With the current model of Web3, your private key is either custodied by you or it’s custodied by a corporation such as an exchange like Coinbase.
Lit Protocol, which will be featured at CoinDesk’s upcoming IDEAS conference, is neither of those two categories of wallets.
David Sneider is presenting at Investing in Digital Enterprises and Assets Summit (I.D.E.A.S.), CoinDesk's newest event revealing the most scalable marketplaces in the digital economy that will attract institutional capital in the years to come.
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Lit Protocol is a decentralized network that functionally serves as a decentralized programmable key. Through a process called, “threshold cryptography,” Lit decentralizes a private key and has it live in a distributed way across the Lit nodes.
According to CEO David Sneider, before Lit the option was to “use Amazon’s key management service to store the key,” but this is a problem because the application developer is totally trusted and can “rug with the key at any time.”
With Lit, the private key is held in decentralized custody. A developer can design a beautiful application, but can never get out the key.
Lit Protocol has two main functions currently: decentralized access control and decentralized cloud signing.
On the access control side, Lit Protocol focuses on who can read private and permissioned data that is stored on the open web like on blockchains and decentralized storage systems.
Users can specifically store private data on the open web and use Lit to provision decentralized keys to users based on on-chain data, like the assets they hold in their wallet.
As an application development network, Lit allows developers to create a decentralized token-gated chat where, for instance, only owners of Miladies can access the chat. And when a new person shows up and wants to access this specific chat, they have to sign a message to prove that they own a Milady. Lit then provisions the new person the private key to decrypt the token-gated chat and interact with its members.
Through Lit Protocol, an individual user can “have their own encrypted shard of the open web,” Sneider said.
Lit Protocol centers around “automating writes,” he explained, whereby an application can have signing happen on a user’s behalf. Any given user – whether it’s for a cross-chain application, financial application, data sovereignty application – can basically write a program that signs a transaction when a specific event happens. As a result of that, the capacity to perform that action is where the cross-chain piece comes in. “You can say, activity happens on one chain, sign a transaction on another chain,” Sneider said.
A decentralized autonomous organization (DAO) can now have a private, interoperable key that’s held in distributed custody that can interact with several blockchains such as Bitcoin, Ethereum and Cosmos, while creating rules on what it wants those interactions to do and to be.
What makes Lit Protocol different from a traditional self-custody key is the encryption and decryption rights for some specific content can happen based on certain programmable rules. Sneider said it’s incongruous to build a decentralized internet without a decentralized private key system.
If Ethereum is the world’s ledger or money computer, and InterPlanetary File Sharing System (IPFS) is a new form of database, Lit would be “the world’s root key,” according to Sneider.
Lit Protocol is still in R&D mode, however. Similar to Ethereum, Bitcoin, Filecoin and Chainlink, Lit is a decentralized network of nodes that provides a service, and as such, a token will eventually be associated with the Lit Protocol Network. Sneider indicated that while the token model is not publicly live yet, the tokens will incentivize nodes to be good stewards of the ecosystem.
Lit Protocol raised $13 million in a Series A round led by crypto investment firm 1kx and included participation from 6thMan Ventures, OpenSea Ventures and A Capital.
David Sneider, co-founder and CEO of Lit Protocol will take the stage at CoinDeskIDEAS to discuss “Decentralized Cloud Keys” on Oct. 18-19 in New York City.
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