Bitcoin Titans Back the ‘Social Network’ of Crypto Custody: Vault12
Vault12 has created a novel way for cryptocurrency investors to protect their digital assets — by tapping into their social network.
The San Francisco-based company launched its decentralized digital custody solution on Wednesday at the San Francisco Blockchain Week. Investors include Bitcoin bulls Tyler and Cameron Winklevoss via their venture capital arm Winklevoss Capital.
According to the announcement, Vault12 is the first platform to offer crypto users a way to secure their assets through a distributed and decentralized backup system.
Vault12 enables an individual’s network of trusted friends and family, known as Guardians, to safeguard their crypto assets.
The approach could potentially relieve a huge pain point for cryptocurrency users and investors who like the idea of “being their own bank” by eliminating traditional banks and other trusted third parties to hold their money.
When a user becomes their own central authority, challenges arise as one individual is tasked with managing their own private keys, keeping them secure, never losing them, never forgetting them, never misplacing the slip of paper that contains the critical information to access their assets.
In the case of QuadrigaCX, for example, the embattled Canadian cryptocurrency exchange became embroiled in a scandal and legal battles when it lost millions in users’ funds after CEO and founder Gerald Cotten suddenly passed away without having granted anyone else access to the private keys containing his clients’ Bitcoin and other cryptocurrencies.
“In cryptography, secret sharing schemes are schemes that split shares of a given secret among a set of trusted participants. This secret could be a very important piece of information that may be needed in the future but needs to be kept private and secure. These shares are completely useless on their own, however, when put together reconstruct the secret and make it apparent.”
“When running Shamir’s [Secret Sharing] scheme for a private key and sharing it among friends and family, one could grant family members greater authority in the scheme and friends lesser authority in the scheme.”
Guardians are paid Ether (ETH) as a reward to secure users’ Vaults. According to Cameron Winklevoss, founder at Winklevoss Capital, the platform can ease challenges for people trying to store their crypto.
“Safeguarding money is necessary for the crypto economy to flourish. Vault12’s distributed, decentralized, and server-less approach to security helps reduce friction associated with securing crypto assets.”
Says Max Skibinksy, co-founder and CEO of Vault12,
“Previously, … we [kept our] cryptographic backups on pieces of paper and stored them in traditional banks. … We built Vault12 to be an innovative, convenient solution that replaced this cumbersome process.”
In addition to Winklevoss Capital, Vault12 is backed by True Ventures, Data Collective and AngelList founder Naval Ravikant.