Abra includes an important feature that will essentially allow you to be your own bank.
It’s called a non-custodial wallet, and it eliminates the need to trust a centralized third-party.
Another way to think about it is that Abra’s user assets all live in user-controlled addresses on the Bitcoin or Litecoin blockchains, enabling transparency, liquidity, and security.
A non-custodial wallet fully leverages the power of permissionless blockchain technology, which enables peer-to-peer transactions without the need for an intermediary. In this instance, Abra operates on top of that model, providing a layer of support and functionality (by making it possible to exchange 28 cryptocurrencies and 50 fiat currencies) without getting in the way of user control and security.
The alternative, which is used as the backbone for most of today’s crypto exchanges, is a custodial arrangement. A recent article on CoinDesk points out that “a few big players — both centralized and custodial in nature — handle the bulk of trading vote for the $381 billion-worth of the world’s crypto assets.”
Custodial exchanges operate a lot like traditional banks, with accounting and risk management structures that prioritize exchange security over user security by putting a layer of control between people and their assets.
One risk is the security vulnerabilities for the exchanges that are inherent in the custodial model. In early 2014, the Japan-based Mt. Gox, an early and massive exchange (at one point 70% of all bitcoin transactions were happening on Mt.Gox) was hacked. The loss was valued at over $450 million at the time, but maybe more damaging was the harm done to bitcoin’s reputation.
And those kinds of risks are not only part of bitcoin’s coming-of-age-story — they are ongoing. At the beginning of this year, roughly $530 million of cryptocurrency was stolen from another Japanese exchange, called Coincheck.
And in June 2018, two Korean exchanges were hacked (Bithumb and Coinrail) collectively losing an estimated $70 million worth of cryptocurrency.
Hold those private keys
Since Abra’s wallet is blockchain-based, a user must control his or her private keys, which requires a level of personal responsibility that more closely resembles a cash-based system, rather than a bank-based system.
If you lose, misplace, or otherwise mismanage cash, there’s a high likelihood that that cash will disappear forever. Same thing with a blockchain-based private key. If you lose or incorrectly record your private key, you will no longer be able to access your blockchain-based assets.
While this all might seem a bit complex, we believe that in the long run, the non-custodial setup actually has more advantages for the user, with privacy and security being chief among them.
How a private key is created and what it looks like
When new users download the Abra app, a unique private key is created in the form of a mnemonic phrase, which is called the recovery phrase.
Abra’s recovery phrase is randomly created using words so that it’s easier for people to interact with, but it actually consists of encrypted numbers and letters that make up the key needed to access assets stored on the blockchain.
Best practice for handling a private key is to write it down on paper and then store the paper in a secure place. Make sure and test the private key before transferring funds into the wallet.
It’s also recommended to never take a photo of a recovery phrase or keep the phrase on any kind of internet-connected device.
I changed my device and I logged in with my recovery phrase on ABRA but all my funds are gone. There are no signs of my investments. Do you know why?
Thanks
Marjan
Please get in touch with Abra’s support team via email support@abra.com.
Thanks
Hi,
How come that Abra is able to show the user his mnemonic phrase?
Is the private key is stored on the phone in plain or encrypted by the 4-digits pin?
Thanks.
Asaf,
The backup phrase is generated and stored on the phone encrypted with the PIN. It is never sent to our servers.
I am concerned that with just four numbers my Abra account is accessed on my phone. Once that is done anyone can see my “secret” phrase!
If I lose the phone, everything is at risk. How can I hide that phrase?
Please get in touch with support@abra.com and they will walk you through best practices. Thanks,
I want to check my investment, how do I open my account?
Virginia,
I’m not sure what you mean, exactly. Please email support@abra.com and they will help you out.
Can I exchange coins between wallets?
Cornelius,
Yes, you can quickly exchange between different kinds of coins on Abra.
Can I send bitcoins from my Coinbase wallet to another person’s Abra wallet? I assume they ill have a unique wallet address which I must need in order to send them. Their Abra wallet must be linked somehow to my Coinbase wallet, is that correct?
Thank you
Yes, you can send from any external bitcoin wallet to any Abra bitcoin wallet. Have your friend send you his or her bitcoin address, which they can find in the Abra app under the “add money” menu (at the bottom of the app). Then click on Bitcoin. From there they can copy the address and send it to you. Best practice is to send a small transaction to check that the address has been copied and pasted correctly. Hope that helps. If you need more help, please reach out to support@abra.com.
How do I purchase a physical wallet to carry with me.
USBs are available at your local retail store, with this you can keep you virtual money on a physical device in this sense being used as your wallet. USBs can also be encrypted and offer a personal touch of security over everything.
I’m concerned with one of messages on here about how he changed his device and logged into his new device using his recovery phrase code and found there was no signs of his investment. Can you let me know what was the outcome please.
Brian,
The best bet is for you to contact support@abra.com.
I keep trying to download the app but it never sends my link to my cell phone
Michael,
Please email support@abra.com. They’ll be able to help you out. Thanks
I’m very pleased with Abra.
If I be able to login whit Digi-ID would be perfect.
Thanks
Hello! Can I send btc from my Abra wallet to blockchain wallet?
Dagda,
The last half of the video on this page will walk you through how to withdraw BTC to any external BTC wallet. You can always contact support@abra.com if you have any questions and someone can help you out.
Does Abra have a one to one ratio of coins held to claims of coins by its customers? In other words is there a any risk at all of not getting my coins off Abra when I want to move them to another wallet?
Thanks for confirming!
Joe,
It sounds like you are asking about how the hedging of Abra’s crypto-collateralized assets works. You should check out this recent talk about MIT about what’s going on under the hood.