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Since the arrival of cryptocurrencies, we see new technologies on the horizon more frequently than ever, with more revolutionary innovations that disrupt the financial, technological, and social aspects of life.
Ethereum is one of the leading ecosystems when it comes to blockchain developments and innovative solutions that contribute to the overall well-being of the blockchain ecosystem and decentralized platforms. Despite coming second to Bitcoin, Ethereum Labs and its founder have been leading the efforts to update the network and improve the crypto infrastructure.
Account abstraction is one of the latest introductions of the ETH blockchain that strives to improve crypto transactions and reliability. Let’s discuss this concept and its importance.
Understanding Account Abstraction
Let’s start by explaining the way crypto transactions happen. In order to send or receive cryptocurrencies, one must have a decentralized crypto wallet from one of the reliable providers available in the market. To start transacting, a user must get the other party’s wallet address, insert the amount they want to send, and confirm the transaction.
For the avid user, this process can be smooth and effortless. However, this process can become complicated for those who use crypto wallets for the first time or are technically illiterate.
Once the transaction is initiated, the user has little to do on the surface. However, on the backend of things, there is a systematic process that takes place every time a crypto transaction is operated.
Nevertheless, users still have to interact with the wallet and grasp some basic knowledge like gas fees, signatures, and private keys, which are essential terms in the crypto world. Moreover, human interference is required in the traditional payment process, and a small error or misunderstanding can lead to loss of funds and incomplete transactions or at least not knowing if the money was received or how to check the transaction status.
The account abstraction method attempts to combat these potential problems by introducing a new streamline of the way crypto transactions occur.
Crypto Transactions Before Account Abstraction
The classical way to transact with crypto without account abstraction was through externally owned accounts (EOAs) created and managed by the user. EOAs are any externally operated application or part of the transaction process, such as crypto wallets, payment gateways, and managed accounts that deal with payment processing and liquidity pools.
The EOA platform is associated with private keys that power encrypt operations on the decentralized network and ensure the ambiguity of user info and transactions. Some EOAs entail simple verifications, while others require complicated steps and can be confusing.
Coinbase and MetaMask are two examples of common EOA platforms that contribute to crypto transaction streamlining by offering decentralized wallets with private and public key verification.
This verification protocol is sufficient to some extent to safeguard blockchain transactions. Private keys are used to encrypt the crypto transfer from the sender and pass it along to the validating and then to the receiver, whose wallet decrypts the message with public keys.
Traditionally, the user must sign the first step on the wallet application/website to verify using private keys in the first encryption process. Then, the user signs another step entailing the gas fees.
Then, the transaction goes through the validating nodes who approve the operation if it meets the blockchain standards and send it over to the receiver’s wallet. The destination wallet uses public keys to release funds to the wallet, and the transaction is finalized.
This process keeps the transaction details away from hackers and malicious attacks. However, this process requires human interference in two instances at least, which the basic user may overlook, resulting in incomplete operation or having the funds in the mempool forever.
The Introduction Of Account Abstraction
Ethereum introduced the account abstraction method to automate the transaction process and make it faster and more reliable. This way, smart contract protocols will manage the payment process automatically without having the user interact with the wallet or interfere in the transaction process.
The revolutionary ERC-4337 standard will take the burden of the crypto wallet owner and streamline the transaction from A to Z. Thus, the smart contracts will carry out the transaction through nodes, nonce structure, and cryptography encryption from end to end.
Moreover, crypto transactions with account abstraction will move within the blockchain ecosystem safely and do not require private and public key verification to lock up the transaction or release the funds to the receiving wallet. Therefore, transactions are safer since they are away from hackers’ reach.
Advantages Of Account Abstraction
The new transaction stream using account abstraction aims at mitigating confusion and improving the payment process in the following ways.
- Gas fees: decentralized transaction speed and gas costs can be confusing, and many users cannot get around this part, which leads to transaction delays and long waiting times. However, account abstraction enables users to purchase gas fee bundles from suppliers who pay these fees on their behalf.
- User interface: the user’s interaction is minimized using account abstraction, reducing the chances of accidentally inserting wrong entries or overlooking some steps like signing the transactions and verifying the gas fees.
- Transaction speed: crypto transactions with the account abstraction method are much faster because they run through the secure blockchain ecosystem without any externally owned accounts, which leads to faster transaction time and improved validation process.
- Security: account abstraction bundles transactions together and processes them in the blockchain software without exposing them to hackers or crypto attackers. Moreover, This model processes transactions faster without having to sit in the mempool for a long time, reducing the chances of them being caught by hackers.
The introduction of account abstraction by Ethereum reshaped the way cryptocurrencies are transferred between users, minimizing any confusion or misunderstanding and contributing to a better payment stream.
This method works by transferring the payment verification and confirmation burden to the technical build of the blockchain and smart contracts, which provide an end-to-end transaction process with minimum human interference. Therefore, crypto payments have become faster, safer, and more reliable.