How do you store your bitcoins? Sure, the coins fungibility bitcoin miner registered on the blockchain, but how do you store the private keys that secure your funds? If you don’t have any Bitcoin now, how would you keep your private keys, the small files that have direct monetary value, safe from both loss and hackers? Ask any cryptocurrency veteran and they’ll tell you that you need to create the keys using well-written software and true sources of randomness.
And they’ll tell you to use multisig to divide up your keys such that hackers need to break into not just one, but multiple machines to gain access to your funds. And such safeguarding is quite difficult. At the extremes, one either stores the keys on multiple devices, where they are vulnerable to theft, or keeps a single encrypted copy in air-gapped secure storage, which the user needs to visit, reconnect to the internet ever so briefly, and recite a full-paragraph password to recover the password. This happens to savvy users, too.
A colleague, a CS graduate student who was an early Bitcoin miner, lost around 10,000 coins. Another friend chose a very very good password. Overall, our computing infrastructure is nowhere near safe enough for storing high-value assets. Bitcoin has become a universal bounty, where hackers break into machines and immediately reap financial rewards. What we need is a way to lock up coins in a way that is impervious to hackers and thieves. At the Bitcoin workshop in Barbados, Malte Möser will present our solution to the Bitcoin private key management problem. Specifically, our paper describes a way to create vaults, special accounts whose keys can be neutralized if they fall into the hands of attackers.