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San Francisco Blockchain Week has kicked off, and the product launches are underway. First up: Vault12, a company building “personal cryptocurrency security” solutions, and backed by an impressive list of investors, including Naval Ravikant, True Ventures, and Winklevoss Capital.
The company bills itself as the “first personal cryptocurrency security solution to provide distributed, decentralized backup of crypto assets for individual users.” Insteading of storing crypto funds on an exchange or cryptocurrency wallet, Vault12 customers house their assets using a decentralized storage network, encrypted using “Hierarchical Threshold Shamir's Secret Sharing and advanced proprietary technology,” according to its press release today.
Vault12 users then enlist a team of "Guardians”—a group of trusted associates—to keep watch over their money, ensuring that only the original owner can gain access to the funds. Guardians earn Ethereum rewards for their services.
It’s an idea that has evidently caught the eye of AngelList founder Ravikant, as well as the Winklevoss twins.
“Safeguarding money is necessary for the crypto economy to flourish,” Cameron Winklevoss said in a statement. “Vault12’s distributed, decentralized and server-less approach to security helps reduce friction associated with securing crypto assets.”
Most crypto users today keep their digital funds in either a wallet or centralized exchange. But these methods are not always an effective way to keep those funds safe from hackers, thieves or cyberattacks. Crypto wallets often require the use of private keys so users can access their money. These keys can be forgotten or lost, resulting in the funds themselves being "lost" on account of the owner’s inability to access them.
Max Skibinksy—co-founder and CEO of Vault12—explained in a statement, “Previously, to keep our digital money safe, we had to keep our extremely valuable cryptographic backups and pieces of paper and store them in traditional banks. It was ironic. We built Vault12 to be an innovative, convenient solution that replaced this cumbersome process.”
By using what’s known as Hierarchical Threshold Shamir’s Secret Sharing, Vault12 aims to ensure private keys remain protected through a trusted network of an individual’s choosing. This network can be made up of friends, family members or other close associates.
The sharing process, according to a conference paper, works by splitting “secrets”—usually encryption keys—into separate parts. Each member of the network is given a respective part to ensure the full keys are never held by a single person, thereby preventing a hack or theft. Users must then request approval from their networks to access the guarded assets.