tl;dr: Thoughts regarding secret shard backup while identifying bad/dishonest backup computations.
Paper: FCiR 2025 or personal pdf.
Michele Battagliola, Carlo Brunetta
The increasing adoption of cryptocurrencies poses the critical challenge of secure crypto-asset custody, where the loss of private keys results in irreversible fund inaccessibility. Unlike traditional banking, cryptocurrency wallets often lack recovery mechanisms, making credential loss a significant vulnerability.
This paper explores existing solutions adopted by custodians to mitigate this risk, including reliance on centralized mechanism, multi-signature wallets, and advanced multi signature schemes that compute threshold signatures.
While centralization has high trust risks and multi signatures lack universal support, threshold signatures offer a promising distributed approach.
The paper analyses the requirements for effective credential loss solutions, evaluates popular methods, and proposes tentative solutions aimed at reducing resource overhead.
Furthermore, it outlines the design and algorithmic properties of a potential ideal solution.