Bitcoin Security - Multisignature in theory and practice - Martin Albert

Multi-Signature in theory and

practice

BitcoinSecurity

www.bitalo.comPhone: +49 6322 9419292 | e-mail: [email protected]

I was asked once:

Why would I ever need Bitcoin?

I can buy and sell everything I want with normal money


Problem: Who CONTROLS your money?

When your money is controlled by someone else

It is no longer your money.


Status Quo - Intermediary


Problem solved? – Bitcoins

- Centralized Service??

- Give up control over my coins??

- Security issues with hackers?

- Sites close over night???

--> SAME PROBLEM AS BEFORE!


so…where should I store my Bitcoins


What if.. A service exists where you- DO NOT give up control over your coins

- DO NOT allow even the administrators to access your coins

- IS NOT possible that Hackers can steal coins, even when the server is compromised

-DO NOT need to trust the trading party, as still an escrow is in place? EVEN when the site is closed?


Trick: Multi-Signature wallets


Multi signature wallets


Hackers and admins see encrypted wallets


“Normal” TransactionHow does it work?


Part 1: Create multi-signature addressMulti-Signature

-Get two or more Bitcoin addressees.

-Combine them using addmultisigaddress JSON-RPC command

-As a result, you will get a special Bitcoin address starting with „3”.

-The resulting Bitcoin address is fully functional and can receive coins.

-You can create different combinations of M-of-N addresses. It means that you can specify how many private keys are needed to spend the coins.


Part 2: Spending coins from multi-signature walletsMulti-Signature

-Create a transaction draft using createrawtransaction JSON-RPC command -Sign the resulting transaction data with one of private keys, utilizing signrawtransaction command -provide it with correct details, which may include: public key and redeem script-Pass partially signed transaction data to other party, which repeats this process-Finally, you broadcast the transaction to the network (using sendrawtransaction or another means)

Two-Factor authentication


And the last resort: Dead Man’s Switch


Centralized services


Decentralized services

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THANK

Bitcoin Security - Multisignature in theory and practice - Martin Albert

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