No More Bitcoin Theft With This New Invention Says Professor

27 February 2016

Some call him a genius. A hacker of 25 years, professor at Cornell University, one of the few in the bitcoin space who can see what others can not, Emin Gun Sirer announced today a new invention designed to make bitcoin thefts if not impossible, highly unlikely.

By utilizing bitcoin’s inbuilt script system to create what he calls a covenant, special transactions can be created to send your bitcoin to a vault, a saving account which requires no banks, no middle men, no intermediary. Unlike normal transactions, this saving account is designed to have a recovery key so that if your bitcoins are stolen you can use the recovery key to in effect undo any transaction by the hacker. Thus making theft impossible.

This is a decentralised undue button, he says, the equivalent of calling your bank to report a stolen credit card.

“An attacker who knows that he will not be able to get away with theft is less likely to attack in the first place, compared to current Bitcoin attackers who are guaranteed that their hacking efforts will be handsomely rewarded.”

If the hacker manages to steal your recovery key as well as your vault key, a back and forth is possible where he can undo your transaction while you can undo his transaction. Game theory kicks in at this point as either of you can in effect burn the bitcoins, so no one gets the money, greatly reducing the incentives to steal from a vault in the first place as a hacker can expect to not be able to spend the money.

This invention can be a game changer for bitcoin security which since inception has been plagued with thefts. In early 2014 Mt Gox, at the time the biggest bitcoin exchange, shocked the bitcoin community by announcing that approximately a million bitcoins, worth around a billion dollars at the time, had been stolen. Bitstamp, one of the bigger bitcoin exchanges, announced last year that approximately 5 million dollars’ worth of bitcoin had been stolen. On a smaller scale it has become a somewhat common occurrence to read forum post complaining about stolen bitcoins, with many suggesting that security is one of bitcoin’s greater weaknesses.

However, there are outstanding questions in regards to bitcoin vaults which have not yet been addressed. It is not clear whether this undue button can apply to all transactions, whether merchants can detect it and there is no working code to analyse, but, if the professor can deliver on his promises with bitcoin vault, prevalent bitcoin theft may be a thing of the past.

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