Distributed Key Technology with Gridlock Wallet

Distributed Key Generation (DKG) Explained

18 Aug 2023

Revolutionizing Crypto Security with a Decentralized Approach

Have you ever worried about the security of your NFTs and other crypto assets? With all the recent news of crypto scams, rug pulls and thefts, chances are pretty high that you have. Distributed Key Generation (DKG) is a cryptographic technology that puts those worries to rest.

Read on to learn what DKG is, how it works, and how Gridlock Wallet implements Distributed Key Generation in an enhanced way to provide you with optimal crypto security.

A mobile phone held by human arms and surrounded by a network of digital blocks

Crypto and NFT enthusiasts have historically received their private keys from one centralized source. They were then tasked with personally keeping those private keys safe and secure. 

While many people continue to use this system, new technologies have emerged that provide a much higher level of security. 

  • No longer do you have to personally maintain backups of your private keys or worry about losing them altogether. 
  • And, no longer do you have to rely on a trusted 3rd party to issue the private keys to your crypto.

Distributed Key Generation is an alternative way to generate the keys to your crypto, giving you peace of mind and convenient access. 

What is Distributed Key Generation in crypto?

Imagine multiple parties collectively and automatically crafting a shared public and private key set, where no one individual has access to the entire private key. So, instead of a hacker trying to compromise your one device, they must work their way into multiple devices at once. Even then, they cannot access the entire set of private keys! 

Distributed Key Generation is a cryptographic process where a randomized calculation creates the private keys across multiple devices. Unlike most key encryption models, distributed key generation does not need to rely on trusted 3rd parties.

How does DKG work?

In order to avoid any one user having sole possession of the private keys, DKG enables a process of decentralized key generation. Each party is issued an encrypted share of the private keys and none of them can access the other key shares. The private keys in their entirety are never located in one place.

To make a transaction with your crypto assets using DKG technology, a threshold of the participating key share holders is necessary. From a user's standpoint, that means a percentage of key shares must be online for the wallet holder to make or sign a crypto transaction. 

DKG’s Practical Applications

DKG technology holds immense promise in crypto wallets as well as in other Internet security initiatives, making more of our digital place safer:

  • Key Escrow Services: Companies can leverage DKG for key escrowing services. By setting a threshold, multiple employees can collaboratively decrypt a ciphertext version of a private key, keeping it out of escrow services' reach.
  • Server-Side Password Authentication: In an era where server breaches are all too common, DKG offers a ray of hope. Instead of centralizing password hashes, DKG can distribute authentication across multiple servers, eliminating vulnerabilities.
  • Group Digital Signatures: DKG shines in the realm of group digital signatures, enabling a digital consensus or voting system. Only when a set threshold of group members participate can a document receive the group's digital seal of approval.

Leading edge key splitting technologies

Earlier key-splitting techniques posed centralization risks because the private keys were generated in a single location before splitting and sending to recipients. If the original device that issued the split keys is compromised, there’s the added risk of the keys being accessed.

Traditional methods of key splitting, such as Verifiable Secret Sharing (VSS) and Shamir Secret Sharing, allowed for key splitting but the originating entity remained a centralized source. With Gridlock’s novel approach to Distributed Key Generation, hacking becomes nearly impossible and privacy is greatly enhanced. 

How Distributed Key Generation works with Gridlock Wallet

To bypass the risks of centralized key splitting, Gridlock devised a system of Distributed Key Generation that virtually generates the split private keys across all the key share devices, also known as Guardians. As a multi-party computation (MPC) wallet, Gridlock users can create their own network of devices, attaining a much higher level of security than earlier multisig wallets.

Even if one of the Guardian devices is compromised, a process of Social Recovery using a threshold of the remaining key shares keeps your crypto assets safe. In essence, the private keys simply do not exist in one centralized place, nearly eliminating the chance of a hack.

Gridlock logo

Gridlock’s decentralized approach offers enhanced security against potential attacks and breaches while sidestepping the need for trusted 3rd parties in encryption models. We artfully synthesize Distributed Key Generation with other leading technologies, such as Threshold Signature Schemes.

Hand in hand with Threshold Signature Technology

Gridlock incorporates Threshold Signature Scheme (TSS) technology so that wallet users can access their wallet even if all five Guardian devices aren't active. Splitting the private key among different devices and/or people that you select keeps it concealed and inaccessible. With TSS, just 3 of the 5 Guardian devices, usually including you and Gridlock, need to be online for wallet access. Even if Gridlock is offline, your Guardians guarantee that funds recovery is still achievable.

The addition of Partner Guardians to Gridlock’s offering allows you to select from reputable crypto companies, over and above friends, family, and legal and financial advisors, to add more resilience to your network of Guardians.

Security in the age of crypto

Distributed Key Generation is not just another cryptographic method—it's a transformative approach to security in the digital age. It decentralizes trust, amplifies security through collective effort, and heralds a future where no single party, whether Gridlock or another platform, has unbridled access to a user's keys.

As digital assets proliferate and cyber threats amplify, DKG stands as a sentinel, ensuring a safer digital world.

Experience distributed private key technology with Gridlock today and safeguard your NFTs and crypto assets like never before. Download Gridlock today!

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Written by Mason Winsed

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Mason Winsed simplifies blockchain for the people. With a comp-sci background and a passion for crypto safety, he's your go-to for straight-forward crypto wisdom. In his off time, he's coding or gaming. Join Mason for a no-nonsense crypto talk.

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