Dummies guide  – Cointelegraph Magazine

For years, Bitcoiners have repeated the mantra “be your own bank.” But in truth, storing any type of crypto in a wallet has been a lot closer to stuffing cash under your mattress than to a complex financial institution like a bank.

Admittedly, it’s an improvement in that crypto can be transferred across the globe in minutes and it’s secured with cryptography — but it’s also a lot less user-friendly than a bank and doesn’t offer anywhere near as many features. 

Your crypto could be stolen in a $5 wrench attack. You could lose the seed phrase and your funds forever. And that’s if you were technically minded enough to even figure out the complicated process of setting up a wallet in the first place.

That’s all set to change with the surprise announcement at WalletCon in Denver this week of “smart accounts,” also known as “account abstraction,” on Ethereum — and every other chain compatible with the Ethereum Virtual Machine (the EVM is the software responsible for executing Ethereum-based smart contracts).

Chains that can now take advantage of smart accounts include Polygon, Optimism, Arbitrum, BNB Smart Chain, Avalanche and Gnosis Chain.

Years in the making, the new ERC-4337 standard transforms a crypto wallet into something with all the features of a real bank.

“It gives you the same features a bank would without having to trust a bank,” says Ethereum Foundation security researcher Yoav Weiss, who was one of the co-authors of the Ethereum Improvement Proposal (EIP) alongside Vitalik Buterin.

“Account abstraction is a way to appeal to the next billion users.”

The benefits include two-factor authentication, signing transactions on your phone, the setting of monthly spending limits on an account, the use of session keys to play blockchain games without constantly having to approve transactions, decentralized recovery of wallets; smart accounts can be configured to autopay bills and subscriptions — the list goes on.

Ledger co-founder Nicolas Bacca tells Magazine he’s hugely impressed with the technology’s potential.

“Account abstraction will completely change the crypto user experience,” he says. 

What does account abstraction mean?

Account abstraction is a complicated technical term for something that is actually incredibly user-friendly. Weiss and zkSync hope to replace it with the more descriptive term “smart accounts.”

“Account abstraction is a confusing term,” says Weiss. “The accounts are abstracted from the network; they are not abstracted from the user. The user is using a very concrete wallet that does very specific things. From the user’s perspective, it’s not account abstraction — it’s more like using a smart account.”

Alex Jupiter, senior product manager at MetaMask, says “account abstraction” means different things to different developers.

In part, that’s due to the fact that non-EVM scaling solutions, including StarkWare and zkSync, have implemented a modified version of ERC-4337 in the protocol itself, while Ethereum implements the standard on top of it.

“I would’t say Ethereum came up with a workaround that’s not quite as good,” Weiss explains. “We came up with a standard that can work everywhere, focusing on interoperability and defragmentation, and it can be implemented more efficiently at the protocol level, for example, by rollups.”

A variety of EIPs to add smart accounts to the protocol have been suggested but would have required a hard fork and did not get enough support, as they’d take attention away from more important upgrades, such as the Merge.

The native implementations upgrade all user accounts to smart accounts, while Ethereum’s new standard requires users to set up a new account. Weiss explains there will inevitably be a hard fork in future to enable the upgrading of all accounts, but “it’ll take a long time to get there.”