Coins representing cryptocurrency, even though cryptocurrencies don’t have actual physical form.
Cryptocurrency is gaining in popularity as investors get more used to it, but there are some fundamental differences when compared to national currencies. The most notable difference is that instead of being based on some item of value such as gold or the credit of the nation backing it, cryptocurrencies are based on the difficulty of producing them. Today’s crypto is based on complex algorithms, but that also means that they don’t have require anything beyond having an encryption key and a password.
This means that one of the strengths of cryptocurrency is that access to your funds is easy. But imagine losing your password to your crypto wallet, thus losing access to your funds. This happens far more often than you might think. According to Chris Brooks CEO and founder of Crypto Asset Recovery, a company which helps people regain their passwords, there are two types of digital wallets. The first is a self-custody wallets where “an individual holds their own private keys, and they are essentially protected through encryption and a password,” Brooks explained. The second are custodial wallets, where companies or organizations hold the private keys and the funds on behalf of the client.”
For people that hold self-custody wallets, losing the password poses a significant problem. The encryption is essentially the original private key; a long string of numbers and letters that you are familiar with, and you encrypt it with a password. If you lose that password, there’s nobody that can reset it.
However, Crypto Asset Recovery can ask some questions and generate millions – and even sometimes billions – of password variations based on your password guesses. And, if one of those is correct, they can decrypt your wallet granting you access and the password that opened it.
Wallet Recovery
Your digital wallet
“To conduct a wallet recovery, we need two things primarily,” said Brooks. “The first is a wallet backup and that’s the encrypted copy of your private key. The second is your password guesses. Once we have both of those things, the first thing we are going to do is take your wallet backup and we’re going to apply a hashing algorithm to it.”
Once they apply the hashtag algorithm, the Crypto Asset Recovery team will take the password guesses and feed them through their proprietary AI program to generate more password guesses. In other words, they take the original password guesses provided to them by the client and extrapolate out further guesses based on that. To get it right and decrypt your wallet, they must be exactly accurate.
“The name of our game is spreading out the key space that we attack and with our modifiers that is in the tens of hundreds of millions of guesses until we find the correct one,” said Brooks. “We crack at a rate of between 40,000 -20,000,000 passwords a second. Even at this speed, it still comes down to being 100 percent on the money to find the password.”
The company’s combination of strategy and technology mean an average of about a fifty percent success rate. While that may seem small, it isn’t. Without them, a wallet owner has essentially no chance of accessing their funds.
The password recovery process actually works with more than just crypto passwords. Whether it’s a digital wallet or something else with an encrypted password, Brooks recommends that since “people are creatures of habit, it’s important to also have good password hygiene.” He said that it’s critical to store and record passwords in a safe place such as by using a secure password manager so you don’t lose them in the future, and so that they can be recovered if needed.
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