In the dynamic world of cryptocurrency, safeguarding your digital assets is crucial. Unfortunately, losing funds is commonplace, often due to forgotten passwords or lost private keys. Additionally, keeping crypto on exchanges exposes users to risks of hacks and outages, which can lead to a loss of control over their assets.
Option 1: Using Exchanges
When you use an exchange, someone else is looking after your money, and that can be risky. Many exchanges have been hacked or shut down, proving that this way isn't always as safe as it seems. Plus, it gets complicated when we talk about who really owns the digital money on these exchanges. For more info read Goodwin Law Article.
Option 2: Self-Custody via Private Keys
Traditional private key-based crypto wallets offer complete asset control but pose user-friendliness and key management challenges. The need for users to securely store and remember complex mnemonic phrases carries a high risk of loss or forgetfulness. This complexity, especially for newcomers, leads to a steep learning curve and the potential for irreversible asset loss due to misplaced keys, making digital asset management both cumbersome and stressful.
Gridlock is a social recovery wallet that incorporates a network of trusted individuals, referred to as "guardians." These guardians assist in regaining access to the wallet if the main user misplaces their private key or password. Differing from the conventional reliance on a seed phrase or private key, Gridlock's social recovery feature introduces a more adaptable and robust approach to recovering account access.
Two key technologies behind how Gridlock social recovery wallet works.
MPC, or Multi-Party Computation, enhances cryptocurrency wallet security by computing the wallet's key across multiple devices. This process involves dividing the key into segments, with each segment stored on a different device. When a transaction is initiated, these segments collaboratively compute to authorize the transaction, without ever fully reconstructing the key on any single device. This approach removes a single point of failure, significantly reducing the risk of key compromise or loss.
Threshold signatures complement MPC by requiring a minimum number of approvals for a transaction. It's a collective agreement process, fortifying your crypto against unauthorized access and single points of failure.