Pillar Smart Wallet for Dummies Pt. I

Written bySavannah LeeMay 31, 2019
The same Pillar Wallet, only smarter.

The same Pillar Wallet, only smarter.

All about smart contract accounts 📑

We’ve been talking a lot about making the Pillar Wallet “smart”. It will still be the same wallet you know and love, only we’re upgrading your account so that it’s smart contract-based.

This means you’ll be moving your funds from your device and into your very own personal smart contract.

WTF is a smart contract? 👩‍⚖️

A smart contract is just like a regular contract, which usually has terms of agreement between two parties. Smart contracts are digital, transparent and self-executing, meaning you write the rules into the code and when X terms are met, Y will automatically happen. No more lawyers, no more judges — just some impartial code which can’t pick sides or cheat.

Some people compare smart contracts to a vending machine — when you enter cash, you get something back automatically (hopefully it’s delicious).

In the case of your personal smart contract account, it means you can make some rules of your own. The two parties are you and the blockchain.

Why the change? 🔑

Your wallet is currently a key-based account. When you generate a new wallet, such as your Pillar Wallet, you create a set of unique public and private keys which allow you to transact on the blockchain. Your public key is tied to your blockchain “address” where people send your funds, and your private key is your secret password which is used to sign off or authorise your own transactions.

Your funds are technically ‘stored on’ your private key, and your key is stored inside your device. This has been the traditional way to hold and manage cryptocurrencies on phone wallets.

With smart contract accounts, you move your funds from hardware (your phone) to software (the smart contract which ‘exists’ in the blockchain cloud).

A smart contract has its own Ethereum address, just like your current Pillar Wallet address. When you download the Pillar app, your new wallet is encrypted within your phone, so that your phone essentially turns into a hardware wallet where you both store and control your funds. While this makes transacting easier and more secure, your funds are ‘lost’ whenever your phone is. (Note: they’ll remain lost until you restore them onto a new phone with your backup seed phrase, so always keep this safe somewhere.)

Using a smart contract as your account, you will still have full control over your funds, but your phone will only be used to access and manage all of your assets, rather than store them.

We can compare this to debit cards and prepaid travel cards. A key-based account is like having a travel card preloaded with funds — if it’s lost, unfortunately it’s like losing cash, as it doesn’t have an accessible account linked to it. Debit cards, however, are linked to an external account, and your funds remain unaffected by their loss (and can be replaced).

This separation of access (keys) and account (smart contract) is not only far more secure, but also multi-functional. With a smart wallet, you can set up multiple accounts with their own unique addresses and private keys. You can also set spending limits, freeze your funds, have different spending personas and even enable account recovery. These are all the different rules we mentioned earlier.

More about these features in the following Parts.

Part II here — all about recovery agents.