform. Some of the technologies and tools that act as building blocks of the Web3 Infrastructure are NFTs, smart contracts, cryptocurrencies, machine learning, and AI.

What is the difference between Web2 vs Web3?

The key difference between Web2 and Web3 is the shift from a centralized to a decentralized Internet. Web2 relies on intermediaries and centralized platforms. Web3, in contrast, enables peer-to-peer interactions and gives control to users rather than one  authority. In addition, Web2 is more about acting as company servers, while Web3 is an illustration of blockchain technology and decentralization. 

What are Web3 limitations?

The main limitations of Web3 Infrastructure that are highlighted by experts and supporters of the technology are scalability and interoperability.

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