How the Loss of Keys is Costing Billions and What Web 3.0 Can Do About It

Practical Challenges of Private and Mnemonic Keys

Mudit Gupta, chief information security officer of layer-2 scaling solution Polygon, recently discussed the differences between theoretical security and practical security in the blockchain and crypto space at the Ethereum Community Conference (EthCC) event in Paris.

He highlighted the advantages of private and mnemonic keys for security, but pointed out the practical challenges they present. Gupta explained that when it comes to theoretical security, the space is “running so fast”, but in terms of practical security, the space is “so far behind”.

As an example of the risks posed by private keys, Gupta noted that they can’t be changed if they get leaked, unlike passwords, and that billions of dollars have been lost due to people losing their mnemonic keys. He also warned that due to the lack of proper security, there are billions of dollars in wallets of users that are incorrectly secured.

Web 3.0 and Crypto Challenges

Gupta pointed out that private keys are theoretically 100% secure. “If nobody knows your private key, nobody can access your funds,” he said. However, he acknowledged that there are practical issues that can arise. “What if you die for some reason? How can your loved ones access your funds? So that’s a tough problem to solve. Then, there is the key rotation problem. What if, for whatever reason, your key is compromised?” he explained.

Apart from these issues, the executive also discussed the difficulty of being a defender in the security world. According to Gupta, attackers have a much easier time than defenders. He said: “The executive stressed that this is why those who work in security have a much harder time compared to hackers and exploiters. Gupta noted that being a defender is all about covering all your bases. Despite all these challenges, the executive said, “Someone has to defend.”

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