Decentralized Identity with Litecoin as a Service
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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.
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.
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.
User Input: Provides email and LTC address.
Challenge Generation: Server creates a unique message incorporating action, email, and UTC timestamp.
User Action: 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.
Initiation: User requests password reset.
Challenge Generation: Server issues a new, time-bound message.
Verification: Server authenticates the signature.
Outcome: If valid, the user is permitted to reset their password.
To prevent replay attacks, all messages follow a standardized format:
Example:
Tools:
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).
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.
Users must utilize wallets that support message signing, such as:
Pteri Browser Extension
Other wallets built on the LiaaS framework
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.
Endpoint: POST /auth/register
Request Body:
Response:
Endpoint: POST /auth/verify-signature
Request Body:
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.
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.
User Action: with their LTC wallet.
endpoint from LiaaS.
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