The private key can be divided into several files. The new security system is based on the algorithm of Adi Shamir, famous Israeli cryptographer.
In the history of Bitcoin, there have been cases of wallets with unrecoverable private keys, an evil for which the cure could be found in the latest update of Trezor. In the week of August 31st, the SatoshiLabs team launched a security standard that minimizes the risks of losing access to a wallet without any escrow service.
The new security option is enabled for all Trezor Model T wallets, as read in a press release by SatoshiLabs team. The mechanism is called Shamir Backup or SLIP-0039 and it aims to offer a safer way to self-escrow private keys.
The security standard is based on an algorithm by Adi Shamir, an Israeli cryptographer who published his Secret Sharing Scheme in an article entitled “How to share a secret” 1979. According to Shamir’s theory, the way to share a secret securely is to divide information into several parts. In this way, the group of people who own these fragments can reconstruct the secret without revealing any information.
Bitcoin, as well as other cryptocurrencies, has the peculiarity of being self-escrowed money. To make a transfer on this network, users do not need the help of a third party or a bank. In this way, they will have absolute power over their money, thus avoiding censorship and increasing their level of privacy.
However, the great benefits obtained entail great responsibilities. By eliminating third parties, users need to store and protect their private keys at their own risk, since these are the direct access to their crypto assets. The loss of the wallet recovery seed is one of the most common risks in the ecosystem. For instance, two years ago a man lost about $ 30,000 in bitcoins because he had forgotten the private key of his wallet.
How It Works
Since private keys are a secret, the security standard works applying the same principle of Adi Shamir’s algorithm. The mechanism allows users to divide the private key of a cryptocurrency address into several files.
In that way, when creating a wallet in Model T hardware, users will not have a single recovery seed but a group of shared files. Each resource has a sequence of more than 20 words. The customer can set the number of shared files that are needed to recover the wallet.
The developers of Trezor explain that up to 16 compatible files can be generated. In spite of this, it recommends that users set a threshold of between 2 and 3, or between 3 and 5, files to recover the wallet. They can share the fragmented information with their family or other people of trust. Besides, the keys can be stored in computers, safes or hiding places at home.
The security standard Shamir Backup is open source, as noted by the SatoshiLabs team. In this way, ecosystem developers can review it and other companies can adopt it for their wallets.
By Willmen Blanco