Leak and Loss Alarms for Bitcoin Wallets
This is a proposal that I wrote up few years ago (and emailed to Coinbase as a feature suggestion), but never published.
Suppose you’ve got a bunch of bitcoins, and you want to keep them safe.
There are two classes of threat that you need to worry about:
- Data loss
You’ve got to somehow store your wallet’s private key(s) such that 1) you’re sure you can retrieve the private key when you need to, and 2) no one else can get to the key.
Whether you do it yourself or trust a wallet service, you want both of these conditions to be met.
It seems to me that, unfortunately, these two goals tend to trade off against each other. Making your private key easy for yourself to recover (e.g. making lots of copies of the key) tends to make it easier for others to steal, and making it hard for others to steal (e.g. storing it on a flash drive in a safe at the bottom of the ocean) tends to
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