Hello folks, this is another article about DAEX Blockchain. If you haven't read my first article, I suggest you read and drop a comment here.
This time, we'll discuss two features in DAEX that looks interesting to me. Of course, every word here are just my opinions and that's why you should do your own research after you've finished reading my article. So, what features are we going to discuss now? Just like my title said it, we'll discuss smart wallet & multiple-part private key in DAEX platform. Actually, multiple part private key is included in DAEX Wallet, but for the sake of this article we'll split it up.
DAEX Smart Wallet
A wallet is an essential feature for any exchanges or cryptocurrency users in general. Without a wallet, they won't be able to access their crypto assets as long as their assets are stored in the blockchain. This also applies to clearing & trading services. A centralized exchange is prone to hack because they use a hot/cold wallet that in theory, only 'owned' by the exchanges. Users can't control it because they don't hold the private key even though there is a personal address.
DAEX Smart Wallet relations to the platform.
To solve that problem and to ensure exchange can still guarantee that the right user is accessing that wallet, in theory, we have to use a wallet where exchange can identify that the right user is using that address. At the same time, we have to make sure that user still controls the wallet and their digital assets. This is where DAEX comes in.
DAEX introduce a smart wallet that is able to maintain a wide range of digital assets and at the same time maintain the 'trust' between the user, exchange, and DAEX platform itself. Every user will have a single wallet that is connected to the clearing blockchain and exchange on-top of DAEX clearing platform. And this wallet will have the multiple private key features.
By utilizing this smart wallet, DAEX user will be able to trade a wide range of assets in the exchange platform that is working together with DAEX. There will be no risk of hacking directly to DAEX or exchange because the funds are not controlled by DAEX or the exchange, and every transactions or trading that happened will be available to the public. Therefore, users can see whether there is an anomaly or not in their transaction.
Multiple Private Key
When a user successfully registered in DAEX (including completing the KYC/AML process), a new DAEX smart wallet will be created. This registration process will produce a three-part private key. One is stored in your mobile/devices, one is stored on DAEX server and the other is stored in backup blockchain in cold state.
An infographic about Bitcoin multisig wallet, similar to how DAEX will work with its multi-part private key. Source: Holytransaction
Every transaction will need to be signed with your private key in mobile apps and DAEX wallet. This means, even if there will be a security breach, it is technically impossible to access and transacts your funds from DAEX clearing blockchain. On the other hand, when you forget your private key or when your mobile devices are lost, you'll be able to retrieve it back from the private key backup chain.
Splitting this private key will definitely increase the security level of exchange and clearing services. Users won't be worried anymore because to access their funds, hacker/cracker will need to have both private keys from DAEX servers and their own. Because of this, lost of funds due to hacking will greatly decrease if exchange uses DAEX clearing chains.
Bottom Line
Smart wallet & multi-part private key is definitely a game changer, alongside with DAEX clearing blockchain. I personally think that the DAEX application has the potential to solve the inherent problems of centralized exchange, and therefore we won't see another news about exchange got hacked ever again.
Don't forget to check these important links below:
#DAEX Website: https://www.daex.io/
#DAEX Whitepaper: https://www.daex.io/daexPaper.do
This is a promotional article. I'm writing this article as part of my contribution for Bounty0x DAEX bounty. My Bounty0x username is joniboini16. Readers are suggested to read DAEX whitepaper by themselves to ensure the validity of data written here.