wallet vs. private key

[grau]

Please confirm or correct:

The private key associated with the receiving address enables you to transfer all BTC owned by the address now and even in future.

Means protecting the wallet is important but is the private key leaked your BTC can be stolen even if you earned it after the wallet was compromised.

[JoelKatz]

Please confirm or correct:

The private key associated with the receiving address enables you to transfer all BTC owned by the address now and even in future.

Correct.

Means protecting the wallet is important but is the private key leaked your BTC can be stolen even if you earned it after the wallet was compromised.

The reason protecting the wallet is important is because it contains private keys.

[grau]

Thanks Joel,

so transfering private key is an off network payment (intentional or not) to the one first using it to transfer the money to an other key.

i assume this will generate the need for an extra secure store, it might sound contradictory, but let me ask: could the network help here too?

[JoelKatz]

Thanks Joel,

so transfering private key is an off network payment (intentional or not) to the one first using it to transfer the money to an other key.

Yep.

i assume this will generate the need for an extra secure store, it might sound contradictory, but let me ask: could the network help here too?

I don't see how. And there's no desire to bloat the network with anything not necessary or nearly so.

[Spacy]

I think it would be sufficient if they introduced encryption in the bitcoin client. So a encrypted wallet with a very strong personal PW, with the possibility to move it from the computer onto multiple secured usb sticks should be enough.

[JoelKatz]

I think it would be sufficient if they introduced encryption in the bitcoin client. So a encrypted wallet with a very strong personal PW, with the possibility to move it from the computer onto multiple secured usb sticks should be enough.

That won't work very well for two reasons:

1) The possibility of losing the password would likely present a greater risk than the risk of having your wallet stolen. (I once forgot a password I entered pretty much daily for 8 years after not using it for just 5 months.)

2) If you encrypt everything (inlcuding the public keys), you'll be entering in the password so often an attacker might catch it with a keylogger. If you encrypt only the private keys so you only need to enter the password in to send coins, you'll be using the password so infrequently you'll have to keep it short to avoid forgetting it. An attacker will know which stolen wallets have the most bitcoins and he'll be able to use compromised machines to brute force their passwords.

[grau]

Passwords suck, but not having any protection because it is not the primary scope of the client is also a bit harsh to enter mainstream. I guess with time we will have a choice of clients some with embedded feature like password protection of the wallet.

There is an obvious need to protect savings against theft, and just like gold is usually stored in a vault, we need to come up with something, i keep thinking...

[bitlotto]

Passwords suck, but not having any protection because it is not the primary scope of the client is also a bit harsh to enter mainstream. I guess with time we will have a choice of clients some with embedded feature like password protection of the wallet.

There is an obvious need to protect savings against theft, and just like gold is usually stored in a vault, we need to come up with something, i keep thinking...

Well there is BOTG!  You essentially create a key that only exists on a piece of paper. No where else. It's as secure as you secure that paper. So rather than computer security you deal with "brick-morter" security.

A tiny little script that uses openssl to create a private key along with a matching Bitcoin address. When run off of a Live CD environment, a very safe location for storing BTC can be created. Running on a Live CD with no Internet ensures no virus or malware can get the private key. The script will create a private key and present it in two formats: Hex and Base58. Either format can be used to access the matching Bitcoin address and helps provide redundancy in case one is copied down wrong. After copying down the keys and the matching Bitcoin address the user is advised to reboot the computer. Keeping the key "off-the-grid" or off any computer means no viruses or computer security lapses will jeopardize your BTC. No backups or encryption is needed. Any money you send to the matching Bitcoin address will be safe. The only way to steal the BTC would be to steal the key directly off of where it is written down. Therefore, it's best to keep the paper somewhere safe where it can't get destroyed or stolen.

Other uses could be:
-pre-loaded cards/tickets that are redeemable
-sending BTC when you are not sure who is going to receive it such as geo cache locations
-scratch cards or draws that are done at parties where everyone gets tickets with unknown amounts
-give BTC to someone and you don't know their Bitcoin address

To spend the BTC the private key has to be manually imported into a wallet. Once imported regular security precautions are needed. There are just a few utilities for importing keys but they are becoming more common. Online wallets may soon add the feature to "redeem" private keys.

[Meni Rosenfeld]

1) The possibility of losing the password would likely present a greater risk than the risk of having your wallet stolen. (I once forgot a password I entered pretty much daily for 8 years after not using it for just 5 months.)

SRS. It's no surprise what happened to you, because you used your password daily it never entered your long-term memory (at least that's what some theories say).

You can have two encrypted copies of your wallet, each with a different password, and memorize them both. If you forget one, chances are you'll still remember the other. You can even use an SRS which hashes your input so you won't have to keep the passwords stored on your computer.