Cryptocurrency storage is essential for both individual and institutional investors who want to protect their private keys against potential hacking attacks or losses. Crypto vault services have become quite popular and profitable today. However, most of them provide high-security layers including at the expense of the rapid access to the funds, making it challenging for users to withdraw their own digital assets in a timely manner. Because of the high volatility of cryptocurrencies, users require a faster withdrawal process to access their holdings as soon as possible, preferably in real-time. Fintech startup VELIC aims to solve this issue by offering crypto storage service without affecting the speed and access to user funds.

VELIC will also lead the growth of the cryptocurrency market with a variety of financial services, notably through the asset security service the “Vault” which will provide security and enable institutionalized expansion in the crypto-finance market. Existing cryptography financial services have largely stored their assets in cold storage, or in an internal multi-sig wallet. This method was always a temporary solution which existed out a necessity in the early nascent crypto-market. As mentioned before the cold-storage/multi-sig wallets have proven to be unreliable security methods where the exploits are already widely exposed. VELIC’s asset security service the “Vault” rectifies existing primitive means on storage and provides a more secure asset security service.

Contemporary cold storage services that are provided by existing cryptographic financial services suffer from poor usability and slow customer-support time. The majority of contemporary cold storage services provide complex offline solutions to solve the private key storage conundrum. The concept of cold storage is fundamentally tied to offline storage, which makes moving large quantities of assets quickly difficult. VELIC’s Vault, on the other hand, does not keep private keys at any single point. There is no single point of failure because the private key is encrypted, decentralized, and each cue is stored in multiple storages. Additionally, VELIC’s Vault is more adapt to the volatility of the cryptocurrency market, as users can easily move assets via private key access from the VELIC Vault in real-time. VELIC’s Vault provides unprecedented security and credibility, all the while providing institutional grade customer support.

VELIC also provides a secret sharing-based security solution for more institutional level security needs. “Secret Sharing” is an algorithm that distributes/restores important information between various participants, which was designed by Adi Shamir and George Blakley in 1979. If there are “n” amount of participants, the crucial information required is stored in a distributed manner. Each participant has only one of several clues (shares), and it is impossible to recover the crucial information individually. Even if some participants are offline or lose shares, if a certain number of clues are met, the data can be completely restored through the shares provided by the remaining participants. In this way, the secret sharing model can recover corresponding data if “n” amount of participants agree upon “t” number of participants (0 <t (threshold) = <n) to gather.

[Figure 2. Secret Sharing Function]

Here is a more simplified explanation of the “Secret Sharing” principle. The above function is a graphical representation of the quadratic equation y = x ^ 2 + 4x +2. The coordinates (-4, 2), (-2, -2), (-1, -1), (0, 2), and (1, 7) are all the points on the graph above. Let’s suppose that if crucial information is separated by five coordinate values in order to hold someone’s crucial information and that these shares come together to derive the function y = x ^ 2 + 4x +2. In this case, “n” will be 5 and since the polynomial is quadratic, the number of minimum points to be collected (threshold) “t” is 3.

1) When storing coordinates in two storages: It is virtually impossible to derive a quadratic equation that perfectly matches the above function with the two coordinates taken from the quadrant. This is because there is an infinite number of cases, including straight lines.

2) When three coordinates are stored in three storages: In the case, three coordinates are given in the quadrant, t = 3 is satisfied, then the above quadratic equation can be derived. However, in this case, even if one of the storage devices comes dysfunctional (due to loss of information), the storage device cannot be restored.

3) In case of storing coordinates in five storages: If you provide the fourth and fifth coordinates existing on the function graph to another storage, it is possible to recover important information even if two of the storages are dysfunctional.

Although the example used was a quadratic equation, the value of secret sharing will increase when the number of “n” participants increase. As the number of participating storage (n) increases higher-order functions can be set up, and naturally, the threshold value t also increases thereby enhancing security.

Collusion by the “private interest groups” of each storage (an individual or corporation with storage) could lead to the exploitation of crucial information. Because of this, VELIC issues a separate encryption key, which allows the user to encrypt the shares of crucial information and provide them to the storage which prevents collisions amongst the storages. Also, in order to guarantee a transparent process, a series of processes of storing and restoring crucial information will be recorded on the blockchain ledger. Unless the storage history recorded in the blockchain ledger is verified, the storage will operate in a structure in which important information cannot be restored.

In conclusion, we have discussed the Vault asset security solution. VELIC plans to use Vault as the underlying infrastructure for VELIC’s assets, critical information retention and providing various services to enable direct customer access to their assets. Through Vault, VELIC will strive to enable cryptographic financial services to be more universal and provide an enterprise level of security solutions for its customers.