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This is what you get when you have amateurs try and develop security systems. While I applaud them for at least trying, and I realize that hiring an actual sec

This is what you get when you have amateurs try and develop security systems. While I applaud them for at least trying, and I realize that hiring an actual security consultant is unlikely to happen, it pains me to see their security system as described. A half-decent systems security architect (in the whole scheme of things) is not that expensive - I'm sure someone like @tptacek would provide a referral to someone charging less than $1000/hour who could, in a matter of two or three weeks, architect an actual secure solution, with HSMs, XofY authorization procedures and so on, that the good people at coinbase could (or not) go off and design/deploy. [edit: Part of my pain at looking at this system, is seeing all the many, obvious flaws, that other industries that need security (military, banking, smart grids) have had to deal with and have solved in elegant, secure, reliable ways. I work in an industry where no one individual can be allowed to have excessive rights, privileges, or power over the system under their control. The many, many, many layers of security, audits, rights management, and AAA we have in place do so are impressive (though, ironically, one of the elements does involve acid-free 100 year paper in Safe Deposit boxes). Reading through the coinbase description though, is akin to reading about the encryption system created by someone who had never taken a cryptography course. The outputs from both groups can be trivially shown to be completely flawed by those who've had the opportunity to see how it's properly done. With that said, at least they are _trying_]

jhuckestein 14y ago
I'm genuinely curious what you think the most likely attack vector currently is and what the next most low-hanging security fruit for coinbase are. From my perspective it looks like coinbase is currently the most secure and redundant way to store your bitcoins. Of course everyone could store them on their own and design my own security system, but I doubt many people can do better than what the OP describes.
- ghshephard 14y ago
  Security concerns that occupy 90%+ of our architects' minds: o What happens if one or more employees goes rogue? o What happens if an employee is "hit by a truck"? o What happens if an employee is blackmailed/extorted? o What happens if your offsite archive is vandalized/broken into/crashed into by a plane? These all have solutions that have been in place for 20+ years in the military/banking industry.
  - krasin 14y ago
    Unfortunately, these well-paid professionals didn't save us from the utterly broken scheme with credit card numbers. And, what's worse, nobody in banking industry is taking any action to fix that.
    - kalleboo 14y ago
      Credit card security seems pretty well-solved in Europe, at least once we can ditch all the backcompat measures. For physical transactions, we have chip-and-pin, which can't be copied like a magstripe. For online transactions, we have securecode/verified by visa.
      - tallanvor 14y ago
        Unfortunately chip and pin is not as secure as the industry wants you to believe. --There have been several examples of where people have modified card terminals to allow the chip and pin information to be intercepted and used elsewhere.
        kalleboo 14y ago
        Any links? All the breaches I've seen so far have been either to fool the user to fall back to magstripe (after having them enter their PIN), or to fake the display of the amount you're charging. IIRC there was one problem where the encryption used between the card and the bank was bad or the card's chip still had its write pins exposed but I think that was solved by replacing the cards with newer ones.
        mentat 14y ago
        https://www.schneier.com/blog/archives/2012/09/new_attack_agai_2.html https://www.schneier.com/blog/archives/2012/09/new_attack_ag...
      - krasin 14y ago
        Thanks for the reference. I have just activated "verified by visa" feature on my primary card, but it appears to be a nonsense again: "After you activate Verified by Visa, your card will be recognized when you buy at participating online stores. You'll enter your password in the Verified by Visa window, your identity will be verified, and the transaction will be completed. In stores that are not yet participating in Verified by Visa, your Visa card will continue to work as usual." basically, everyone still has the power to charge me, when it knows my card number. The feature seems to be protecting merchants, not customers (yes, I understand that my bank will likely refund all stolen funds, but I would prefer a sane solution)
nicpottier 14y ago
I think this is a bit of an unfair, perhaps even elitist post, and certainly seems a bit against the culture here at HN. Why so much text devoted to tearing down without a single suggestion as to how they could do better, or where their flaws are now? Is it that you can't give $1000/hr advice for free, but instead have to defend the value of that $1000/hr? I am most definitely not a security expert, but this sure seems like a step forward, and has some really interesting aspects to it from a Bitcoin perspective. (that they can deposit to the offline storage without actually touching the offline storage is one) Yes, the most glaring issue is there is only one offline storage site. But if the person with the decryption key is different than the person with the safe deposit key (and I suppose more than one of each) then I don't see the glaring issue. Please offer constructive criticism instead of just tearing it down.
- ghshephard 14y ago
  These people are proposing to manage people's money, without having a serious understanding of how to secure it. For me, it's akin to watching someone build a bridge that people's cars are going to be driving across without having a background in civil engineering. I may not be able to tell them how to build the bridge, but I sure know it's going to end poorly when they try to do it themselves. As a first step, add an NofM authentication process with a pair of sophos/utimaco HSMs doing rate/key/encryption management.
  - nicpottier 14y ago
    Thanks, that is nice to actually have a suggestion. One note is that I think you vastly overestimate the competency level of organizations. Just because they are large and have an air of security does not mean their systems are terribly secure. I can speak from personal experience that huge government organizations that ought to know better have absolutely glaring security holes. But yes, we should all strive to do better. I think NofM encryption in particular would be a great improvement.
- davidw 14y ago
  > I think this is a bit of an unfair, perhaps even elitist post, and certainly seems a bit against the culture here at HN. Maybe it's just my impression, but a lot of security-related discussions evoke the "comic book guy voice". Speaking of... any of you security guys want to recommend a good book that talks about different solutions and common situations when they're useful? Not a "how to...", but a "know that this thing is available, and here's when it might be useful".
JoachimSchipper 14y ago
You're aware that two weeks * 40 hours/week * $1000/hour = $80 000 (plus HSMs and ongoing costs imposed by additional security), and that the Bitcoin breaches we've heard of so far cost $100 000 - 300 000? The level of security you're proposing seems excessive. (Also, their "team" page seems to list one person. It's very hard to make XofY security work in really small organizations.) All that said, Bitcoin security is amateur hour, and you're right that there's a lot they could learn from people who have solved such problems before.
- ghshephard 14y ago
  Shouldn't it worry (terrify?) you that a small group of two or three people could coordinate with each other and abscond with your money? Isn't the fact that $80,000 worth of consulting costs is considered an investment too large to consider making also a pretty big red flag?
  - JoachimSchipper 14y ago
    <snark>Meh, this is Bitcoin. If it takes more than one bored teenager with some off-the-shelf SQL injection tools to abscond with my money, that's better than expected.</snark> More seriously, the threats faced by a real bank are more serious than the threats faced by a minor Bitcoin operation. That said, there's no way I'm trusting any significant amount of money to any of these outfits.
  - icebraining 14y ago
    That depends on how much money one has stored with them, no?
rdl 14y ago
1) Actually, removing as much risk as possible, limiting risk to a small subset of wealth, at the expense of latency in some cases, is a perfect solution here (I'm not charging $1k/yr yet...). Coinbase presumably has a certain amount of risk they'll cover internally, and some level they can't or won't cover, so making sure the worst case breach doesn't exceed their risk tolerance is necessary and brilliant. Any insurer would require a solution like this, on top of any other audit and control measures. The only weakness with the system as it stands now is documentation (which the blog post accomplishes, to some extent) -- the next step is to develop legal and technical measures (possibly using threshold cryptography, HSMs, etc., as well as multiple contracted parties like law firms, escrow agents, etc.) to enforce the fundamental principle of reducing value at risk to a reasonable level. 2) Please give me an example of ANYTHING the military, banking, or smart grids has solved "elegantly", especially in security. Elegance is the opposite of how those industries work -- they solve things with brute force. 3) This solution is elegant in that it's a simple hack and accomplishes the goals using the resources available. It's not a general solution to the computer security problem, but took advantage of a compromise (latency) they could make. CAs, for a long time, actually did a lot of work using laptops stored in bank vaults, rather than HSMs, since there was no good way to run all the code they needed in-HSM, or they needed to use kinds of keys not supported in HSM. Later, they bought HSMs for the keys themselves (mainly to do multi-party access control), and kept the laptop too.
mrb 14y ago
These "other" industries are not so perfect. In the military, for example, it is common for single individuals to have excessive access to confidential information. When they go rogue, bad things happen, eg. http://en.wikipedia.org/wiki/Bradley_manning http://en.wikipedia.org/wiki/Bradley_manning

jhuckestein 14y ago

I'm genuinely curious what you think the most likely attack vector currently is and what the next most low-hanging security fruit for coinbase are. From my perspective it looks like coinbase is currently the most secure and redundant way to store your bitcoins. Of course everyone could store them on their own and design my own security system, but I doubt many people can do better than what the OP describes.

ghshephard 14y ago
Security concerns that occupy 90%+ of our architects' minds: o What happens if one or more employees goes rogue? o What happens if an employee is "hit by a truck"? o What happens if an employee is blackmailed/extorted? o What happens if your offsite archive is vandalized/broken into/crashed into by a plane? These all have solutions that have been in place for 20+ years in the military/banking industry.
- krasin 14y ago
  Unfortunately, these well-paid professionals didn't save us from the utterly broken scheme with credit card numbers. And, what's worse, nobody in banking industry is taking any action to fix that.
  - kalleboo 14y ago
    Credit card security seems pretty well-solved in Europe, at least once we can ditch all the backcompat measures. For physical transactions, we have chip-and-pin, which can't be copied like a magstripe. For online transactions, we have securecode/verified by visa.
    - tallanvor 14y ago
      Unfortunately chip and pin is not as secure as the industry wants you to believe. --There have been several examples of where people have modified card terminals to allow the chip and pin information to be intercepted and used elsewhere.
      - kalleboo 14y ago
        Any links? All the breaches I've seen so far have been either to fool the user to fall back to magstripe (after having them enter their PIN), or to fake the display of the amount you're charging. IIRC there was one problem where the encryption used between the card and the bank was bad or the card's chip still had its write pins exposed but I think that was solved by replacing the cards with newer ones.
        mentat 14y ago
        https://www.schneier.com/blog/archives/2012/09/new_attack_agai_2.html https://www.schneier.com/blog/archives/2012/09/new_attack_ag...
    - krasin 14y ago
      Thanks for the reference. I have just activated "verified by visa" feature on my primary card, but it appears to be a nonsense again: "After you activate Verified by Visa, your card will be recognized when you buy at participating online stores. You'll enter your password in the Verified by Visa window, your identity will be verified, and the transaction will be completed. In stores that are not yet participating in Verified by Visa, your Visa card will continue to work as usual." basically, everyone still has the power to charge me, when it knows my card number. The feature seems to be protecting merchants, not customers (yes, I understand that my bank will likely refund all stolen funds, but I would prefer a sane solution)

nicpottier 14y ago

I think this is a bit of an unfair, perhaps even elitist post, and certainly seems a bit against the culture here at HN. Why so much text devoted to tearing down without a single suggestion as to how they could do better, or where their flaws are now? Is it that you can't give $1000/hr advice for free, but instead have to defend the value of that $1000/hr? I am most definitely not a security expert, but this sure seems like a step forward, and has some really interesting aspects to it from a Bitcoin perspective. (that they can deposit to the offline storage without actually touching the offline storage is one) Yes, the most glaring issue is there is only one offline storage site. But if the person with the decryption key is different than the person with the safe deposit key (and I suppose more than one of each) then I don't see the glaring issue. Please offer constructive criticism instead of just tearing it down.

ghshephard 14y ago
These people are proposing to manage people's money, without having a serious understanding of how to secure it. For me, it's akin to watching someone build a bridge that people's cars are going to be driving across without having a background in civil engineering. I may not be able to tell them how to build the bridge, but I sure know it's going to end poorly when they try to do it themselves. As a first step, add an NofM authentication process with a pair of sophos/utimaco HSMs doing rate/key/encryption management.
- nicpottier 14y ago
  Thanks, that is nice to actually have a suggestion. One note is that I think you vastly overestimate the competency level of organizations. Just because they are large and have an air of security does not mean their systems are terribly secure. I can speak from personal experience that huge government organizations that ought to know better have absolutely glaring security holes. But yes, we should all strive to do better. I think NofM encryption in particular would be a great improvement.
davidw 14y ago
> I think this is a bit of an unfair, perhaps even elitist post, and certainly seems a bit against the culture here at HN. Maybe it's just my impression, but a lot of security-related discussions evoke the "comic book guy voice". Speaking of... any of you security guys want to recommend a good book that talks about different solutions and common situations when they're useful? Not a "how to...", but a "know that this thing is available, and here's when it might be useful".

JoachimSchipper 14y ago

You're aware that two weeks * 40 hours/week * $1000/hour = $80 000 (plus HSMs and ongoing costs imposed by additional security), and that the Bitcoin breaches we've heard of so far cost $100 000 - 300 000? The level of security you're proposing seems excessive. (Also, their "team" page seems to list one person. It's very hard to make XofY security work in really small organizations.) All that said, Bitcoin security is amateur hour, and you're right that there's a lot they could learn from people who have solved such problems before.

ghshephard 14y ago
Shouldn't it worry (terrify?) you that a small group of two or three people could coordinate with each other and abscond with your money? Isn't the fact that $80,000 worth of consulting costs is considered an investment too large to consider making also a pretty big red flag?
- JoachimSchipper 14y ago
  <snark>Meh, this is Bitcoin. If it takes more than one bored teenager with some off-the-shelf SQL injection tools to abscond with my money, that's better than expected.</snark> More seriously, the threats faced by a real bank are more serious than the threats faced by a minor Bitcoin operation. That said, there's no way I'm trusting any significant amount of money to any of these outfits.
- icebraining 14y ago
  That depends on how much money one has stored with them, no?

rdl 14y ago

1) Actually, removing as much risk as possible, limiting risk to a small subset of wealth, at the expense of latency in some cases, is a perfect solution here (I'm not charging $1k/yr yet...). Coinbase presumably has a certain amount of risk they'll cover internally, and some level they can't or won't cover, so making sure the worst case breach doesn't exceed their risk tolerance is necessary and brilliant. Any insurer would require a solution like this, on top of any other audit and control measures. The only weakness with the system as it stands now is documentation (which the blog post accomplishes, to some extent) -- the next step is to develop legal and technical measures (possibly using threshold cryptography, HSMs, etc., as well as multiple contracted parties like law firms, escrow agents, etc.) to enforce the fundamental principle of reducing value at risk to a reasonable level. 2) Please give me an example of ANYTHING the military, banking, or smart grids has solved "elegantly", especially in security. Elegance is the opposite of how those industries work -- they solve things with brute force. 3) This solution is elegant in that it's a simple hack and accomplishes the goals using the resources available. It's not a general solution to the computer security problem, but took advantage of a compromise (latency) they could make. CAs, for a long time, actually did a lot of work using laptops stored in bank vaults, rather than HSMs, since there was no good way to run all the code they needed in-HSM, or they needed to use kinds of keys not supported in HSM. Later, they bought HSMs for the keys themselves (mainly to do multi-party access control), and kept the laptop too.

mrb 14y ago

These "other" industries are not so perfect. In the military, for example, it is common for single individuals to have excessive access to confidential information. When they go rogue, bad things happen, eg. http://en.wikipedia.org/wiki/Bradley_manning http://en.wikipedia.org/wiki/Bradley_manning