IDCEE 2014: Bitcoin: Sophisticated Multi-Signature Solutions That Keep Money Fully Under Your...

Sophisticated multi-signature

solutions

Bitcoin

www.bitalo.comPhone: +49 6322 9419292 | e-mail: [email protected]

backgroundabout me

•Martin Albert, 33 years old

•Diploma in Chemistry, Diploma in Business Economics

•Business Consultant in the field of chemicals legislation

•EU bureaucrat

•2011 Discovered Bitcoin, early adopter

•2012 Full time Bitcoin enthusiast

•2013 Investor, CEO at Bitalo AG


lets see…Now more about bitcoin

A system to transfer “value” from person to person

Inventor: 2009 – “Satoshi Nakamoto” As White Paper

Open Source project


a story about an apple


But now a virtual apple


Now you require a ledger


Basis is the P2P Network

Like Skype or Bit-torrent

Download client, install, start

When connected you can tell yourcomputer to confirm transactions

Computer will confirm Bitcoin transactions

Reward for confirmations in Bitcoins


Bitcoin?

- decentralized, peer to peer....

- no banks or 3rd parties needed

- secure system / everything with encryption

- somehow anonymous...

--> SO WHAT?


Transaction in DetailGeneral principle:

I take a certain amount of bitcoins

I take my public key as senderI take public key of recipient

Transaction is signed with my private key to prove that I am sender

Transactions are public and sent to the bitcoin network.

Network checks if transaction is valid and “confirms”


Normal Bank TransactionNormal Bank account:Person and Account are connected

Only Sender, Receiver (and Bank)Know about the transaction

Bitcoin:Transaction is PUBLIC,But it is NOT known who is behind the account (unless known)

One person can have unlimited bank accounts


Status Quo - Intermediary


Problem solved? – Bitcoins

- Centralized Service??

- Give up control over my coins??

- Security issues with hackers?

- Sites close over night???

--> SAME PROBLEM AS BEFORE!


so…where should I store my Bitcoins


What if a service exists where you….Get Bitcoins

- DO NOT give up control over your coins

- DO NOT allow even the administrators toaccess your coins

- IS NOT possible that Hackers can stealcoins, even when the server is compromised

-DO NOT need to trust the trading party, as still an escrow is in place? EVEN when the site is closed?


Trick: Multi-Signature wallets


“Normal” TransactionHow does it work?


Part 1: Create multi-signature addressMulti-Signature

-Get two or more Bitcoin addressees.

-Combine them using addmultisigaddress JSON-RPC command

-As a result, you will get a special Bitcoin address starting with „3”.

-The resulting Bitcoin address is fully functional and can receive coins.

-You can create different combinations of M-of-N addresses. It means that you can specify how many private keys are needed to spend the coins.


Part 2: Spending coins from multi-signature walletsMulti-Signature

-Create a transaction draft using createrawtransaction JSON-RPC command

-Sign the resulting transaction data with one of private keys, utilizing signrawtransaction command

-provide it with correct details, which may include: public key and redeem script

-Pass partially signed transaction data to other party, which repeats this process -Finally, you broadcast the transaction to the network (using sendrawtransaction or another means)


Multi signature wallets


Hackers and admins see encrypted wallets

Two-Factor authentication


And the last resort: Dead Man’s Switch


Bottom line- It IS possible to create REAL NO TRUST Bitcoin services

- Multi-Signature wallets, no one can ever access the bitcoins without your consent

- Thanks to MePIN two factor authentication not even if your PC is compromised

-With timed backup-transaction coins are even safe when service is closed down or server data is deleted

YOUFOR watching

THANK

IDCEE 2014: Bitcoin: Sophisticated Multi-Signature Solutions That Keep Money Fully Under Your...

Economy & Finance

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