As the limitations of email and password authentication became evident, the need for enhanced security measures led to the development of 2-Factor Authentication (2FA). 2FA added an extra layer of security by requiring users to provide a second form of verification, typically something they had (like a mobile device) in addition to something they knew (their password).

The implementation of 2FA marked a significant evolution in self-custody, as it reduced the risks associated with password-based authentication. Even if a password was compromised, an attacker would still need access to the user’s secondary factor, such as a text message code or an email link, to breach the account. This method of authentication was particularly effective in combating phishing attacks and unauthorized access.

However, 2FA was not without its challenges. The reliance on SMS-based verification introduced vulnerabilities, as attackers found ways to intercept messages or clone SIM cards. Despite these issues, 2FA set the stage for more sophisticated forms of self-custody, prompting further innovation in online security.