This is a Hold Up. Give me your keys
⏳Keep it brief
Not Your Keys, Not Your Crypto. Keep your keys to yourself.
Developers shouldn’t hold user’s keys or risk insolvency.
In today’s era, the closest that many people come to experiencing an old-fashioned bank holdup is in the movies. Glorified in Hollywood Westerns, these robberies allegedly died with the turn of the century — or have they? Recently, many cryptocurrency organizations have experienced the same . While storing the private keys — which allow clients to access their cryptocurrency — many companies have been robbed, hacked, or simply misplaced this important information. It seems as though the wild frontier of cyberspace has opened new opportunities for thieves to get rich quick by stealing crypto keys. Thankfully, there are ways to store key information safe through different methods of storage.
Cryptocurrency requires a completely different approach to currency exchange and banking. In a traditional setting, banking is centralized — meaning that all currency deposited in that bank is saved and distributed within that bank’s network. In essence, it remains in the bank’s control. Additionally, depositors can receive a guaranteed return through policies such as FDIC at many banks in the US. Whereas, in the cyber realm, there are no physical means of protection or prosecution of a thief and there are no governmentally-backed insurance programs to safe-guard cryptocurrencies. Because of this, the procedures instituted within reputable banking systems are ineffectual in cyberspace.
Unfortunately, many companies have applied the same age-old banking logic to cryptocurrency. Many cryptocompanies keep the private codes, or keys, that each individual receives for their cryptowallet in a single location. This centralized key storage concentrates a variety of personal information as well as private key information linked directly to cryptocurrency investments in a single location. It makes this extremely easy to build on as your servers control the keys directly and transact on the ledger. But for those same reasons, hackers can easily target storage facilities and access this personal information as well as any cryptocurrency attached to private keys stored there.
Hedera Hashgraph supports a system of decentralized key storage which should be implemented by all decentralized applications. The only solution currently available for this is Composer for Hedera. This geographically diversified storage method will eliminate a hacker’s ability to target a specific location. Therefore, hackers will not be able to strike a single location and steal cryptocurrencies and/or personal information from Hashgraph users. It offers a new level of security for users by not only promoting the development but also the implementation of decentralized key storage. If individuals lose their keys, they will no longer have access to their crypto investments.
Although cryptoholders are still encouraged to write out their keys for the ultimate safe-storage, a decentralized system offers further confidence for users by dispersing personal financial information and access — making it nearly impossible for thieves to locate and steal this data.
