3.6 Storing bitcoin Flashcards
Storing bitcoins is all about
Different approaches for storing and managing secret keys lead to different trade-offs between …
Explain those three terms.
storing and managing secret keys
availability: being able to access the keys when one wants to
security : restricting access to the keys
convenience: easy use
Cryptocurrency wallets can be subdivided into hot storage and cold storage. Explain these concepts.
One advantage of cold storage is it does not have to be online to receive coins
One example of hot storage is storage on your mobile/pc
Cold storage: takes some time to “activate”, enhances security at the cost of convenience and availability
Hot storage: is immediately available, enables convenience and availability at the cost of security
Wallet types: Brain Wallet
A brain wallet …
There is no need for … to store information.
Idea: …
However: Source of randomness determines the
security-> ..
If passphrase is forgotten, …
Example:
„witch collapse practice feed shame open despair
creek road again ice least”
stores Bitcoins with nothing but a secret passphrase
hard drives, paper or else
a deterministic function to generate a private key out of a passphrase.
offline guessing / password cracking
bitcoins are lost forever
Wallet types: paper wallet
Key material is printed to paper. Paper can be placed in …
However, keep in mind:
§ …
§ Side-Channel attacks: … ,Malicious paper-wallet generator, Monitored printer
§ Durability of paper
§ Durability of ink
§ Secure place: dark, 16-19°C, low humidity
secure places like safes or vaults.
Source of randomness; Infected computer / malware
Wallet types: Hardware wallets
Key material is stored …
Additional: Generation of a 24-word passphrase. If device gets destroyed, the … allows for a …
Device is designed to … private. Key is …
The display shows the … The keys on the device allow for …
Requires …(Never buy used hardware wallets!)
on the hardware device.
passphrase; recovery
keep your private key; securely stored within the device.
amount and target of a transaction; a confirmation or rejection of the transactions.
trust in manufacturer and intermediaries.
Wallet types: Online Wallet
Let other people/ companies … (custodial wallet).
No …, coins can only used through a certain interface / website.
Very common within most exchanges. The money is …, the account on the platform has now …
However: Very dangerous! Many exchanges got hacked, users lost their funds. Be careful!
store your Bitcoins/ cryptocurrencies for you
access to the private key
sent to the exchange;a new balance which can be traded or paid out.
