6 ms·

Multisig Vault

102 points by blazamos 12y ago

jastanton 12y ago
Sorry if this is off topic. But I wonder how many websites like these the US government creates in an attempt to control their environment. Maybe I'm paranoid but what if (as an example) companies like Popcorn Time were shutdown and replaced with a government version? All the more reason open source is important.
ukd1 12y ago
Does this mean we'll be able to see balance on the blockchain in one place?
- mihar 12y ago
  Yep.
- jerguismi 12y ago
  At the same time they use deterministic hierarchical keys. Means that you get series of different keys. I guess you can use only a single key, or number of different ones if you want to.
adrianmacneil 12y ago
TL;DR: Store your bitcoin on Coinbase, without giving up control of your private keys.
peter_l_downs 12y ago
> COINBASE KEY: The only key that Coinbase stores. > SHARED KEY: Encrypted with your password and stored > both by you and Coinbase. Are these the same key, or is there an inconsistency with the language here? How many keys does Coinbase store?
- jerguismi 12y ago
  Different key. The other key is encrypted with BIP38 with your chosen password. I don't know how the actual interface works, if it is encrypted client-side or server-side. Anyway, on paper it sounds fantastic.
  - adrianmacneil 12y ago
    Yes, the shared key is generated and encrypted with your passphrase client-side, then sent to Coinbase. We never see the raw private key.
- coinbase-craig 12y ago
  Coinbase stores one private key that we can access, and one private key that is encrypted with the user's vault password on the front-end and sent to us encrypted for storage. The third key is the user's and we never see that. We have no ability to access multisig vault funds without the user passphrase, which never touches our server.
  - STRML 12y ago
    Is there a way to sign a transaction offline but still run it through Coinbase? When it comes to decrypting private keys in the browser, unless the user inspects the javascript each and every time they use the site, there is no guarantee that it hasn't been silently replaced by code that steals keys.
    - adrianmacneil 12y ago
      Yes. You can sign transactions completely independently from Coinbase, provided you have your private key, encrypted shared key, and passphrase (the two keys are provided on a sheet of paper which you print out during vault creation). https://github.com/coinbase/multisig-tool https://github.com/coinbase/multisig-tool
    - coinbase-craig 12y ago
      Yes, you can sign a transaction offline using our multisig vault recovery tool, which is open source: https://github.com/coinbase/multisig-tool https://github.com/coinbase/multisig-tool You can use it to generate a transaction payload which can be broadcast from a client of your choice, including Toshi, our open source bitcoin node: https://toshi.io/docs/#relay-transaction https://toshi.io/docs/#relay-transaction
      - STRML 12y ago
        Excellent! Thank you for putting forth the extra effort and thinking this through. Many comparable online solutions in the Bitcoin space do not offer similar offline tools, making them a non-starter for business use.
sillysaurus3 12y ago
Keys are created and encrypted in the browser Key hijack in 5... 4... 3... Browser crypto isn't secure. One way to offset the risk is to use a browser plugin to perform the crypto operations, and even that isn't really a security guarantee. When you combine an incentive to break crypto (money) with a straightforward route to breaking it (browser crypto), you get a pretty dangerous situation.
- drcode 12y ago
  Though I agree with you this leads to risky security issues, the mere fact that a major Bitcoin exchange is allowing users to hold their own private keys really puts a smile on my face today. It is completely unheard of in the financial industry (and usually technically impossible before cryptocurrencies) to have a bank give away their "middle man" access of people's money and empowering their customers with complete control over their finances.
  - jerguismi 12y ago
    Which makes me wonder... The keys are generated in-browser. What if the users computer is compromised, and a malware succeeds in capturing the keys + bip38 passphrase? I don't know if this product will be pain in the ass for coinbase, if the user funds start disappearing from these multisig addresses. All the best luck for this product, though.
    - adrianmacneil 12y ago
      If the computer is infected, then yes it would be possible to steal both the private keys, and the passphrase. To avoid this attack scenario, we're investing pretty heavily in technologies such as CSP. However, this can be mitigated with our group multisig vault, where separate users create their own keys. For malware to steal these, it would require infecting multiple computers.
      - icebraining 12y ago
        Seems like the next step would be to allow the users to store their copies on a smart card instead of a PC.
wslh 12y ago
coinbase-graig: is it possible with your current API to connect a third party service outside Coinbase to sign the transaction? say I want to do a retinal scan before the transaction is approved.
- barmstrong 12y ago
  Yes, see https://www.coinbase.com/docs/api/multisig https://www.coinbase.com/docs/api/multisig Good question!
vijayboyapati 12y ago
The most powerful part of multi-sig is not that you can have arbitrarily many M of N, but that you can outsource complex policy in a trusted way. E.g., create policy that lower level employees can control a small percentage of a company's holdings, while higher level employees can control a higher percent. It allows you to implement flexibility that exists in the credit system, without giving up the trust/control that comes from the blockchain system. This is a very valuable upgrade to Coinbase's feature set. Great work guys!
- IkmoIkmo 12y ago
  Yeah it's pretty cool. At some point we'll see more enterprise software to take on some of the responsibilities to manage bitcoin funds like that. I think one or two such companies have already been VC funded. The idea is that you can say create a fund with say 3 keys. One is given to the middle-manager, one is given to a senior manager, and one is given to a computer. The middle manager can go on and use up to 80% of the budget. He simply creates a transaction, signs it with his key, then sends it off. The computer sees it, and then does various fraud-type checks. It checks if the receiving address is a whitelisted partner address (e.g. a supplier) and if the amount falls within reason given payment history for example, and if the transaction doesn't use up more than 80% of the budget. It then co-signs it and the bitcoin is released. For anything more, the computer simply won't sign it according to its programming. So the middle manager must go to the senior one to request permission to release earmarked funds. It's just a simple example but you could move lots of the finance to a completely digital system, do immediate software-based accounting and program governance rules into the software, and spit out periodic transparency reports. Will be interesting to see when something like this gets integrated into existing ERP packages someday.
  - andrewljohnson 12y ago
    I don't get why you need BitCoin/multisig for this. As long as you are "giving a key" to a computer, this is no different than programming a computer to oversee the middle-manager's spending from a bank account. I get that multi-sig and bitcoin can be good, but as long as you already have the decision-making and power setup of a corporation, this is a marginal benefit. I would see this technology being more useful for trust-type situations where you might want to give a lawyer, a beneficiary, and a guardian a key. Or any sort of situation where power is actually split between multiple entities - seems like the boss still has all the power in the situation described.
yason 12y ago
I wouldn't trust any third party to keep my bitcoins except for the money in transit. I have my local client and local wallet, and that's where I do my transactions from.
- exo762 12y ago
  The whole point in multi-signature scheme is to remove need to trust Coinbase. Your local client and local wallet are fine, until your keys are stolen by malware. Multisig scheme also attempts to fix that flaw. EDIT: multisig scheme with user's key on Trezor. This way you are also protected fully from viruses stealing your local key.

102 points by blazamos 12y ago

Sorry if this is off topic. But I wonder how many websites like these the US government creates in an attempt to control their environment. Maybe I'm paranoid but what if (as an example) companies like Popcorn Time were shutdown and replaced with a government version? All the more reason open source is important.

ukd1 12y ago

Does this mean we'll be able to see balance on the blockchain in one place?

mihar 12y ago
Yep.
jerguismi 12y ago
At the same time they use deterministic hierarchical keys. Means that you get series of different keys. I guess you can use only a single key, or number of different ones if you want to.

adrianmacneil 12y ago

TL;DR: Store your bitcoin on Coinbase, without giving up control of your private keys.

peter_l_downs 12y ago

> COINBASE KEY: The only key that Coinbase stores. > SHARED KEY: Encrypted with your password and stored > both by you and Coinbase. Are these the same key, or is there an inconsistency with the language here? How many keys does Coinbase store?

jerguismi 12y ago
Different key. The other key is encrypted with BIP38 with your chosen password. I don't know how the actual interface works, if it is encrypted client-side or server-side. Anyway, on paper it sounds fantastic.
- adrianmacneil 12y ago
  Yes, the shared key is generated and encrypted with your passphrase client-side, then sent to Coinbase. We never see the raw private key.
coinbase-craig 12y ago
Coinbase stores one private key that we can access, and one private key that is encrypted with the user's vault password on the front-end and sent to us encrypted for storage. The third key is the user's and we never see that. We have no ability to access multisig vault funds without the user passphrase, which never touches our server.
- STRML 12y ago
  Is there a way to sign a transaction offline but still run it through Coinbase? When it comes to decrypting private keys in the browser, unless the user inspects the javascript each and every time they use the site, there is no guarantee that it hasn't been silently replaced by code that steals keys.
  - adrianmacneil 12y ago
    Yes. You can sign transactions completely independently from Coinbase, provided you have your private key, encrypted shared key, and passphrase (the two keys are provided on a sheet of paper which you print out during vault creation). https://github.com/coinbase/multisig-tool https://github.com/coinbase/multisig-tool
  - coinbase-craig 12y ago
    Yes, you can sign a transaction offline using our multisig vault recovery tool, which is open source: https://github.com/coinbase/multisig-tool https://github.com/coinbase/multisig-tool You can use it to generate a transaction payload which can be broadcast from a client of your choice, including Toshi, our open source bitcoin node: https://toshi.io/docs/#relay-transaction https://toshi.io/docs/#relay-transaction
    - STRML 12y ago
      Excellent! Thank you for putting forth the extra effort and thinking this through. Many comparable online solutions in the Bitcoin space do not offer similar offline tools, making them a non-starter for business use.

sillysaurus3 12y ago

Keys are created and encrypted in the browser Key hijack in 5... 4... 3... Browser crypto isn't secure. One way to offset the risk is to use a browser plugin to perform the crypto operations, and even that isn't really a security guarantee. When you combine an incentive to break crypto (money) with a straightforward route to breaking it (browser crypto), you get a pretty dangerous situation.

drcode 12y ago
Though I agree with you this leads to risky security issues, the mere fact that a major Bitcoin exchange is allowing users to hold their own private keys really puts a smile on my face today. It is completely unheard of in the financial industry (and usually technically impossible before cryptocurrencies) to have a bank give away their "middle man" access of people's money and empowering their customers with complete control over their finances.
- jerguismi 12y ago
  Which makes me wonder... The keys are generated in-browser. What if the users computer is compromised, and a malware succeeds in capturing the keys + bip38 passphrase? I don't know if this product will be pain in the ass for coinbase, if the user funds start disappearing from these multisig addresses. All the best luck for this product, though.
  - adrianmacneil 12y ago
    If the computer is infected, then yes it would be possible to steal both the private keys, and the passphrase. To avoid this attack scenario, we're investing pretty heavily in technologies such as CSP. However, this can be mitigated with our group multisig vault, where separate users create their own keys. For malware to steal these, it would require infecting multiple computers.
    - icebraining 12y ago
      Seems like the next step would be to allow the users to store their copies on a smart card instead of a PC.

wslh 12y ago

coinbase-graig: is it possible with your current API to connect a third party service outside Coinbase to sign the transaction? say I want to do a retinal scan before the transaction is approved.

barmstrong 12y ago
Yes, see https://www.coinbase.com/docs/api/multisig https://www.coinbase.com/docs/api/multisig Good question!

vijayboyapati 12y ago

The most powerful part of multi-sig is not that you can have arbitrarily many M of N, but that you can outsource complex policy in a trusted way. E.g., create policy that lower level employees can control a small percentage of a company's holdings, while higher level employees can control a higher percent. It allows you to implement flexibility that exists in the credit system, without giving up the trust/control that comes from the blockchain system. This is a very valuable upgrade to Coinbase's feature set. Great work guys!

IkmoIkmo 12y ago
Yeah it's pretty cool. At some point we'll see more enterprise software to take on some of the responsibilities to manage bitcoin funds like that. I think one or two such companies have already been VC funded. The idea is that you can say create a fund with say 3 keys. One is given to the middle-manager, one is given to a senior manager, and one is given to a computer. The middle manager can go on and use up to 80% of the budget. He simply creates a transaction, signs it with his key, then sends it off. The computer sees it, and then does various fraud-type checks. It checks if the receiving address is a whitelisted partner address (e.g. a supplier) and if the amount falls within reason given payment history for example, and if the transaction doesn't use up more than 80% of the budget. It then co-signs it and the bitcoin is released. For anything more, the computer simply won't sign it according to its programming. So the middle manager must go to the senior one to request permission to release earmarked funds. It's just a simple example but you could move lots of the finance to a completely digital system, do immediate software-based accounting and program governance rules into the software, and spit out periodic transparency reports. Will be interesting to see when something like this gets integrated into existing ERP packages someday.
- andrewljohnson 12y ago
  I don't get why you need BitCoin/multisig for this. As long as you are "giving a key" to a computer, this is no different than programming a computer to oversee the middle-manager's spending from a bank account. I get that multi-sig and bitcoin can be good, but as long as you already have the decision-making and power setup of a corporation, this is a marginal benefit. I would see this technology being more useful for trust-type situations where you might want to give a lawyer, a beneficiary, and a guardian a key. Or any sort of situation where power is actually split between multiple entities - seems like the boss still has all the power in the situation described.

yason 12y ago

I wouldn't trust any third party to keep my bitcoins except for the money in transit. I have my local client and local wallet, and that's where I do my transactions from.

exo762 12y ago
The whole point in multi-signature scheme is to remove need to trust Coinbase. Your local client and local wallet are fine, until your keys are stolen by malware. Multisig scheme also attempts to fix that flaw. EDIT: multisig scheme with user's key on Trezor. This way you are also protected fully from viruses stealing your local key.