How to Store Digital Assets on Ethereum

This is from an article originally posted by ConsenSys – technically by Gnosis – about storing digital assets on Ethereum and Gnosis’ introduction of their new product Gnosis Safe. Full article link [here.]( Overview below. Looks interesting!

“As of May 23rd, 2018, Ethereum achieved a market capitalization of 64 billion USD while the top 100 Ethereum based tokens account for another 39 billion USD. The increasing amount of users also results in higher volumes of funds that need to be stored. In this post we’d like to provide an overview and analysis of the ways users can store funds on Ethereum at the moment.

**Centralized Exchanges:**

Coinbase or Kraken provide a user-friendly introduction to storing digital assets. Users sign up for these accounts in a similar way they sign up for most Web2 platforms, meaning they are comfortable with password resets & accessing from multiple devices. **Challenges:** Centralized exchanges typically hold funds on behalf of users – i.e. users don’t own wallet addresses with their funds. Centralized exchanges, therefore, have a single point of failure that can be exploited by a hacker and jeopardize users’ funds.

**Decentralized Wallets:**

Decentralized wallets allow for a user’s full control of his/her funds. Allows users to own their private key and back up their account – all they need is their private key or recovery passphrase to restore their account. An attacker would need to access the private keys in order to steal funds. **Challenges:** Users own their private keys and therefore are entirely responsible for making and securing proper backups. This is not user friendly for newer users of cryptocurrency, and is still susceptible to catastrophe or irreversible consequences if a user messes up.

**Multi-Sig Wallets:**

Multi-signature wallets exist to mitigate some of the shortcomings of decentralized wallets. They require a predefined number of owners to verify every transaction before execution. In case one owner loses access to his/her private key, the other owners could step in so the funds remain accessible. If an attacker retrieves the private keys of one of the owners, he/she cannot withdraw funds because other owners would have to verify the withdrawal. **Challenges:** Multi-sig wallets are smart contracts, so they must be audited very closely. A small bug can result in lost or frozen funds. Setting up this smart contract and keeping it alive with gas fees, as well, isn’t very user-friendly for newcomers to the ecosystem.

**Introducing Gnosis Safe:**

Today, there is not ideal solution for decentralized storage of funds on Ethereum – every solution pitches security and usability against each other. Gnosis is working on a new decentralized wallet, the Gnosis Safe. Gnosis Safe aims to provide all users with a convenient, secure way to manage funds and interact with dApps on Ethereum. There are two editions: Team and Personal Edition. Team Edition is a direct improvement of the Gnosis MultiSig wallet with updated smart contracts, cheaper setup/transaction costs, and improved UX. The Personal Edition is meant for individuals using 2+ factor authentication via a browser extension. Gnosis has three main goals:

1. Usability and accessibility for new and advanced users
2. Simplification of multi-sig setup and transactions

Fund recovery beyond backing up private keys.

View Reddit by ConsenSys_SocialiteView Source

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