Decentralized Identity: Password Recovery via Litecoin Address Ownership

Decentralized Identity with Litecoin as a Service

Problem Statement

Traditional password recovery mechanisms—such as email verifications, SMS-based one-time passwords (OTPs), and centralized security questions—are increasingly vulnerable to security breaches. These methods often rely on centralized infrastructures, making them susceptible to phishing attacks, SIM swapping, and unauthorized access. Moreover, they conflict with the principles of self-sovereign identity (SSI), where users seek complete control over their digital identities without intermediary dependencies.

Solution: Cryptographic Recovery Using Litecoin Address Ownership

To address these challenges, we propose a decentralized password recovery mechanism that leverages the cryptographic properties of Litecoin (LTC) addresses. By utilizing the inherent security features of blockchain technology, users can authenticate their identity through cryptographic proofs, eliminating the need for traditional, centralized recovery methods.

Key Advantages

• Enhanced Security: Utilizes public/private key cryptography, reducing reliance on vulnerable centralized systems.

• User Sovereignty: Empowers users with full control over their identity verification process.

• Resistance to Common Attacks: Mitigates risks associated with phishing, SIM swapping, and unauthorized access.

• Alignment with SSI Principles: Supports the ethos of decentralized identity management.

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📝Implementation Overview

1. Registration

• User Input: Provides email and LTC address.

• Challenge Generation: Server creates a unique message incorporating action, email, and UTC timestamp.

• User Action: Signs the message using their LTC wallet's private key.

• Verification: Server validates the signature against the provided LTC address.

• Outcome: Upon successful verification, the email and LTC address are securely stored as verified credentials.

2. Password Recovery

• Initiation: User requests password reset.

• Challenge Generation: Server issues a new, time-bound message.

• User Action: Signs the message with their LTC wallet.

• Verification: Server authenticates the signature.

• Outcome: If valid, the user is permitted to reset their password.

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🧪Technical Specifications

Message Format

To prevent replay attacks, all messages follow a standardized format:

ACTION for [email] at [UTC timestamp]

Example:

Password reset requested for [email protected] at 2025-05-10T12:15:00Z

Signature Verification

• Tools:

  • verify-message endpoint from LiaaS.

  • Litecoin-compatible JavaScript NPM package (e.g., liaas-js).

• Process:

  • Verify the signature against the provided LTC address and message.

  • Ensure the message timestamp is within an acceptable time window (e.g., 10 minutes).

Security Considerations

• Time-bound Challenges: Messages expire after a predefined interval to mitigate replay attacks.

• Logging: All verification attempts are logged for auditing purposes.

• Data Handling: Signatures are used solely for verification and are not stored persistently.

👛Wallet Compatibility

Users must utilize wallets that support message signing, such as:

• Pteri Wallet

• Pteri Browser Extension

• Other wallets built on the LiaaS framework

🔄Fallback Recovery Options

In scenarios where users lose access to their LTC wallets, the following alternatives can be considered:

• Multi-signature Registration: Implement a 2-of-3 multi-sig setup, where one key is stored encrypted on the server.

• Email-based OTP: As a last resort, an email-based OTP can be used, clearly indicating the centralized nature of this method.

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📡API Endpoints

Register User

Endpoint: POST /auth/register

Request Body:

{
  "email": "[email protected]",
  "ltc_address": "LTC1..."
}

Response:

{
  "message": "Registering [email protected] at 2025-05-10T12:00:00Z"
}

Verify Signature

Endpoint: POST /auth/verify-signature

Request Body:

{
  "email": "[email protected]",
  "signature": "H0Y5Q...",
  "message": "Registering [email protected] at 2025-05-10T12:00:00Z"
}

Note: The endpoints POST /auth/register and POST /auth/verify-signature mentioned previously are hypothetical and not part of kakr labs. They are specific to the organization who is implementing them.

🚀 Start Exploring the Litecoin Blockchain Capability with Zero Cost

• 📄Sign up on Pteri and gain instant access to powerful blockchain API endpoints with our Free Plan.→ Join for Free / Azure Marketplace

• 🔐 Try Message Signing → Sign Message

• 🔑 Try Message Verifying → Verify Message

Conclusion

Integrating Litecoin address-based cryptographic verification for password recovery enhances security and aligns with the principles of decentralized identity. This approach empowers users with greater control over their digital identities, reduces reliance on centralized systems, and mitigates common security threats associated with traditional recovery mechanisms.