‍TLDR:  Account Abstraction (AA) is a method of authentication that eliminates the need for private and public keys to access accounts. Instead, it relies on smart contracts to verify the account's identity. 

In simpler terms it's like how, in Web2, data abstraction hides all the complex stuff and makes everything run smoother. Take high-level programming languages for example, developers can write code without losing sleep over the nitty-gritty details of how the hardware functions. It's like speaking a language without having to know every single word in the dictionary. Plus, this saves time and enables more complex operations.

Similarly in the world of Ethereum, AA brings two different types of accounts in Ethereum, and makes it one.

According to Ravindra Kumar, founder of non-custodial wallet Frontier, AA is still a concept in Ethereum, but lots of teams currently are working on creating their very own versions of it like Starknet and zkSync. “There are lots of possibilities to it, like enhanced security, social recovery, multi-signature out of the box,” he added.

‍How account abstraction works

To understand how AA works, one needs to know the two types of Ethereum accounts.

As of now Ethereum has two types of accounts: Smart Contracts and Externally Owned Accounts (EOA). 

• Externally Owned Accounts (EOAs) - They have a public address and a private key that one can use to send and receive transactions and interact with smart contracts. They don't need any fancy code or data storage. When two EOAs interact with each other, they can initiate transactions between tokens. MetaMask, one of the most popular crypto wallets, is an example of an EOA.
• ‍Contract Accounts (CAs) - Contract accounts, on the other hand, have the ability to create new contracts in addition to transferring tokens. However, unlike externally owned Ethereum accounts, contract accounts do not have private keys.Their activities are controlled by smart contract code instead. CA’s don't initiate transactions — they only respond to them. It's like they're playing hard to get in the dating world! When they receive a transaction, they execute their programmed logic and complete the transaction.

The idea of Ethereum Account Abstraction is to merge the strengths of the two types of accounts and make it one. Simply put, account abstraction would mean that regular users switch from EOAs to CAs.

‍Exploring the possibilities of account abstraction

1. ‍Recovery options for wallets - One of the biggest problems in the current wallet system is losing private keys. For example when QuadrigaCX filed for bankruptcy after its CEO, Gerald Cotten, died suddenly while on a trip to India, nobody knew how to access the exchange's wallets (and therefore the funds). But with account abstraction, you can customize your wallet and enable social recovery to keep your funds secure. This means that different people have parts of your seed phrase, and they can work together to recover your funds without any one person having full access. It's like a secret code where no one person can steal the treasure.
2. ‍Batched transactions - If you're also someone who's into web3-enabled games, you might find it annoying to sign a transaction for every little thing you do. It takes away from the fun of the game. With a smart wallet, you can batch transactions, which means you only need to sign once you reach a certain number of actions. Instead of signing every hour, just sign one big transaction at the end of the game.
3. ‍Safe transaction training wheels -  According to Prasad Mahadik, an analyst at Brinc Accelerator, AA can also act as a sort of training tool for those who are not as experienced in financial trading. It allows them to make transactions with limits on trading size, margin and assets, as well as specific types of transactions. These limits can be set according to the level of expertise of the user.

Are there any risks?

Using AA in smart contract wallets can make them more flexible, but it also increases the risk of attacks. Upgrading to a new standard can introduce bugs and security risks, the Web3 authentication platform Dynamic shared in its blog. The wallets also require a global entry point contract that needs to be well protected. Additionally, there may be issues with higher gas fees and lack of cross-chain compatibility.

On the other hand, MPC (Multi-Party Computation) wallets can be used alongside AA to provide a secure key management system. The benefits of AA may outweigh the risks, depending on each individual's needs and risk tolerance. Nonetheless, it's worth keeping an eye on the developments happening with AA so that you can make the most informed decision about your crypto wallet.

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Shagun is the founder of Makeraves, a global PR agency that specializes in emerging tech and Web3 companies. As a former tech journalist, she loves to geek out on the latest tech trends. When she's not busy running her PR biz, she loves nothing more than empowering women in tech.

This is not financial advice. If you don't want to spend money investing in crypto or Web3 — you don’t have to. The intent of this article is to help others educate themselves and learn.