Non-Profit Company Proposes to ‘Decentralize’ Crypto Keys Themselves
A so-called trustless bot enables automated trading of cryptocurrency without giving up private key access.
A new proposal wants to take decentralization a step further by decentralizing the private keys themselves.
Trusting trustless bot with your crypto private keys
Tide, a non-profit privacy advocate, claims to have developed a decentralized technology, which gives rise to a trustless bot or Delegated Automated Trustee (DAT) on the blockchain.
According to an announcement on Aug. 5, DAT can act as the custodian of a crypto-key, manage access to personal data or enable automated trading bots to access funds without having access to a full key.
Essentially, the key protecting the data or crypto-assets is divided into several pieces and split between a group of nodes. No single node has access to or knowledge of the whole key, or the authority to act on its own. This makes malicious access to your key virtually impossible.
However, the nodes can act in a swarm to perform functions utilizing the key. The user can specify the parameters upon which this authority can be given.
The trustless bot can manage access to personal data, perform decentralized authentication and password or key recovery. Business processes which require ongoing access to crypto-assets, can be granted such access immediately, as long as it falls within defined criteria.
Tide co-founder, Michael Loewy, gave Cointelegraph some examples of the form these criteria can take:
“In the context of the Tide ecosystem those instructions may be a set of rules determining which data fields I’m prepared to trade with certain types of organizations — for example, I don’t want any contact details traded with political organizations. That same concept can also be applied to advanced crypto trading — for example, social trading where my instructions may be to follow or mirror the trades or a peer or expert trader.”
Privacy as a service
Existing centralized solutions which address such situations can be vulnerable, and current automated trading bots require access to your private keys. However, the trustless DAT allows trading bots to run on decentralized exchanges without giving up this information, providing an extra level of security.
One of the benefits of decentralized exchanges is that the user maintains control of their funds and private keys. Using an ordinary bot with full access to those keys reintroduces a central point of attack. As the DAT is trustless, this risk is mitigated.
Maintaining the secrecy of your private keys is essential, as anyone discovering them can get access to your crypto. This is one of the issues facing parties wishing to act as cryptocurrency custodians. The DAT may well be one solution which keeps overall responsibility in the hands of the user, whilst maintaining access for approved functionality.