How to use and store your Bitcoins in a secure way

Krzysztof Szumny

Terminology in Bitcoin

is BROKEN

Bitcoin wallet ≠ wallet
Bitcoins ≠ coins

 

Learn more about broken terminology in Bitcoin, with "Bitcoin Design Principles" by Andreas M. Antonopoulos
https://www.youtube.com/watch?v=Ur037LYsb8M

Bitcoin wallet ≠ wallet

 

Bitcoin Wallet is a Keychain

"Normal wallets cannot be copied, Bitcoin Wallets can be copied - exactly like normal real-life keys"

"If you give someone a copy of a key, they can open the door, they don't need your permission anymore"

When miners mine Bitcoin, they are creating entries in distributed ledger. Those ledger entries do not enumerate coins, they have transaction outputs, which are chunks of value that are infinitely divisible and recombinable."

coins ≠ coins

 

Storing Bitcoins

Question for you:

Do you really own your Bitcoins?

 

What are the options?

  • Bitcoin Exchanges
  • Bitcoin Online Wallet
  • Mobile/Desktop Wallet
  • Hardware Wallet
  • Paper Wallet (cold storage)

Bitcoins are not yours if you don't own your private keys

What is the best place to store Bitcoins?

What is the best place to store FIAT money, like Dollars or Polish Złoty?

But what actually is a key?

A really big 256-bits long random number, converted in a certain way:


256-bits long == range: [0 - 2^256)

 

Binary: 011011100101001011111001100011110001110100000001000101101000101111110111110100110100001010000000010000001101100110100101011010001011100101000111010111011011000100000100101000010010111111011111011010010100010100111101111101100100100111101000101001110100001

 

Decimal:

49901017196638358554774310583280483467654187237950210469348718171031975012162

Generating Private Key and Address

Bin (256) -> HEX - > BASE58Check -> Private Key -> Address

Detail description: https://bitcointalk.org/index.php?topic=944596.0

BrainWallet: https://brainwallet.github.io/

PaperWallets: https://www.bitaddress.org/

QR codes & Paper Wallets & HD Wallets

What if my wallet will not work on my iPhone 26S in 2035?

BIPs (Bitcoin Improvement Proposals):

 

  • BIP21 - This BIP proposes a URI scheme for making Bitcoin payments.

    The purpose of this URI scheme is to enable users to easily make payments by simply clicking links on webpages or scanning QR Codes.
     
  • BIP32 - Hierarchical Deterministic wallets (or "HD Wallets")

    ...In order to avoid the necessity for a backup after every transaction 100 transactions (...) HD wallets support multiple keypair chains, derived from a single root.
     
  • BIP38 - Encrypting and encoding a passphrase-protected Bitcoin private key
     
  • BIP39 - Implementation of a mnemonic code or mnemonic sentence

Mnemonics / Seed

A mnemonic code or sentence is superior for human interaction compared to the handling of raw binary or hexadecimal representations of a wallet seed. The sentence could be written on paper or spoken over the telephone.

ALWAYS BACKUP YOUR SEED !!!111oneone

Seriously!

ALWAYS!

ALWAYS

BACKUP

YOUR

SEED!

Hierarchical Deterministic Wallets

Transfering Bitcoins

​in a safe way...

Best Practices

  • Do a test transaction, before the main transaction
    • Cons:
      • fee paid 2 times
    • Pros:
      • You will know that recipient received coins
        • Tip: look at block explorer
      • Address was correct
      • Fee was not to small
      • in case of exchanges: that there is no delays 
    • Caution: Paper Wallets should be swiped at once!
       
  • ​Use hardware wallets
     
  • ​Still afraid? Try "Point and Calling" method!

Transactions with Hardware Wallets

  • Hardware wallets are not just a fancy USB sticks
  • Private Keys never leaves the device
  • Typical flow:
    • Software Wallet request a payment
    • User confirms transaction on hardware wallet
    • Hardware Wallet generates singed transaction
    • Software Wallet broadcast transaction

Pointing and Calling

Pointing and calling is a method in occupational safety for avoiding mistakes by pointing at important indicators and calling out the status. It is common in Japan and is sometimes referred to by its Japanese terms, shisa kanko (指差喚呼), shisa kakunin kanko (指差確認喚呼) or yubisashi koshō (指差呼称). Making large gestures and speaking out the status helps keeping focus and attention.

Krzysztof Szumny

 

My Blog:

https://steemit.com/@noisy

Link to slides:

https://slides.com/noisy/how-to-keep-bitcoins-secure

How to use and store your Bitcoins in a secure way

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