How Bitcoin Could Solve Your Password Problem

bitcoin passwords

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NEW YORK (InsideBitcoins) — There is no denying that we are in an age of stolen account data. Recently, it was widely reported that a Russian crime ring amassed over 1.2 billion username and password combinations. And it only appears to be getting worse, as companies around the world face the threat of being hacked and losing company data.

One of the primary reasons this happens is because hackers are able to gain access to the databases where companies store information. For a good understanding on how it works, watch this video on YouTube.

As more companies realize that storing customer information is a liability, they have rolled out protocols like “Connect With Twitter” or “Connect With Facebook.” This can minimize the risk of a company having to manage additional login information. Facebook has the resources to combat hackers; a small startup doesn’t.

What if, instead of using one of these social networks to enable consumer logins, you could use Bitcoin instead? BitID is an authentication protocol developed by Eric Larchevêque that allows Bitcoin technology to provide access to an online service, all enabled by the user’s wallet.

“Replacing plain-text credentials with a service like BitID is definitely a step forward as the only responsibility for the users to secure their credentials is to keep their wallet safe by encrypting it with a master password and protecting its files from malware and storage failures,” George Kimionis, a programmer, entrepreneur and open source contributor, tells Inside Bitcoins.

By using a Bitcoin wallet, users can verify all security data in BitID — in other words, only one password is needed. If they are able to access their wallet, then they are able to access any site they want.

Think of it another way. I have an email account, a bank, my investment accounts, and a health insurance account. Rather than having to remember all four of these logins, I could use my wallet to authenticate all four of these accounts. I remember one login; the wallet does the rest.

Further, because of how many different private keys can be generated, it’s virtually impossible for the same key to be owned by another wallet. It’s estimated that there are 7.5e+18 grains of sand on Earth.  “There are 2^180 different private keys,” Kimionis explains. 7.5e+18 is not even in the same galaxy as 2^180, which is so many times bigger.

Kimionis says that if websites provided their users with a programmable interface through which they could log on to Web services, using a bitcoin wallet for authentication would become possible.

Until then, we’re stuck having to remember all of our logins — and companies have to worry about getting hacked and losing our data.

Written by Jacob Cohen Donnelly

Photo credit: Freddy The Boy via photopin cc

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