Binance is launching a new self-custody wallet. They are calling it Binance Web3 Wallet. I am not surprised to see Binance building a self-custody wallet. As much as exchange would like to have people's crypto assets in their wallets, self-custody is an essential part of crypto world. While some may choose to keep their funds in exchanges, some see great benefit in self-custody. After all, that is what decentralization is about, that is what revolutionary about bitcoin and other decentralized network. They provide true and complete ownership of property which is achieved by self-custody wallets that only the owners have access to. While Binance has been an successful company by offering exchange platform, they fully understand the space they are in. Supporting self-custody is a good for the brand.
Coinbase, another successful crypto exchange has self-custody wallet with the same name. Coinbase not too long ago acquired one of my favorite self-custody wallets, BRD. After acquiring it they didn't anything with it, and discontinued its use. Those who used BRD were forced to transition to Coinbase self-custody wallet. BRD app just stopped working, and funds were available via Coinbase self-custody wallet. I didn't really like that Coinbase stopped BRD and that they acquired it. Binance too acquired a self-custody wallet in 2018. It was long before Coinbase did. The wallet Binance acquired was the Trust wallet. It seems Binance is taking a little different approach with the new self-custody wallet.
With what both Coinbase and Binance trying to do, it seems this has to do with branding. Because chose to use the company name for the wallet. I find it confusing, but probably this is good for business. I don't mind seeing multiple self-custody wallet options. If successful exchanges choose to develop and maintain few, why not? They have the resources to contribute to the crypto eco-system.
One of the main difference of Binance Web3 Wallet is that it doesn't require seed phrase. They are utilizing three part key-share. There will be three keys. All three will be encrypted. One is held by Binance, second is on user's device, and third in a personal cloud storage. Two key-shares are required to access the wallet. What they are trying to solve is the problem when people lose their private keys and/or seed phrases. Since all three parts are encrypted and stored in three separate places, Binance will not have access to the wallets but users will always have two parts of key-share which is needed for accessing. If for some reason a user loses their key-share, they will be able to obtain the key-share Binance hold from Binance and gain access to their funds.
I do not dislike the idea. I am sure there will be many who will prefer normal self-custody with full ownership and responsibility of access to the wallets. But there will also be those who will find Binance's solutions useful. It seems it would still be a better option than holding assets on an exchange. With FTX and other failed exchanges we have seen how funds can easily disappear or be misused by the exchanges, with Binance's Web3 wallet it looks like assets will remain in the wallets and not misused. Binance Web3 Wallet will not be a separate mobile app. It will be part of Binance mobile app. I personally would prefer a separate app. But I can how this could be useful for those who use Binance frequently.
Among the feature of the wallet is an "airdrop zone" for exclusive airdrops. It will also provide access to staking, lending. They will also present curated selection of dapps. Now it looks like with this product, Binance will be more involved in various "decentralized" projects and play role in promoting some. While many projects and app utilize "decentralized", "web3", and similar terminologies to present themselves to be pioneers in decentralized solutions, unfortunately many misuse and mislabel them. Having a centralized entity having more influence on which projects and apps are promoted might create some conflict of interest. I am not sure I would trust Binance's curated selection. I just don't know enough yet.
When it comes to wallets, of course my preference is Hive wallet. It is such a great wallet. So easy to use, complete ownership, so many awesome features. I have written extensively about Hive wallet. But it is only for Hive and HBD. What I would really want to see is ability to store other coins like bitcoin, litecoin, ethereum, etc with Hive wallet. Now, that would be something really impressive.