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Binance Web3 Wallet: exploring features and drawbacks

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On November 8, Binance announced the launch of its new Web3 crypto wallet during the Binance Blockchain Week conference in Istanbul. The features of the wallet may sound promising. But in fact, the terms of use are quite ambiguous. The price of TWT token, belonging to another Binance’s wallet — Trust Wallet, fell almost by 15%.

Binance acquired the well-known mobile wallet Trust Wallet in 2018. Since then, the wallet has introduced support for a large number of blockchains, a browser extension, and many other updates. Moreover, this wallet has its own token, TWT (Trust Wallet Token).

What preceded the launch of Binance Web3 Wallet 

On November 6, Binance posted an intriguing tweet announcing something that should attract the "next billion" users.

On November 7, the media noticed the Binance Messenger app in the App Store and thought that was what the exchange had been going to announce; however, it later turned out to be an old app for the exchange's VIP clients.

So, on November 8, Binance unveiled a new product — Binance Web3 Wallet.

The presentation of Binance Web3 Wallet took place on the first day of the major Binance Blockchain Week conference in Istanbul. This cryptocurrency wallet is built into the Binance mobile app and is already available (except USA users).

Exploring Binance Web3 Wallet main features

The Binance Web3 Wallet is positioned as a "Self-custody wallet", which means that the funds are on an address within the blockchain and only the wallet’s owner can manage them. However, there are some nuances.

🔐 The wallet uses a multi-party computation (MPC) mechanism to protect the private key. The seed phrase, as in other wallets, is absent here. The private key is divided into three parts. The first one is stored by Binance, the second one is stored on the user's device, and the third one is stored in the user's cloud storage under a custom password. 

According to Binance, this "alters the traditional method of storing private keys by eliminating the need to retain them in one sole location. In this way, MPC lowers the risk of the keys being compromised and reduces the vulnerability of the system". 

⛓️ The wallet has built-in dApps, which are recognized as safe, and supports more than 30 blockchains. Among them there is no Bitcoin but Ethereum, BNB Chain, Polygon, and others.

Also, when interacting with suspicious smart contracts and addresses, users will be sent a risk notification. In addition, the wallet integrates Binance Bridge, which simplifies cross-chain transfers, making them fast, cheap, and secure.

👥 The wallet is only available to Binance users. According to the terms of use, the wallet address is tied to the account, and it will be impossible to change it. 

Additionally, there is a clause in the agreement, according to which Binance monitors transactions for "potential fraud, suspicious activity, and sanctions evasion" and can place "on hold" individual transactions and addresses. 

Notably, these terms are made in accordance with Hong Kong law, and this product will not be available to US residents.

What are Binance Web3 wallet drawbacks

The purpose of the wallet is clear: to make a convenient bridge between centralised finance (CeFi) and decentralised finance (DeFi) for those who are new to crypto. Therefore, the focus is on simplicity and security. However, this wallet is far from any cypherpunk ideals, and Binance has quite a bit of control over user addresses.

The most controversial thing about this is that you cannot export this address to another wallet (like MetaMask) or import your other address into Binance Web3 Wallet. This is different from usual software wallets, like MetaMask or Trust Wallet, where you can import your seed phrase and use the same address in different apps on different devices. In general, Binance Web3 Wallet is too closed in the Binance ecosystem. In this aspect, it is very different from other popular wallets.

Strangely, this product was presented in the announcement as "the key to onboarding the next billion", even though Binance had approximately 150 million registered users as of August this year. 

This is probably how Binance decided to expand its presence in the crypto wallet niche. It has owned the Trust Wallet app for several years now, has a close partnership with hardware wallet maker SafePal, and is now launching its own product aimed at new users. Whether Binance's bet will work, time will tell. However, judging by the reaction of the TWT’s price, the community was expecting something different from the announcement on November 8.

How Trust wallet’s token reacted on Binance Web3 Wallet launch

Two days before the release, the price of the Trust Wallet token, TWT,  increased by more than 30% — from $1.31 to $1.73.

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However, on the day of the announcement, the price dropped almost 15% — from $1.73 to $1.47. Now the price continues to decline and has almost returned to the pre-announcement values of $ 1.33.

You might also like: 

What’s up with Binance: is it really going to collapse?

How to store crypto

Maria Kachura
Maria Kachura

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