Shimmer Secret Sharing provides an alternative method for securely storing backups of Bitcoin seed words without needing changes to the existing setup or interacting with the blockchain.
Diversifying storage locations for backup shares of Bitcoin seed words reduces the risk of loss or theft, and comprehensible estate planning documents are crucial for non-technical individuals to execute the storage scheme.
While hardware wallets are generally recommended for day-to-day transactions, the Codex32 scheme introduces a physical approach for securely storing and recovering data that offers redundancy, simplicity, and compatibility with existing Bitcoin address formats.
Deep dives
Bitcoin Private Keys and the Trade-Offs of Secure Storage
The podcast episode discusses the challenges of securely storing Bitcoin private keys. Currently, many individuals use hardware wallets to store their private keys along with seed words. However, the dilemma arises in securely storing these seed words, which are crucial for accessing the funds. Users must decide how many copies of the seed words to keep and where to store them. While multi-signature arrangements help distribute the risk, they come with their own complexities and costs. The podcast introduces Shimmer Secret Sharing as an alternative method for securely storing backups of Bitcoin seed words. Shimmer Secret Sharing allows the user to split the seed words into separate shares, enabling them to distribute these shares across different locations or among trusted individuals. When needed, the shares can be combined to reconstruct the seed and gain access to the funds. The convenience of Shimmer Secret Sharing lies in the fact that it does not require any changes to the existing setup and can be implemented without interacting with the blockchain. However, it is emphasized that multi-signature arrangements should still be the first choice for securing Bitcoin funds, given their security benefits.
Practical Considerations for Securely Storing Bitcoin
The podcast delves into practical considerations for securely storing Bitcoin. It explores the idea of employing multiple locations to store backup shares of Bitcoin seed words, reducing the risk of loss or theft. Suggestions for storage locations include trusted friends or family members, an estate lawyer, or even safety deposit boxes at banks (despite associated risks). Diversifying the risk by storing shares in different geographical locations can also enhance security. For instance, if concerned about government confiscation, shares distributed across different countries can mitigate the risk. The podcast also highlights the importance of comprehensibility in the chosen storage system. Estate planning documents should clearly describe the storage scheme, ensuring that even non-technical individuals (such as lawyers) can understand and execute it when required.
Technical Considerations and Risks of Hardware Wallets
The podcast explores the risks and difficulties associated with relying solely on hardware wallets for securely storing Bitcoin. While hardware wallets are generally recommended for day-to-day transactions, long-term storage and usage pose certain concerns. Auditing hardware for security or side channel attacks is practically impossible, making trust in the hardware manufacturer crucial. The podcast points out that alternative methods, such as the Codex32 scheme discussed, cannot directly generate Bitcoin addresses or produce signatures. Thus, the data stored in the Codex32 scheme would need to be loaded onto a hardware wallet to interact with the Bitcoin network. Despite the trade-offs and complexities, the podcast reiterates that hardware wallets are still far superior to storing Bitcoin secrets on regular, internet-connected computers, emphasizing the importance of using hardware wallets for real-time Bitcoin usage.
Securing Secret Data in Electronics
The podcast episode discusses the challenges and risks associated with securing secret data in electronic devices. It highlights how CPUs and hardware can behave unpredictably, leading to potential vulnerabilities. The episode emphasizes the importance of considering the finite lifetime of electronic devices and the ongoing trust required when using multiple hardware wallets over the years. It also explores the idea of using physical media, such as metal plates or paper, to secure secret data and the importance of periodically checking and verifying the integrity of the stored data.
Introducing Codex 32 and Paper Computers
The podcast introduces a solution called Codex 32, which is a workbook containing tables, worksheets, and paper computers called volvels. These paper computers can be assembled and used to perform secret sharing and data verification. The episode explains that the workbook provides a self-contained instruction manual for securely storing and recovering data. It highlights the resilience of this physical approach, as the book can be duplicated, stored securely, and the encoding format used is compatible with existing Bitcoin address formats. Although the usage of Codex 32 requires additional hardware wallet support, it is positioned as a long-term storage solution that offers redundancy, deliver piece of mind, and simplicity in secure data management.
A ‘paper computer’ for Bitcoin checksums and Shamir Secret Sharing may seem absurd, but that’s what we’re talking about in this episode! This project is a scheme to generate, encode, checksum, split and recover Bitcoin secret keys, using pencil, paper and lookup tables (alternately, volvelles). We discuss codex32 and the motivation behind it with Andrew Poelstra (Director of Research, Blockstream). Note this is the first of a two part episode. In this first part we discuss:
Bitcoin private keys today
Multi signature and Shamir Secret Sharing contrasted
Where to keep shards or keys
Error correction
Risks with Hardware wallets (even though you should still use them)
