Before the internet, the adorable dog videos and your grandmother’s facebook updates, losing money was a traumatic experience. Dropping $20 bill meant you might never see it again and feel stupid doing so.
However in the FIAT world, it has become a little harder to lose track of money. Centralised institutions controlling the assets and give you your usernames and passwords when requested after conducting some security measures. This is one factor that the crypto industry is trying to solve.
Ownership of cryptocurrency is determined by who holds the private keys to these assets. Because of this, they are far more important than a password could ever be. Storing these codes on the cloud can be calamitous in case you get hacked, while holding them on your phone can be devastating if the device is lost, stolen or damaged. Crypto enthusiasts have heeded advice from experts by getting clever and recording them offline – using a USB stick or even an old-fashioned piece of paper – only to forget where they put it or throw it away without realizing its significance.
Most of the time, nothing can be done when private keys are lost. It’s perhaps no surprise then that, last year, a digital forensics firm estimated that four million Bitcoins are gone forever. But although it might be a little bit too late for those who have already lost a fortune, new technology designed to help people recover their private keys is starting to emerge.
Some blockchain platforms believe “zero-knowledge proofs” – a relatively new concept in the cryptographic world which emerged in the 1980s – could transform attitudes to private keys, enabling them to be recovered without compromising security.