The top issue of the safekeeping of our assets in cryptocurrencies, but also generally the user-friendliness of the services offered on the blockchain, is what Ethereum developers are trying to solve by working on the technology called “Account Abstraction”.
One of the biggest “headaches” in the cryptocurrency industry is the storage of our assets and the worry of losing the keys to our personal private wallets and at the same time access to them forever.
It is this very concern, as well as the ease of using services on the blockchain, that the developers of Ethereum are attempting to solve by preparing a revamp that is likely to be a major catalyst for mass adoption of cryptocurrencies.
Account Abstraction (AA) aims to use smart contracts to execute cryptocurrency transactions.
For example, with AA, users will not have to disconnect from their private wallets in every transaction with another entity:
“We will be at a point in the future where using an Ethereum account, will be as simple as using a bank account,” said Kristof Gazso, co-author for an Ethereum Improvement Proposal (EIP) on AA.
Make it as easy as possible
Through the AA, developers want to make Ethereum as easy to use as a traditional national currency bank account, so users can make transactions simply, schedule automatic bill payments and more.
How do Ethereum transactions work today and how does AA technology want to transform them?
In Ethereum, users are able to create two types of accounts: External Account Owners (EOA) and Contract Accounts (CA). The two types of accounts differ in how they initiate transactions over the Ethereum network.
EOAs, the standard account type for Ethereum users, are the standard account type used, like the MetaMask and Coinbase wallet. With an EOA, users are given a pair of keys: one public and one private.
Anyone can send funds to an EOA using their public key. But only the account holder – whoever has access to the account’s private key which should remain secret – can actually initiate transactions from the account.
CA accounts, more commonly known as “smart contracts,” are like mini computer programs that live on the Ethereum network.
These accounts are password controlled – not private keys – but they cannot initiate transactions themselves. An EOA must send a transaction (something like a message or instruction) to a CA in order to make the transactions.
The problem with EOAs can be created by human error. If a user loses an EOA private account key, there is no help service or key recovery process (such as a “reset password” button) that can help to regain access to the account and thus the user’s assets.
“People are the biggest security flaw in Ethereum account management,” Gazso added.
They could be lost
While there is no specific data on how much ETH is lost due to forgotten keys, Bitcoin accounts use a similar private key system to that in Ethereum. According to a report by Chainalysis, up to 23% of all Bitcoin in circulation (or about 3.79 million BTC) could be lost forever due to forgotten or lost keys.
And forgotten or lost keys aren’t the only problem. If someone (e.g. a hacker) gets hold of a person’s private key, they gain full control of that person’s funds.
How Account Abstraction works
Account Abstraction allows users to create accounts with built-in security mechanisms and other special features to verify transactions.
Within Account Abstraction, user accounts could be programmed to include retrieval systems, where multiple individuals – each with their own key – have the ability to return an account to its owner in the event that the owner loses access to the private key.
In addition, it will offer the ability to create “multi-wallets”, which will hand over ownership of the account to a group, requiring many different parties to sign off on transactions as a kind of extra layer of security.
Accounts under the AA could also avoid some of the other limitations of EOAs. They could, for example, define how users pay their fees. Currently, under EOAs on Ethereum, users must pay their fees in ETH. But with AA, one can choose a different cryptocurrency to pay their fees or could delegate someone else to pay fees.
All of these systems are possible to implement today using CA accounts, but with a significant degree of complexity and overhead (i.e. fees) due to the requirement that all transactions must be initiated by an EAA.
How is the full implementation of Account Abstraction achieved?
There are many proposals that aim to add AA to Ethereum, with the most prominent being EIP-4337.
The main advantage of this proposal is that no changes to the basic Ethereum protocol are required to implement it. The proposal would simply add a new Account Abstraction layer on top of the core Ethereum protocol, allowing wallet providers to create user-owned accounts and use smart contracts to define the rules for initiating transactions.
The issue in this particular case is how to push this new technology to the masses of the world. It is generally accepted that for the masses of the world to try out a new wallet or a new technology, it is not the easiest thing to do.
It has already begun to provide
Some Level-2 blockchains on Ethereum are leading the way to AA integration. StarkWare, the company behind the blockchain, StarkNet, is already implementing Account Abstraction.
Eli Ben-Sasson, StarkWare’s co-founder and president, told CoinDesk that Account Abstraction could in the future use facial recognition or biometrics to authorize payments, much like FaceID can enable card payments for iPhone users. “The infrastructure to do this is now possible on StarkNet,” Ben-Sasson added.
Last month, Visa announced its proposal to use Account Abstraction to deploy automatic payments with the StarkNet infrastructure. This would mimic the automatic payments of a bank account, except that it would be done on the blockchain.
Other companies, such as Gnosis Chain, are trying to integrate Account Abstraction into their infrastructure. Gnosis Chain co-founder Stefan George told CoinDesk:
“Slowly, interest in AA is growing as more and more developers and users realize the potential.”
Gazso reiterated that 2023 will be “the year of Account Abstraction”, noting that it is currently one of the most widely discussed topics in the ecosystem.