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Bitcoin multisignatures and its applications

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A non technical talk made at the Bitcoin Startups Berlin meetup about multisignature and its applications. …

A non technical talk made at the Bitcoin Startups Berlin meetup about multisignature and its applications.

Better quality here: http://sp4ke.com/bitcoin/multisig.pdf

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  • 1. Bitcoin Multisignature and its applications Chakib Benziane @sp4ke Freelance Dev - Bitcoin Hacker
  • 2. Quick review of a Bitcoin transaction Transaction: send 1 Bitcoin Alice Bob No multisig
  • 3. Alice unlocks her coins with her single pair of keys Alice Bob Bitcoin network validates transaction Alice’s walletBob’s wallet
  • 4. Using a simple Bitcoin transaction Alice can: Make a transaction in a trustless network (no government, company or bank) Transaction is fast Cheap as fees are very low BUT she can lose access to her coins Losing her “single” pair of keys Losing her wallet ( if the wallet is stored on her laptop ) Her online wallet server gets hacked and her coins stolen
  • 5. Convenience VS Security Most users use online wallets Trade trust and security for convenience
  • 6. Multi Signature Transaction Alice’s wallet Unlock wallet with 1 of 2 keys Backup key Alice Bob
  • 7. Multi Signature Transaction Bitcoin network validates transaction Shared wallet Any 2 of 3 keys unlock transaction Bob
  • 8. TWO MAN RULE
  • 9. High security for critical operations Nuclear Warheads Hazardous Environments Dual Key Bank Vaults time before bitcoin now Anyone with access to internet and blockchain technology
  • 10. Applications Improved Security: Exchanges, Oracles, Wallets … Escrow and arbitration Crowdfunding Co-Spending ...
  • 11. Multi Signature with Exchanges Alice’s wallet hosted at exchange service 2 keys required out of 3 exchange backup key Bob
  • 12. Multi Signature with Exchanges Transfer coins to safe wallet 2 keys required out of 3 backup key safe wallet
  • 13. Multisignature Wallets server based web client native client
  • 14. Where are your wallet keys stored ? On a remote server exchanges coinbase On your device Offline Bitcoin Core Electrum Armory
  • 15. Where are your wallet keys stored ? On a remote server exchanges coinbase On your device Offline Bitcoin Core Electrum Armory On your browser (aka web wallets) blockchain dark wallet * web wallets
  • 16. Armory Native client with multisig Lockboxes feature with M of N transactions Total freedom and flexibility Simulfunding: Simultaneous wallet funding (private crowdfunding) Most secure Bitcoin and multisig wallet. Not the most convenient
  • 17. Armory Native client with multisig 1-of-2: Husband-wife joint account (either can spend) 2-of-2: Husband-wife savings account (requires both signatures) 2-of-3: Buyer-seller escrow with trusted third-party (use simulfunding) 2-of-3: Personal savings using two hot wallets and one cold backup 3-of-5: Board of directors of a company managing company funds 3-of-6: Board of five directors, but CEO has two keys (only two required if CEO is involved; else three) 4-of-7: Ultra high-security storage using 7 offline devices in vaults around the world M-of-N: Use your imagination! (up to 7-of-7) https://bitcoinarmory.com/about/using-lockboxes/
  • 18. Server Based Wallets Coinbase Vault: Offline storage Multi sig coming soon
  • 19. Your wallet on Coinbase No Multisig coinbase webpage Your key is hosted on Coinbase’s server Server Based
  • 20. Your wallet on Coinbase backup key Your keys are not hosted on Coinbases’s webpage You need to somehow sign the transaction ( out of web page) With Multisig 2 of 3 coinbase webpage Server Based
  • 21. Web Wallets Bank Grade Security 2 of 3 MultiSig Offline Storage
  • 22. Web Wallets Greenaddress.it HD wallet Multi Signature (2 of 3) Presigned transactions: pay in the future :)
  • 23. Web Wallets CoPay BitPay still in beta HD wallet Multi Signature (M of N) Real time multi signature
  • 24. Web Wallets Onchain.io HD wallet Multi Signature (M of N) Out Of Band ( Phone app as extra signing key )
  • 25. Beware of “Security Theater”
  • 26. Your key is hosted on web wallet web page You sign the transaction on the web page key on browser Web Wallet: Web App Without Multisig
  • 27. backup key Your key is hosted on web wallet web page You multisign the transaction on the web page key on browser Web Wallet: Web App With Multisig 2 of 3
  • 28. backup key key on browser Web Wallet: Web App With Multisig 2 of 3 control server send modified pageSecurity Theater Multisig
  • 29. backup key Good web app multisig Extra step needed key on browser extension Web Wallet: Web App With Multisig 2 of 3 control server
  • 30. Oracles
  • 31. API Integrates with Wallets and Services Theft prevention Fraud risk detection Organisations can protect shared wallet (NeoBee fiasco) third party oracle
  • 32. user wallet backup key Alice orders a transaction from her wallet oracle 2 of 3 multisignature
  • 33. Oracle applies third party verifications then signs transaction 2 of 3 multisignature backup key user wallet oracle
  • 34. Alice backup keys oracle 3 of 5 multisignature We can go further exchange wallet or web wallet
  • 35. Arbitration and Arbitration and Escrow
  • 36. Open Source p2p decentralized marketplace No fees, no censorship Ricardian contracts: trade and arbitration Escrow payment with multi signatures
  • 37. seller buyer notary Buyer and Seller review and sign contract Notary signs final contract
  • 38. seller buyer notary Notary creates multisig bitcoin address 2 of 3 keys to unlock payment Buyer send money to address
  • 39. Buyer and Seller settle transaction Funds unlocked with both their keys Notary receives fee Seller receive paiement seller notary buyer
  • 40. Buyer and Seller disagree Notary makes arbitration Seller is bad Buyer receives back paiement Notary receives fee seller buyer notary
  • 41. Buyer and Seller disagree Notary makes arbitration Buyer is bad Seller receive paiement Notary receives fee notary buyer seller
  • 42. Final Thaughts With multisig we can reach unmatched levels of security No need for regulations to protect users ;) Give some time to infrastructure to mature You can start using multisig Today
  • 43. Thanks for listening send your love to 19DavSZz6vopuYyER3S2Jnd2jzoEQa4Ww8 OR chakib.benz@gmail.com

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