How Tatoshi’s social recovery functionality can enable the mass adoption of Bitcoin
One of the reasons why Bitcoin’s mass adoption is only progressing slowly is that there is almost no mass capable storage solution for Bitcoins. New users in particular are often very doubtful when it comes to find the right storage solution. In general, there are two different ways you can handle your bitcoins. You can either keep them yourself or give them to someone else for custody.
With traditional money, most of us bring their assets to a bank and ask the bank to take care of it. Assuming the bank won’t go bankrupt, your money is much safer at a bank than at home under your mattress. So, people may think they are doing the same with their Bitcoins. But you can’t compare the custody of fiat money with Bitcoin custody. Digital fiat money cannot be stolen from a Bank. Even if a hacker should be able to withdraw some money from a bank, such transactions usually take 1-2 days and will most likely be noticed and withdrawn. With Bitcoin, the risk is many times higher. Transactions are executed within minutes and are immutable, irrevocable and can be anonymous. This means that if a hacker is able to invade a Bitcoin custodian, the assets are lost forever.
Bitcoin custody increases the risk
Contrary to the assumption that handing over your Bitcoins to a custodian would reduce the risk to your assets, it even increases the risk. To understand this, you have to believe me that there are really no IT systems that are 100% secure. This is not possible as long as IT systems are designed, built and operated by humans. This means that every, and I mean every, IT system can be hacked. It just depends on how much effort you are willing to put into it. The most complex hack that ever took place was the destruction of the Iranian uranium enrichment facilities by the Stuxnet virus in 2010. These facilities were not connected to the Internet, were in underground bunkers and had the strictest access controls. But the hackers, who according to Wikipedia had a budget of about 70-90 million USD, managed to get into the system.
Today’s custodians rely on the same security controls as the Iranian nuclear plants. They have most of their assets in offline storage, they have strong access controls, some are even in former nuclear bunkers in the Alps. But the more assets they store in a central system, the more attractive they become for hacker attacks. One of the biggest custodians announced that they now have more than $1 billion in custody. Well, if it cost 90 million to hack Iranian nuclear power plants, the cost of hacking a custody start-up is certainly not higher. That sounds like a good deal for criminals. Invest about 90 million and get a return of more than 1 billion. If your assets would belong to these 1 billion, you would have lost them.
Decentralized self-storage is the best protection against hackers
Most of us have crypto assets well under 1 billion USD. In fact, the amount of assets most individuals own is far too low to pay for a complex hacker attack. This makes decentralized self-storage the best protection against hacker attacks. Unfortunately, self-storage carries other risks, especially the risk of losing your private key. According to an analysis, almost 4 million Bitcoins have already been irretrievably lost because the owners have lost their private keys. There are many ways you can lose your private key, a hard drive that was accidentally discarded, a lost mobile phone, an accidentally deleted application, or a forgotten password, and your entire private key representing your Bitcoins could be gone.
Tatoshi Wallet protects users against the loss of their private key
Tatoshi Wallet has all the advantages of a decentralized self storage solution without the risk of losing your private key. With our app you can store recovery data with your friends and families. If you lose your phone and private key, you can easily recover it with the help of your friends. Involving your friends to protect you from loss is called social recovery. This means that we use your proven social relationships from real life to help you protect yourself from losses in cyberspace. Just as you would give your best friends your spare key to your home, you store your Bitcoins recovery data with them. Cryptography ensures that this recovery data cannot be used by friends and family to access the user’s money. You always retain full control over your assets.
To make this new technology available to everyone, we’ve done our best to make our app as simple as possible. Using social recovery with Tatoshi Wallet is as easy as using Whatsapp or other messenger tools. You don’t need technical expertise to protect your Bitcoins from loss.
If you haven’t tried it yet, download the app from the Apple App Store and give us your feedback.