May 18, 2020
The Key to Simpler Crypto is Keyless
Any veteran Bitcoiner has heard some version of this horror story: a large amount of Bitcoin bought with the intention of HODLing, only to have the user lose the private keys to their wallet, and with it all their Bitcoin. Many of these stories surfaced during Bitcoin’s meteoric rise in late 2017, when people who had purchased Bitcoin years earlier were suddenly scrambling to take advantage of the price. If it’s any comfort, those people are far from alone. There are some estimates that say about 4 million Bitcoin (worth almost $40 billion at today’s BTC price) are lost for good. But it’s not clear if users have gotten smarter about wallet safety and securing their crypto in the three years since Bitcoin went mainstream.
How crypto gives us greater financial power
As a new financial system, the safe-keeping of Bitcoin can be confusing. Most of us are used to operating within a system of passwords; whether it’s our bank account or email account, a forgotten password is always recoverable. Bitcoin is different: each user is responsible for securing their own coins in the Bitcoin wallet of their choice. That wallet and the coins inside of it are protected by a long, pre-assigned string of alphanumeric characters known as the wallet’s private keys. There’s no “I forgot my password” button to fall back on, nor does Bitcoin have a customer support team to walk us through our mistakes. In some ways, that’s a scary thought. But while there’s a certain comfort in knowing a password reset is within reach, it also leaves us vulnerable.
When it comes to any password reset, the control no longer lies in our own hands. Instead, it belongs to the institution we’ve entrusted with our information. In the case of bank accounts, that means ceding financial control to financial institutions. In the case of an email account, it means our email provider can always access our information.
Bitcoin, which was designed as for the people and by the people aims to be different. Because it’s decentralized, no one entity is in control. Instead, the financial power is with the users. When we’re put in charge of securing our own wallet, we take the power away from financial institutions. Unlike fiat currency, which can be confiscated by the bank or government without warning, Bitcoin belongs only to the user. As long as you are the only one who has your private keys, you’re in complete control of your funds; government seizure or intervention isn’t possible.
The problem with private keys
Just as they say that with great power comes great responsibility, so is the case with Bitcoin. Private keys are long and onerous. They’re impossible to remember and easy to misplace. And as with the estimated 4 million lost Bitcoin, they’re irretrievable.
In other words, Bitcoin wallets and private keys provide a great system in theory. After all, it’s virtually impossible to hack someone’s wallet. But the reality isn’t as simple, and private keys often leave us just as vulnerable as the centralized systems Bitcoin wants to rid us of.
Why keeping your funds on an exchange is risky
One solution that was developed to the problem of private keys is to keep your funds in an exchange wallet. Yet, philosophically, is Bitcoin really Bitcoin when kept on a centralized exchange? When an exchange knows and controls your private keys, is it providing you with financial freedom? Furthermore, when an exchange gets hacked and its store of funds is stolen — something that has happened to several exchanges — the individual user’s funds are rarely protected. When that’s the case, one can ask, what is the benefit of crypto over fiat?
The exchange wallet may solve the problem of private keys, but it introduces a host of other problems instead. How then, can we solve the problems with Bitcoin wallets and make cryptocurrency easier, welcoming, and more accessible to the masses? The key to simpler crypto is keyless.
The key to simpler crypto is keyless
What if there was a wallet that eliminated the need for private keys, yet still provided the same safety and security while keeping in the spirit of true decentralization? That wallet exists.
Coinmama has been at the forefront of the financial revolution since 2013, with the mission of making cryptocurrency as simple and accessible as possible. The cryptocurrency exchange has always operated with the belief that people should be in charge of their own funds, and as such has allowed users to send coins to the wallet of their choice. While users will still have that choice, Coinmama has recently partnered with ZenGo, whose first keyless wallet of its kind has the potential to transform cryptocurrency.
How is ZenGo different? Using mathematical secret shares, ZenGo splits the wallet’s private keys between its own server and your device in the form of a biometric 3D face scan. Both halves of the equation are needed to access the wallet, meaning ZenGo can’t access your coins without your half of the key. Yet because your half is biometric, there’s no need to worry about losing it. Your funds remain decentralized and in your own control, minus the problem with private keys.
At Coinmama, we’re proud to partner with ZenGo. After all, eliminating one of the biggest barriers of cryptocurrency is a giant step in the direction of mass adoption.
About us: Coinmama believes that the future of money is by the people and for the people, and that economic freedom should be available to all. It’s why our mission is to simplify the way the world does cryptocurrency, and why we work to make crypto easy, friendly, and fast for our growing community of 2 million users in 188 countries. We’re here to welcome you to the financial revolution.
