Bitcoin Multisignature
and its applications
Chakib Benziane @sp4ke
Freelance Dev - Bitcoin Hacker
Quick review of a Bitcoin transaction
Transaction: send 1 Bitcoin Alice
Bob
No multisig
Alice unlocks her coins with her single pair of keys
Alice
Bob
Bitcoin network validates transaction
Alice’s walletBob’s w...
Using a simple Bitcoin transaction Alice can:
Make a transaction in a trustless network
(no government, company or bank)
T...
Convenience VS Security
Most users use online wallets
Trade trust and security for convenience
Multi Signature Transaction
Alice’s wallet
Unlock wallet with 1 of 2 keys
Backup key
Alice
Bob
Multi Signature Transaction
Bitcoin network validates
transaction
Shared wallet
Any 2 of 3 keys unlock transaction
Bob
TWO MAN RULE
High security for critical operations
Nuclear Warheads
Hazardous Environments
Dual Key Bank Vaults
time
before bitcoin now...
Applications
Improved Security: Exchanges, Oracles, Wallets …
Escrow and arbitration
Crowdfunding
Co-Spending
...
Multi Signature with Exchanges
Alice’s wallet hosted at
exchange service
2 keys required out of 3 exchange
backup key
Bob
Multi Signature with Exchanges
Transfer coins to safe wallet
2 keys required out of 3
backup key
safe
wallet
Multisignature Wallets
server based
web client
native client
Where are your wallet keys stored ?
On a remote server
exchanges
coinbase
On your device
Offline
Bitcoin Core
Electrum
Arm...
Where are your wallet keys stored ?
On a remote server
exchanges
coinbase
On your device
Offline
Bitcoin Core
Electrum
Arm...
Armory
Native client with multisig
Lockboxes feature with M of N transactions
Total freedom and flexibility
Simulfunding: ...
Armory
Native client with multisig
1-of-2: Husband-wife joint account (either can spend)
2-of-2: Husband-wife savings acco...
Server Based Wallets
Coinbase Vault: Offline storage
Multi sig coming soon
Your wallet on Coinbase
No Multisig
coinbase
webpage
Your key is hosted on Coinbase’s server
Server Based
Your wallet on Coinbase
backup key
Your keys are not hosted on Coinbases’s webpage
You need to somehow sign the transactio...
Web Wallets
Bank Grade
Security
2 of 3 MultiSig
Offline Storage
Web Wallets
Greenaddress.it
HD wallet
Multi Signature (2 of 3)
Presigned transactions: pay in the future :)
Web Wallets
CoPay BitPay
still in beta
HD wallet
Multi Signature (M of N)
Real time multi signature
Web Wallets
Onchain.io
HD wallet
Multi Signature (M of N)
Out Of Band ( Phone app as extra signing key )
Beware of “Security Theater”
Your key is hosted on web wallet web page
You sign the transaction on the web page
key on
browser
Web Wallet: Web App
With...
backup key
Your key is hosted on web wallet web page
You multisign the transaction on the web page
key on
browser
Web Wall...
backup key
key on
browser
Web Wallet: Web App
With Multisig 2 of 3
control server
send modified pageSecurity Theater Multi...
backup key
Good web app multisig
Extra step needed
key on
browser
extension
Web Wallet: Web App
With Multisig 2 of 3
contr...
Oracles
API Integrates with Wallets and Services
Theft prevention
Fraud risk detection
Organisations can protect shared wallet
(Ne...
user wallet
backup key
Alice orders a transaction from her wallet
oracle
2 of 3 multisignature
Oracle applies third party verifications
then signs transaction
2 of 3 multisignature
backup key
user wallet
oracle
Alice backup keys
oracle
3 of 5 multisignature
We can go further
exchange wallet
or web wallet
Arbitration and
Arbitration and Escrow
Open Source p2p decentralized marketplace
No fees, no censorship
Ricardian contracts: trade and arbitration
Escrow payment...
seller
buyer
notary
Buyer and Seller review and sign contract
Notary signs final contract
seller
buyer
notary
Notary creates multisig bitcoin address
2 of 3 keys to unlock payment
Buyer send money to address
Buyer and Seller settle transaction
Funds unlocked with both their keys
Notary receives fee
Seller receive paiement
seller...
Buyer and Seller disagree
Notary makes arbitration
Seller is bad
Buyer receives back paiement
Notary receives fee
seller
b...
Buyer and Seller disagree
Notary makes arbitration
Buyer is bad
Seller receive paiement
Notary receives fee
notary
buyer
s...
Final Thaughts
With multisig we can reach unmatched levels of security
No need for regulations to protect users ;)
Give so...
Thanks for listening
send your love to
19DavSZz6vopuYyER3S2Jnd2jzoEQa4Ww8
OR
chakib.benz@gmail.com
Bitcoin multisignatures and its applications
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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.

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

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Bitcoin multisignatures and its applications

  1. 1. Bitcoin Multisignature and its applications Chakib Benziane @sp4ke Freelance Dev - Bitcoin Hacker
  2. 2. Quick review of a Bitcoin transaction Transaction: send 1 Bitcoin Alice Bob No multisig
  3. 3. Alice unlocks her coins with her single pair of keys Alice Bob Bitcoin network validates transaction Alice’s walletBob’s wallet
  4. 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. 5. Convenience VS Security Most users use online wallets Trade trust and security for convenience
  6. 6. Multi Signature Transaction Alice’s wallet Unlock wallet with 1 of 2 keys Backup key Alice Bob
  7. 7. Multi Signature Transaction Bitcoin network validates transaction Shared wallet Any 2 of 3 keys unlock transaction Bob
  8. 8. TWO MAN RULE
  9. 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. 10. Applications Improved Security: Exchanges, Oracles, Wallets … Escrow and arbitration Crowdfunding Co-Spending ...
  11. 11. Multi Signature with Exchanges Alice’s wallet hosted at exchange service 2 keys required out of 3 exchange backup key Bob
  12. 12. Multi Signature with Exchanges Transfer coins to safe wallet 2 keys required out of 3 backup key safe wallet
  13. 13. Multisignature Wallets server based web client native client
  14. 14. Where are your wallet keys stored ? On a remote server exchanges coinbase On your device Offline Bitcoin Core Electrum Armory
  15. 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. 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. 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. 18. Server Based Wallets Coinbase Vault: Offline storage Multi sig coming soon
  19. 19. Your wallet on Coinbase No Multisig coinbase webpage Your key is hosted on Coinbase’s server Server Based
  20. 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. 21. Web Wallets Bank Grade Security 2 of 3 MultiSig Offline Storage
  22. 22. Web Wallets Greenaddress.it HD wallet Multi Signature (2 of 3) Presigned transactions: pay in the future :)
  23. 23. Web Wallets CoPay BitPay still in beta HD wallet Multi Signature (M of N) Real time multi signature
  24. 24. Web Wallets Onchain.io HD wallet Multi Signature (M of N) Out Of Band ( Phone app as extra signing key )
  25. 25. Beware of “Security Theater”
  26. 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. 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. 28. backup key key on browser Web Wallet: Web App With Multisig 2 of 3 control server send modified pageSecurity Theater Multisig
  29. 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. 30. Oracles
  31. 31. API Integrates with Wallets and Services Theft prevention Fraud risk detection Organisations can protect shared wallet (NeoBee fiasco) third party oracle
  32. 32. user wallet backup key Alice orders a transaction from her wallet oracle 2 of 3 multisignature
  33. 33. Oracle applies third party verifications then signs transaction 2 of 3 multisignature backup key user wallet oracle
  34. 34. Alice backup keys oracle 3 of 5 multisignature We can go further exchange wallet or web wallet
  35. 35. Arbitration and Arbitration and Escrow
  36. 36. Open Source p2p decentralized marketplace No fees, no censorship Ricardian contracts: trade and arbitration Escrow payment with multi signatures
  37. 37. seller buyer notary Buyer and Seller review and sign contract Notary signs final contract
  38. 38. seller buyer notary Notary creates multisig bitcoin address 2 of 3 keys to unlock payment Buyer send money to address
  39. 39. Buyer and Seller settle transaction Funds unlocked with both their keys Notary receives fee Seller receive paiement seller notary buyer
  40. 40. Buyer and Seller disagree Notary makes arbitration Seller is bad Buyer receives back paiement Notary receives fee seller buyer notary
  41. 41. Buyer and Seller disagree Notary makes arbitration Buyer is bad Seller receive paiement Notary receives fee notary buyer seller
  42. 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. 43. Thanks for listening send your love to 19DavSZz6vopuYyER3S2Jnd2jzoEQa4Ww8 OR chakib.benz@gmail.com

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