Client-Side Key Management

It is important for security that users manage their own keys. If one or a handful of servers have all the keys, that creates a giant security honeypot that would draw attackers. But if users have their own keys, and validate their own transactions, then the network is much more secure.

Consider that the more the keys are distributed, the higher cost for an attacker to gather those keys. For the same amount of value stored in the tokens, the cost can be raised arbitrarily by distributing the value over keys and over more independent systems.

The first version of the wallet will require that the user generate a key client-side that is never sent to a server. While this is not ideal for every user, it is not too hard these days as most users have password managers. The user can simply store their master key in a password manager.

Over the long-run, there are ways to make client-side key management easier. An encrypted backup of each key can be sent to semi-trusted third-parties, who can’t see the key, but who can, together, reveal the key only to the original owner. Imagine if one party has an encrypted backup, and another party has the key to decrypt that backup, and both of those parties send both pieces to the owner. This enables the owner to recover their key. I call this strategy “two factor friend” - have your friends store material that can be used to recover your key.

Two factor friend is not the only strategy for key management. Users can use multisig outputs which require multiple independent keys. If the user has not lost two of their devices, but only one, in a 2 of 3 multisig output, then they can recover their funds.

The first version of the EarthBucks wallet will simply require the user recall their primary key. This will be adequate for launch day and all early users. However, we can and will improve the user experience of managing keys over time.

Note that, although I do not plan to launch a custodial service, custodial key management is, of course, also possible, which may be better for some users, even though it creates a honeypot for attackers.