The issueAs you probably know, a Cold Wallet is a safe way to preserve your funds from a cybernetic attacks or digital lost. Must people will agree that Cold Wallets are the safest and easiest way to get the maximum security for the least of the cost.
Cold Wallets also yield their own serious risks, like physical lost. Yes, they are safe from the Internet, but they are not safe from the world: a fire, an accidental disposal, a simple lost... can be enough for all your funds to be lost. A more general way to describe the risk of Cold Wallets is physical centralization: all you fund are centralized on a specialized drive some QR codes on a paper.
It is clear that the answer to this problem must be
risk mitigation.
These are some examples of bad methods for risk mitigation of Cold Wallets:
- Multiple copies of a Cold Wallet - Increased risk of wallet's exposure to third parties.
- Save a digital copy of the cold wallet - Not really a Cold wallet anymore. It has all risks associated to any wallet stored in a digital media.
- Funds in multiple Cold Wallets - Users often do not have enough different safe places to store many different wallets. Many wallets may lead to lost of track, or imply a batch storage of them, which leads to the same storage risks of a simple Cold Wallet.
- Divide a wallet in multiple parts and store the parts in different places, or trust parties* - If you divide a wallet in 3 parts, the 1x risk of one wallet being lost is now x3 the total risk, since only missing piece of the wallet is required for all funds to be gone forever.
The solutionIt is clear we need a different and clever approach to this problem.
The point of cryptocurrency is that now the user has greater control of his own funds, not only the government, banks or other finantial institutions. Of course, we can trust third parties to store our funds safely, and we are free to do so, but we still need the option to store our funds in a safe, reliable, private and accessible way.
A solution to many of these problems is a Cool Wallet.What is a Cool Wallet? - The conceptThe theoretical definition of a Cool Wallet is
a compound wallet of m total parts, in a way that a quantity under n parts is not enough to recover the private key, but on or over n parts is, assuming that n is less or equal to m.Maybe an example is a better way to explain what a Cool Wallet is.
Suppose Mark wants to mitigate the risk of storing the 12 BTC he saved growing up. He first considered a Cold Wallet, but he also likes to travel, so the media can be lost or stolen. He still wants to have his funds in hand for any emergency. He realizes that a Cold Wallet is not ideal for his purposes, so he considered a Cool Wallet instead. He generated a simple Public-Private key pair and provided the Private Key to a Cold Wallet tool to generate the parts of a Cool Wallet. He generated 6 parts in a way that only 3 different parts are required to recover the Private Key and get all his funds, which means he created a 3 / 6 Cool Wallet.
Mark stored one wallet part in his mother's house (1), he gave another to a trusted friend (2), he stored another one in his laptop (3, remember it is not a Cold Wallet), another one in his physical wallet as a QR code (4), he stored another one in his USB drive (5) and the last one is stored as an image in his cell phone (6). Mark may lost his wallet, phone and wife (just kidding), but he will still able to recover the funds from the parts left and create a new Cool Wallet to move the funds from the previous one. A very clever hacker could had access to the Cool Wallet's part stored in Mark's laptop, but the hacker was unable to get any funds without more different parts to combine.
Mark
never lost control of his wallet, since only he knew and had access to all his Cool Wallet's parts. He also mitigated the risk of losing his wallet, since only a fraction of the generated parts are required to recover the Private Key.
Therefore, Cool Wallets are called as such because they may or may not be strictly used as Cold Wallets, but they are a lot safer than online wallets or exchanges as storage of money.
The toolI created a tool to create Cool Wallets. Any string can be a Private Key, so you can use any Private Key generated with your favorite tool, or even use directly the Electrum Seed Phrase instead of a common private key.
I will be developing the Tool's User Interface as required. Later, I will release the source code in GitHub.
As technology and its security risks increase, and the adoption of cryptocurrency reaches new high levels every year, privacy and security of digital funds will have to become a top priority, since there is a lot of room for technological growth and safety improvement in the world of cryptocurrency.
Roadmap (may change)- Publish the concept - done
- Release the alpha version of the command-line tool to generate cool wallets, for QA testing. - soon
- Release the Core's Source Code on Github.
- Marketing phase
- Release the alpha version of the GUI tool.
- Release the NuGet, for developers.
FAQI will try to answer your questions and concerns in this thread and later add the information here.
