Marek Palatinus, widely known as
Slush in the Bitcoin community and the operator of mining.bitcoin.cz, the
oldest mining pool, has revealed his latest project in collaboration with Pavol
Rusnák (stick): a USB Bitcoin hardware wallet. The key motivation behind this
endeavor is to address the security concerns associated with storing Bitcoin on
computers that are susceptible to viruses and malware attacks. The team aims to
provide a user-friendly and secure solution that ensures the protection of
digital assets.
Historically, there have been
instances where Bitcoin users have suffered substantial losses, ranging from
thousands to millions of dollars, due to compromised computers. The prevalence
of botnets comprising millions of infected machines further exacerbates the
vulnerability of personal devices. Recognizing the need for improved security
measures, the proposed hardware wallet aims to offer an accessible solution for
safeguarding substantial Bitcoin holdings.
The USB Bitcoin wallet, which
remains unnamed at this stage, is a compact device approximately the size of an
iPod Shuffle (3×3 cm). It features a custom chip capable of generating new
addresses and signing transactions. To initiate a transaction, users connect
the device to a computer or potentially a smartphone via USB. After entering
the recipient’s address and transaction amount on the computer, the user sends
the unsigned transaction to the device. To mitigate virus-related risks, the
user must confirm the transaction by pressing a button on the hardware wallet.
The signed transaction is then sent back to the client for publishing, with the
private keys never leaving the device.
The protocol incorporates several
additional features to enhance convenience and security. The hierarchical
deterministic wallet proposal, drafted by Peter Wuille in 2012, forms the basis
for address generation on the chip. A single root private key is used to
generate all private keys, allowing for recovery even if the device is lost.
The device also freely provides a root public key, enabling Bitcoin clients to
generate addresses associated with the device without the ability to spend from
them directly. Optional PIN requirements further fortify security, and the
device is designed to be tamper-proof, making it exceptionally challenging for
thieves to extract private keys or coerce the device into signing unauthorized
transactions.
Moreover, the device supports
multisignature transactions, allowing users to create addresses requiring
multiple private keys for transaction signing. This feature enables more
complex security schemes, such as requiring signatures from a subset of
specified private keys. Users seeking additional security measures can
incorporate the hardware wallet as part of a comprehensive wallet security
strategy.
While the device’s primary focus
is security, its portability may be limited. Although compact in size, it
requires a cable to connect to a computer or phone, making it impractical for
everyday wallet carry. The team dismissed the inclusion of USB or micro USB
connectors due to concerns regarding durability and wear and tear.
Nevertheless, Slush emphasizes that the primary goal is to prioritize safety
over portability.
A Bitcoin client is required for
the device to function on a computer. Currently, cooperation with Multibit and
Electrum has been established, as these two clients agreed to implement the
necessary protocols. However, online clients like Blockchain do not support the
required low-level device interaction. To address this, Multibit and Electrum
can be stored on a USB key along with the hardware wallet, allowing for easy
loading when needed. Future versions may include a built-in client, but this is
not an immediate priority.
The project is still in its early
stages, with a full product yet to be released. A security company has been
engaged to conduct a thorough code review and testing process, ensuring a high
level of security. As additional features increase complexity and potential
attack vectors, simplicity remains a key focus for the team. The release will
comprise two products: a custom hardware solution for general users and a
shield for the Raspberry Pi, catering to the technically inclined. Furthermore,
the code for the device will be open source, enabling community scrutiny and
contribution.
The success of this project could
signify a significant advancement in Bitcoin security. Decoupling Bitcoin
security from computer security is crucial to ensure user safety. Physical
wallet devices, such as this hardware wallet project, combined with
multisignature transactions, play a vital role in achieving this objective and
enhancing overall Bitcoin security for all users.
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