This presentation introduces about the Bitcoin private key management related security issues and challenges.

1. 1
MPYANA MWAMBA MERLEC
Department of Computer and Engineering
Korea University
Dec. 12, 2017
Blockchain Security Issues
and Challenges
Bitcoin Key Management
Security Issues and Challenges

2. Project Goal
2
 We aim to figure out the following questions :
 What are the BTC key management security threats ?
 How these security risks/issues can be addressed ?
 What are the existing approaches and their limitations ?
 What are the related challenges ?
 The main purpose of this study is to investigate on :
 Private key management related security issues and challenges
 Bitcoin (BTC) as a BlockChain (BC) application use case

3. Problem Statement
3
 Private Key Security[6]
 With BC, a private key is regarded as user identity and security credential
 Generated and maintained by the user instead of 3rd party agencies
 Hartwig et al.[1] discover a vulnerability in ECDSA* scheme
 Side-channel attack and invalid-curve attack might be possible
 Does not generate enough randomness during the signature process
 Attacker can be able to recover the user’s private key
* Elliptic Curve Digital Signature Algorithm

4. Problem Statement
4
 Side-channel attacks
 Aim to retrieve secret data from a cryptographic system
By observing factors outside the normal computation
 invalid-curve attack
 Aim to retrieve secret data from a cryptographic system
By observing factors outside the normal computation

5. Problem Statement
5
 Private Key Security[6]
 Once a user’s private key is lost, it will not be able to recovered
 User’s BCT account will face the risks of being tampered by others
 If a private key is stolen by criminals
 BCT doesn’t dependent on any centralized 3rd party trusted infrastructure
 Difficult to track the criminal’s behaviors and recover modified BC information
 Decentralized aspect of BC makes the key management task very challenging

6. Bitcoin Keys and Addresses
6
With bitcoin, keys come in pairs:
 Private (secret) key = secret PIN or signature on a check
 Provides a control over the account and sign TXs
 Public key = bank account number
 Unique and derived from private key
 Bitcoin address = K recipient, represented by its digital fingerprint
 Similar to a beneficiary name on a check (i.e. “Pay to the order of”)
 Bitcoin address is generated form and corresponds to a public key
Conversion of a public key into a bitcoin
address [2]
A = RIPEMD160(SHA256(K ))K = k * G
G : is the generator point

7. Bitcoin Wallet (BW)
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Type-2 deterministic (seeded) wallet [2]:
a tree of keys generated from a single seed
Type-0 nondeterministic (random) wallet [2]:
a collection of randomly generated keys
 Contains and manages a collection of key pairs
 Mostly, k and K are stored together as a Key pair for convenience
Randomly generated number
combined with other data
(i.e. index or chain code)

8. Master Keys Creation & PK extension
8http://chimera.labs.oreilly.com/books/1234000001802/ch04.html#hd_wallets
Creating master keys and chain code from a
root seed [2]
Extending a parent private key to create a
child private key [2]
HMAC : Hash Message Authentication Code
Chain code is used to introduce entropy in the
function that creates child keys from parent keys.

9. Bitcoin Wallets (BW)
9https://bitcoin.org/en/choose-your-wallet

10. Bitcoin Wallet Storage Approaches
10https://www.linkedin.com/pulse/part-2blockchain-technology-situation-malware-join-picco/

11. BTC Key Management Approaches
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 Works in [3-5] surveyed on the BTC Key management approaches
 Found that BTC has several fundamental issues and challenges
 It offers opportunities to rethink the key management for end users
 First investigation [3] on the usability issues of BTC’s key management
 Survey and categorize most known BTC key management proposals
 Propose a set of evaluation criteria for BTC key management

12. 1. Keys stored on local device
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 Bitcoin manages several private keys in a bitcoin wallet
 Stored on users’ local storage device
 Typically in a file or database in a pre-configured file system path.
 Bitcoin client can read keys and immediately broadcast TXs over the network
https://news.bitcoin.com/idiot-proof-vault-cold-storage-guide/ https://bitcoinnewsmagazine.com/what-is-the-best-bitcoin-wallet-for-2015/

13. 1. Keys stored on local device
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 Several threats to store keys in local devices [3]:
 Files storing private keys can be read by any app.
 with access to the user’s application folder
 Malware may exploit this key management approach
 Access to local files results in the adversary gaining access to the victim’s funds
 Users must be aware to not mistakenly share their app. folders
 P2P file sharing networks, off-site backups or a shared network drive
https://www.secureworks.com/research/cryptocurrency-stealing-malware-landscapehttps://www.secureworks.com/research/cryptocurrency-stealing-malware-landscape

14. 1. Keys stored on local device
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 Several threats to store keys in a locally[3] :
 Physical storage device theft
 Especially in case of mobile devices (i.e. laptops or smart phones)
 Equipment failure
 Due to natural disasters and electrical failures
 Undetected storage failure, etc.
 Private key files format long-term readability
 A trust fund/long-term saving requires PKs to be stored for a long period of time
 Users must ensure that keys’ file format can continue to be read

15. 2. Password-protected (encrypted) wallet
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 BCT clients allow a locally stored wallet file to be encrypted
 With a key derived from a user-chosen pw or passphrase
 This address only physical theft of underlying devices
 Brute-force of the pw if the file containing private key is stolen
 Share the pros and cons of non-encrypted wallets
 If the pw is forgotten, users lose access to their pw-protected wallet

16. 3. Offline keys Storage
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 To further protect private key form malware-based threats
 Traditional physical security techniques
 required to protect the wallet (e.g. store the drive in a fire-proof safe)
 It makes the wallet inaccessible for immediate use by SW
 Preventing users from spending funds (unless the offline storage media is nearby)
 This approach can be used for backup.
 Offline wallets take time to perform TXs
 Need to download all blockchain (< 140GB) into the PC

17. 3. Offline keys Storage
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https://bitcoinpaperwallet.com/
 Requires a QR code reader
 to read the key back into a Bitcoin client
 Securing this is similar to securing cash
 Paper wallet doesn’t contain the funds itself
 Enables signing authority over a set of Bitcoins
 Funds can be stolen from the wallet
 By simply observing the QR code
 Not possible with physical money
*** Requires printed contents remain unobservable during transportation***

18. 4. Air-gapped & hardware Storage
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 Device holding keys can perform computations
 e.g. signing for the keys it holds
 Air-gapped device can prevent certain types of theft
 By never exposing keys directly to an internet-connected devices
 Hardware Security Modules (HSMs) can be used to :
 To isolate key materials from host devices
 by exposing only the ability to sign transactions
https://trezor.io/
Ledger Wallet
KeepKey
Pi Wallet
* Hardware Security Modules
https://bitcoinarmory.com

19. 5. Password-derived Keys
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 HD wallets [2] deterministically derive a set of private keys
 form a master secret key (a user randomly chosen passphrase)
 pw holder can view the balance and funds of any sub-account derived from the pw
 If one sub-key k is compromised, only the funds of that sub-key
(or sub-keys derived from it) may be stolen
 Weak passwords can be found easily through brute-force search
 Fingerprint of associated public keys will be in the public ledger
 if the account holds any amount of bitcoin
Hierarchical Deterministic
(HD) wallet
https://brainwallet.io/
https://brainwalletx.github.io/

20. 6. Hosted Wallets
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 User wallet is hosted by a trusted third-party WSP*
 Key management and storage services are offloaded
 No need to perform resource intensive cryptographic operations on devices
 WSPs maintain possession of the private keys
 Enable user access via standard web authentication mechanisms
 May also offer password recovery/reset mechanisms
 Users should assume the loss risk
 the service could be breached and funds lost
*WSP – Web Service Provider
https://blockchain.info/

21. Super-Wallet [9] : Multi Tiered Storage Scheme
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https://bitcoinsecurityproject.org/SecureStorage/MultiTieredColdStorageScheme/
As a counter measure to theft, hosted
wallet providers often keep :
 Small float of holdings online in hot storage
 Majority of holdings offline in cold storage
 Causes delays in TXs for users if the
hot storage amount is exhausted.
 Implementation complexity

22. Comparison of Key Management Approaches for Bitcoin
Vs Traditional Online Banking Service [3]
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Client partially awards the benefit
Client is awarded the benefit

23. WRAP UP
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 Most of recent practical security attacks on bitcoin
 Leverage weaknesses in the network and consensus layers of BTC BC
 to considerably increase the advantage of an adversary
BTC shares many of the fundamental challenges of keys management
known from other domains.
 Bitcoin present opportunity to rethink key management for end users

24. [1] Mayer, Hartwig. "ECDSA Security in Bitcoin and Ethereum: a Research Survey." (2016).
[2] Antonopoulos, Andreas M. "Mastering Bitcoin: unlocking digital cryptocurrencies. " O'Reilly Media, Inc., 2014.
[3] Eskandari, Shayan, et al. "A first look at the usability of bitcoin key management." Workshop on Usable Security
(USEC), 2015.
[4] Goldfeder, Steven, et al. "Securing Bitcoin wallets via a new DSA/ECDSA threshold signature scheme." (2015).
[5] Bonneau, Joseph, et al. "Sok: Research perspectives and challenges for bitcoin and cryptocurrencies." Security
and Privacy (SP), 2015 IEEE Symposium on. IEEE, 2015
[6] Li, Xiaoqi, et al. "A survey on the security of blockchain systems." Future Generation Computer Systems (2017).
[7] RSA Laboratories, “PBKDF2 (Password-Based Key Derivation Function 2),” http://tools.ietf.org/html/rfc2898.
[9] Barber, Simon, et al. "Bitter to better—how to make bitcoin a better currency." International Conference on
Financial Cryptography and Data Security. Springer, Berlin, Heidelberg, 2012.
[10] Top 10 Security Concerns for Bitcoin Wallets and Exchanges - https://bitcoinsecurityproject.org/topten/
REFERENCES
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