Vault12, an Asset Custody Platform Customized for Digital Currency
According to a report issued by ChainAnalysis in early 2018, nearly 4 million Bitcoin, or 23% of the total supply, have been lost and this number will only continue to increase. Secure storage of private keys is a prominent issue for digital currency assets. The reliability of the secure cold storage used by most exchanges is evident. Security breaches big and small have occurred regularly, from the Mt. Gox event in 2014 to the hundreds of millions of dollars lost by Japanese exchange Coincheck in early 2018. Many investors store private keys on offline storage or keep paper copies, but if the offline storage or paper is physically lost or damaged, the digital assets can never be retrieved.
Secure, decentralized storage of private keys has become a competitive topic among blockchain startups. One promising method is called secret-sharing. This theory was first proposed by Adi Sharmir and George Blakley in 1979. With secret-sharing, private key holders can split their key into several interrelated parts (sub-keys) and distribute these parts to others. When the sub-key reaches a certain number (not all), the key can be recovered by using a specific method. In many Hollywood films, the US president is joined by several ministers who must all input their sub keys in order to successfully arm a nuclear bomb. This is similar to one of the application scenarios of secret-sharing, and we can see that this technology is still very reliable today.
In the blockchain field, secret-sharing has been adopted by many companies that are engaged in digital asset custody, such as InVault, Vault12, Tenzorum, and Zippie. The productization of secret-sharing is still in its infancy but Vault12 already has some obvious advantages. With a comprehensive technical whitepaper and demo video, the business plan and architecture of the project are clear. The Vault12 token is circulated on the custody platform as a utility token and delivered to the grant set group as custody fees. As a custody platform, Vault12 can also be integrated using the wallet API.
The technology of secret-sharing is well understood, but the actual development work is difficult. Most wallet companies will choose not to develop this technology independently as it is more efficient and cost-effective to utilize the Vault12 solution instead. The Vault12 team has a strong technical background. Among them are Max Skibinsky and Wasim Ahmad, who previously filled the role of software development director and were founding team members of Voltage Security, a company incubated by Stanford University Labs. They are joined by Terrence Spies, CTO of Voltage Security, and consultant Dr. Yevgeniy Dodis, a professor of cryptography from New York University and Co-Chair of the 2015 Theory of Cryptography (TCC). Among the participants of the 2015 TCC were two masters of cryptography from Cornell University, as well as Rafael Pass and Elaine Shi, members of the 2018 public chain project Thunder Token.
Well known investment institutions such as Hashed Capital, FBG Capital, ZhenFund, GBIC, Liaode Capital, and the Winklevoss brothers participated in the Vault12 seed round, and the assets of Gemini will be in Vault12 custody. Gemini launched their stable coin on the Ethereum network on September 10th, and as a digital currency exchange with deep cooperation with NASDAQ, Gemini has a clear development direction to provide services for institutional and accredited investors. This positioning is very beneficial to the development of Vault12, because in the competition for digital asset custody, strong marketing and business development capabilities are also very important. With the support of the Winklevoss brothers and many high-quality investment firms, Vault12 is sure to excel as an asset custody platform.