Cryptocurrency exchange ShapeShift has launched a mobile app that allows users to buy, sell and transfer digital currencies using their smartphones ShapeShift seeks to differentiate itself from its competition by allowing users to control the encryption keys of their own digital wallets in what is known as a self-protection wallet. This is in stark contrast to traditional cryptocurrency exchanges like Coinbase, which take over user wallets and control encryption keys. User wallet login information is never known or maintained by ShapeShift, which places a security burden on individual merchants.
Self-protection wallets
ShapeShift already offered a similar trading platform through its web interface, but the new trading app meets many crypto users right where they are: on their mobile devices. "With just an email and password, users can self-finance on the web and on mobile," says ShapeShift founder Erik Vorhees. "We're here to make it easy." The self-protection model has proven attractive to cryptocurrency users, as hacks have increasingly targeted the exchanges that host users' digital wallets. In April, hackers stole €25 million worth of user assets from exchange DForce and ShapeShift was hacked in 2016, but no user funds were stolen because their exchange does not have the keys to users' crypto wallets. . Custodial wallets are also gaining popularity as they are required for a wide range of blockchain-based financial applications. While exchanges with hosted wallets can buy and sell crypto on behalf of a user, hosted wallets are insulated from the majority of the blockchain-based financial ecosystem. Financial transactions, such as buying decentralized insurance, granting loans based on blockchain, and exchanging crypto derivatives, require a self-service wallet.