The cryptocurrency users know very well that private keys are the most important strings of characters that give them the right to own and execute crypto transactions on their wallets. If you lose the private keys, you lose the ownership rights of your wallets forever. Because it is not possible to reset the private keys as one can do in a password security system. In simple words, losing the private keys of a cryptocurrency wallet means you lose all the associated data and financial assets in your wallet permanently.
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Private keys are most important in the cryptocurrency domain
Cryptocurrencies are decentralized digital assets that are secured by asymmetric key cryptography. Blockchain and other Distributed LEDGER Technologies (DLT) are the core technologies to realize cryptocurrencies. Blockchains and DLTs hold the promise of creating cybersecurity infrastructures useful for a myriad of business and personal data transactions over the Internet. The data in the distributed ledgers are privacy protected by asymmetric cryptography.
The private keys are the most important secret keys. If you lose your private keys, you lose your data and the associated digital assets forever.
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This problem is popularly referred to as “Blockchain’s private key-loss conundrum”
In my humble opinion, this conundrum is the main roadblock to why Blockchain and DLT applications may not be accepted by the general public. People may still wish to have a provision for resetting the password, which is the private encryption key.
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Most people are used to resetting and recovering passwords
Password security systems have the advantage of resetting the password.
The most user-friendly aspect of a password and PIN-based centralized authentication system is simple. If the password is lost or stolen, the users can reset or recover the account's password with help from the central processing center. But centralized systems are highly prone to data hacking.
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The private keys determine ownership of cryptocurrency assets
If the private key is stolen/lost, you lose the digital assets/coins
If you don’t own the private key, that means you don’t own the cryptocurrency. If the private key is stolen, you lose the digital coins. And if you lose the private key, the digital coins under that wallet are lost forever. In principle, your crypto coins are lost for you and others because nobody can ever access them without a private key. There is no provision to recover the lost private keys. This is the characteristic of accessing decentralized assets in the distributed ledgers.
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“Take care of your private keys” is a common piece of advice in the crypto sphere
The common advice floating in the air is known to all — “Take care of your private keys.” One must save the private key in a secured place, either printed on paper, saved in an electronic form, or stored in a hardware wallet. Every storage may fail under certain circumstances.
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What would happen if the private encryption key is lost?
There is no sure shot solution to this problem to recover private keys
This is an unfortunate situation that can often happen in real life. A lost private key means the user loses all the data and the associated assets. In the case of bitcoin, if the owner loses the private key, the user loses all the digital money! The distributed ledger community couldn’t give any sure-shot solution for recovering the data, associated digital assets, or bitcoin.
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Cheers! Debesh Choudhury
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