Forget “Not Your Keys, Not Your Coins”: There’s a Safer Way to Store Your Crypto
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Ever since the 2014 Mt. Gox hack of $600+ million worth of Bitcoin, the crypto community has embraced the doctrine âNot your keys, not your coins.â
âNot your keys, not your coinsâ has since become the gold standard for crypto security: control your private keys, and with them, safely store your 12-24 word seed phrase to ensure you - and only you - can access your crypto. While there is no question that centralized exchanges have their role, and can be useful for liquidity, swaps, lending, and trading, most smart money should be stored off-chain, in non-custodial wallet solutions and guarded with private keys.
This gold standard has remained unquestioned for far too long. In recent years, innovative cryptographic solutions challenge this âprivate keyâ assumption and do a better job at balancing the âsecurity v. simplicity v. controlâ tradeoff better than outdated mottos.
Private keys are not the (only) vulnerability: You are!
Any password, including private keys, represent a security vulnerability, and no system is fully resistant to attacks or errors. While the nature of these attacks and errors can change, they share a common thread: human mistakes that coders and users will inevitably make.
In crypto, there are dangerous narratives that hide harsh realities. âHardware wallets are the ultimate securityâ or âuse two-factor authenticationâ. While they all share some basis of truth, they have their limits. You can still lose all of your funds, even if you diligently follow all of the above. If you give away or lose your private keys, misplace your seed phrase, or get hacked during the second factor authentication process in exchanges, you will likely lose all your funds forever.
Unfortunately, thereâs no limit to poor security choices. How many people secretly write down their 24 word seed phrase on a piece of paper to keep them âsomewhere safe?â This is probably the worst piece of advice you can give to someone without proper awareness of the risks: the ink can fade, the handwriting can be difficult to read later, the paper can be lost, stolen, burned, forgottenâ¦ or land in the hands of someone else!
At the same time, safely storing private keys represents a significant barrier to mass global adoption. Itâs intimidating. How are your parents going to safely store their seed phrase when so many use âPasswordâ to protect their most important online assets?
In the past, the crypto storage âsecurity v. simplicity v. controlâ tradeoff was dominated by centralized custodial exchanges on one end, and decentralized non-custodial solutions on the other. That is no longer the case: new innovations in an area of cryptography known as Multiparty computation (MPC) and Threshold Signature Schemes (TSS) have arrived and offer an innovative hybrid solution.
Securing crypto with MPC: They hybrid solution paving the way for mass crypto adoption
The future of crypto should protect users and related systems from their own mistakes, by design. MPC is an innovation in cryptography that introduces a hybrid solution, making crypto wallets more simple and accessible, while allowing users to safely maintain complete control over their assets. Itâs arguably the most successful approach to the âsecurity v. simplicity v. controlâ tradeoff.
This technology is not theoretical - itâs open-source, vetted, and being used today by hundreds of thousands, if not millions of users. Crypto wallets like ZenGo take advantage of this type of cryptography to ensure that users never have to remember or store a 12-24 seed phrase that can get lost, stolen, or compromised: because there is no seed phrase to lose.
With MPC technology, the traditional private key is replaced by two independently created mathematical secret shares. One share is stored on the userâs mobile device, and the other share is securely stored on the ZenGo server and is useless to a hacker if hacked. With no single point of failure, even if something happens to one of the shares, the userâs crypto is always safe.
This technology is gaining popularity, with a few companies championing this technologyâs adoption. Watch this space and try it out for yourself - to encourage true global adoption, these types of innovative solutions are both critical and inevitable, and will help users find a better balance between security, simplicity, and control.