Trifocal Key Structure for Secure Digital Asset Custody
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
Ensuring that digital assets are not traded or exchanged in an unintended manner is challenging due to the bearer nature of private keys, which are vulnerable to exposure and collusion, and existing solutions like cold storage require human intervention, leading to scalability issues.
Innovation Solution
A trifocal key structure comprising an ownership key, a permission key, and a consent key, generated from a master seed, is used to authorize custodial services to transact with digital assets on a blockchain, ensuring that the private keys remain encrypted and only the custodial service has permission to perform transactions.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If private keys are exposed for trading digital assets, then transaction capability is improved, but security is worsened due to vulnerability to collusion and unintended trading
Solution Approach 1:
The private key is segmented into three separate keys: ownership key (proving asset ownership), permission key (granting custodial access), and consent key (authorizing specific transactions). This segmentation allows the system to provide transaction capability through the consent key while keeping the ownership key secure and encrypted, thus resolving the contradiction between ease of operation and reliability.
2Reliability
If cold storage is used to secure digital assets, then security is improved, but scalability is worsened due to requirement of human intervention
Solution Approach 1:
The system enables self-service automated transactions through smart contracts that automatically verify ownership, permissions, and consent using the trifocal key structure. Transactions are executed automatically without human intervention, allowing the system to maintain high security while achieving scalability and improved productivity.
3Ease of operation
If custodial services are authorized to transact with digital assets, then ease of operation is improved, but control is worsened due to potential unauthorized access
Solution Approach 1:
The consent key acts as an intermediary that bridges the ownership key and the transaction execution. Custodial services can access and transact with digital assets using the consent key, which is derived from the ownership key but does not reveal it. This intermediary mechanism enables ease of operation for custodial services while preventing unauthorized access to the actual ownership credentials.
Data Source
AI summary
An example operation may include one or more of receiving, via a custodial service, a request to transact with a digital asset owned by a user and temporarily in custody of the custodial service, generating a blockchain transaction comprising an identifier of the digital asset on a blockchain ledger, an identifier of the custodial service, and an identifier of a recipient of the digital asset, signing the blockchain transaction with a key from a trifocal key which proves that the custodial service is authorized to transact with the digital asset on behalf of the user, and storing the signed blockchain transaction on a blockchain ledger.