As artificial intelligence becomes increasingly sophisticated, traditional wallet security measures like seed phrases and passwords are becoming dangerous liabilities. AI-powered scams no longer look like broken-English phishing emails; they can sound and read like someone you trust.
Deepfake voice and video cloning can replicate anyone’s likeness with just a few audio or visual samples, and foreign attackers can now write in perfect English. Together, these tools create an urgent need to rethink how we protect our digital assets and financial systems. It also makes one conclusion inescapable: the reliance on knowledge-based authentication must end.
AI + Social Engineering = The Perfect Storm
Artificial intelligence has been weaponized by threat actors to create unprecedented attack vectors. For example, last year, a finance worker at a multinational firm in Hong Kong was tricked via a video call into transferring roughly $25 million USD after deepfakes of the company’s CFO and other staff appeared on the call. A message or call might sound like it’s from your boss, your bank, or even a family member, but it could be AI-generated. In this environment, no amount of caution or training can fully prepare people to separate what’s real from what’s fake. The human element alone can no longer carry the weight of security.
These technologies have turned every employee into a potential entry point for cybercriminals. In this environment, no amount of training can fully prepare workers to distinguish between an AI-generated deepfake and authentic communication, making the human element untenable as the primary defense mechanism.
The Fatal Flaw of Knowledge-Based Security
For years, crypto security has relied on what you know: seed phrases, passwords, PINs. The problem is they can all be guessed, stolen, or tricked out of you. Once compromised, hackers can drain accounts and assets in minutes. Billions have already been lost this way, and AI is making the problem worse.
Some new tools, like multi-sig or social recovery, have tried to reduce the burden, but they still share the same flaw: too much depends on human behavior. In contrast, passkey-based logins are part of the solution. They replace fragile backup phrases with secure keys stored on your device, making them resistant to phishing and theft.
Why Biometrics Changes the Equation
Biometrics adds a different class of defense. They tie security to something you are (your fingerprint, your face, or even behavioral patterns), rather than something you have to remember. Biometric identifiers can’t be forgotten, written down, or stolen in the same way as a password.
When combined with passkeys and intelligent wallet agents that quietly monitor for suspicious activity, biometrics make attacks exponentially harder to pull off. It’s no longer just you versus the scammer; it’s you with a built-in safety net that notices when something feels off.
What the Future of Security Looks Like
With crypto adoption surging, security has to work for everyday people, not just tech experts. That means simple logins, fewer opportunities for mistakes, and defenses that adapt in real time to new threats.
This layered model – biometrics, passkeys, hardware protections, and adaptive monitoring – keep the user experience smooth most of the time, but step in when something looks wrong. It’s security designed for the billions who will come next. Fireblocks’ multi-layered approach uses biometrics along with other enterprise-grade security features, such as chip-level hardware isolation, to protect signing keys and credentials from sophisticated attacks.
Seed phrases and passwords won’t vanish overnight, but their days are numbered. The future of self-custody isn’t about remembering secret words: it’s about using who you are, not what you know, to stay safe.