In the emerging area of cryptocurrency financial services, we can replace the traditional model of customers using services offered by their financial institution with one where the user picks financial products from a loose group of providers according to what they need.

Cryptocurrency enables this because of its open and permission-less nature. You do not need to open an account, similar to cash, but all transactions are done purely electronically.

Because each transaction is signed using a private key, proper key management is of the utmost importance. Losing the key without a copy would most certainly lead to a permanent loss of access to those funds. Making a duplicate means that a secure store of the copy is vital.

The implications of private key based access

As a cryptocurrency user, you are in the possession and in full control of your funds, and one might ask, do we even still need financial institutions? You do not need to look too far to see, that just “being your own bank” does not come without risks.

Private key ownership poses new kind of challenges. If two persons use the same private key, the transactions will be indistinguishable from each other. We do not know who signed which transaction. So giving the key to someone else equals giving them the full access to your funds. Because of the finality of cryptocurrency transactions, once someone sends out money from your e-wallet, there is no way to get the amount back.

You can encrypt the key, but then what if you forget the password? You can write down the password somewhere else. Then you need to remember where you store the password and where is the key. But if you pass away without telling anyone about your password, or one of the two gets destroyed or lost, the access to the funds might also be lost forever.

Ommer’s SafetyWallet feature

Leveraging on something called “pre-signed” transactions and a time-lock, Ommer is working on a service that mitigates the problems outlined above. The SafetyWallet ensures that:

No copy of the private key needs to exist The owner of the keys stays in full control of the funds (i.e. no transaction by a 3rd party is possible) In case of loss of the private key, all funds can be safely recovered

With this feature enabled, after each incoming or outgoing transfer, we generate a future-dated transaction, which is invalid until the future date passes (chosen by the user), and also, is invalidated by each new transaction that the user makes. As a result, we ensure the existence of precisely one future-dated transaction, which we will call the recovery transaction. As long as the user uses their wallet, this recovery transaction is continually being pushed out into the future.

However, should the funds become inaccessible (due to events like a private key loss, life event of the user, etc.) we can use this recovery transaction to rescue the full balance. After verifying the necessary ID documents, we will transfer these monies into a new wallet of the lawful owner.

You can read more about the technical details of SafetyWallet in our upcoming whitepaper. Please subscribe to our newsletter to stay updated on our progress.

https://www.ommer.com/