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Author Topic: How to design a perfect cold storage?  (Read 5891 times)
lukaexpl
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August 28, 2017, 08:04:17 PM
 #1

I am paranoid by design and by professional deformation.

Suppose you have the following tools available:

1. two Trezor hardware wallets
2. offline bootable PC with Ubuntu
3. bitaddress.org site burned to a CD
4. BIP39 passphrase and mnenomic code generator burned to CD
5. passguardian.org Shamirs secret sharing page burned to CD
6. offline printer to print and laminate paper wallets
7. metalstamps to stamp seeds/keys to metal plates if need be
8. two rented safe deposit boxes in two banks in two different European jurisdictions

How would you go about designing a "perfect" cold storage that should fulfill the following criteria:

1. be resistant to my death hence inheritable
2. be reistant to my amnesia
3. be resistant to being denied physical access to both safe deposit boxes
4. be resistant to malevolent staff opening the contents of the safe deposit boxes
5. be resistant to goverment confiscation/access denial to your safe deposit boxes

So basically I want no other entity (spouse, underage children, bank staff, evil government officials) to be able to spend my bitcoins as long as I am alive and with a functioning brain.
I also want to be able to comitt to memory a seed or an encryption method that would grant me access to bitcoins if I am not able to access the cold storage in safe deposit boxes.
Ultimately I would need to leave clear instructions in case of my death so that the family would be able to reconstruct access to those bitcoins.

I have some ideas but would like to hear flaws in my design.

1. PAPER WALLET ROUTE

One way to go about it would be to create paper wallets, print them offline, encrypt them with a strong passphrase (for example Diceware generated) using BIP38 and store them in two separate safe deposit boxes.
The secret passphrase would be easy to memorise for me and could be split using sharding into 3 pieces (2 safe deposit boxes and my home for example) so that you would need access to all of those in order to decrypt the paper wallets.

It prevents goverment or the bank staff from spending your bitcoins but if you find yourself unable to access the physical location of your paper wallets you are doomed.

2. TREZOR MNEMONIC SEED

You load your Trezor hardware wallet and stamp the seed on metal plates in a randomly generated order that you put in one safe. In another safe you put an encrypted message that is simply the order in which you have to put the mnemonic seed to be able to access bitcoins. You distribute the passphrase to unlock the order in the same way as in design No. 1.

You carry your Trezor with you (your home) hoping that even if it gets stolen nobody will be able to break the PIN.

This method has the advantage that with some memory technique you should be able to remember the seed yourself and reuse it should you be locked out of access to your safe deposit boxes.



Is all of this an overkill? Are there simpler ways?
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aleksej996
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August 29, 2017, 09:29:00 AM
 #2

2. be reistant to my amnesia

Only thing that is truly only accessible by you is your memory, so if you forget everything then there is no way to do it without trusting someone else.
Not to mention that you wouldn't even remember you had a wallet in the first place.
You can't not trust yourself and others at the same time, there is no one with any access to the wallet then.
If one part of the wallet is lost, all is lost. If a group of people have all the parts of the wallet, then they and only them can use it. If you are part of the group, you can't forget your part, if you are not, then you have to trust the group.

I lost many accounts due to forgetting my passwords, but there is no other way except giving someone else access or have another way of access.

You need to trust yourself and if you have a backup, for yourself or others, then figure out a place that you can always protect while you are alive. When you are dead, they can take it from you. If you are afraid that someone will kill you for it, then you need to only be able to get it by your memory.

You can't have both perfect security and perfect availability. If you care more about security, then carry full responsibility. If you care more about it not getting lost, then you have to trust someone in one way or the other.

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Hamphser
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August 29, 2017, 11:37:48 AM
 #3

2. be reistant to my amnesia

Only thing that is truly only accessible by you is your memory, so if you forget everything then there is no way to do it without trusting someone else.
Not to mention that you wouldn't even remember you had a wallet in the first place.
You can't not trust yourself and others at the same time, there is no one with any access to the wallet then.
If one part of the wallet is lost, all is lost. If a group of people have all the parts of the wallet, then they and only them can use it. If you are part of the group, you can't forget your part, if you are not, then you have to trust the group.

I lost many accounts due to forgetting my passwords, but there is no other way except giving someone else access or have another way of access.

You need to trust yourself and if you have a backup, for yourself or others, then figure out a place that you can always protect while you are alive. When you are dead, they can take it from you. If you are afraid that someone will kill you for it, then you need to only be able to get it by your memory.

You can't have both perfect security and perfect availability. If you care more about security, then carry full responsibility. If you care more about it not getting lost, then you have to trust someone in one way or the other.
This would really be only the flaw on which your memory would be the issue here no matter what good precautions or measure of security you do made on your wallet if your memory wont able to remember that as the time goes by then that would really be a problem. Perfect cold storage is already in the market and theres no need to search or create even more, the important thing is that you wont able to forget about it as the time goes by.


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lukaexpl
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August 29, 2017, 05:44:41 PM
 #4

2. be reistant to my amnesia

Only thing that is truly only accessible by you is your memory, so if you forget everything then there is no way to do it without trusting someone else.
Not to mention that you wouldn't even remember you had a wallet in the first place.
You can't not trust yourself and others at the same time, there is no one with any access to the wallet then.
If one part of the wallet is lost, all is lost. If a group of people have all the parts of the wallet, then they and only them can use it. If you are part of the group, you can't forget your part, if you are not, then you have to trust the group.

I lost many accounts due to forgetting my passwords, but there is no other way except giving someone else access or have another way of access.

You need to trust yourself and if you have a backup, for yourself or others, then figure out a place that you can always protect while you are alive. When you are dead, they can take it from you. If you are afraid that someone will kill you for it, then you need to only be able to get it by your memory.

You can't have both perfect security and perfect availability. If you care more about security, then carry full responsibility. If you care more about it not getting lost, then you have to trust someone in one way or the other.

I am a medical professional and I have seen perfectly sane people lose their memory "instantenously" due to sepsis, meningitis, brain haemorrhage etc.

So it is a concern.
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August 29, 2017, 10:31:19 PM
 #5

Watch Memento - that should give you some ideas.

And remember Sammy Jankis:


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August 30, 2017, 08:11:01 AM
 #6

Live boot usb stick with TailsOS. Encrypted persistent volume.
Electrum is preinstalled and can be activated.

Nobody can do anything with your usb if confiscated and you can recover with electrum seed too.

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lukaexpl
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August 30, 2017, 09:27:32 AM
 #7

Live boot usb stick with TailsOS. Encrypted persistent volume.
Electrum is preinstalled and can be activated.

Nobody can do anything with your usb if confiscated and you can recover with electrum seed too.

Could you expand on that?

What is enrypted persistent volume?
Where is Electrum preinstalled?
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August 30, 2017, 03:14:27 PM
 #8

Live boot usb stick with TailsOS. Encrypted persistent volume.
Electrum is preinstalled and can be activated.

Nobody can do anything with your usb if confiscated and you can recover with electrum seed too.

Could you expand on that?

What is enrypted persistent volume?
Where is Electrum preinstalled?

When you make a usb with a live boot OS on it, you can make a different partition on it on which you can keep files that you want to carry on when you boot up that OS next time. It is called persistent, as it survives the reboots, unlike the other changes you make to the live boot OS. The whole partition should be encrypted for security and privacy.
Electrum is apparently preinstalled on TailOS, as you can see here https://tails.boum.org/doc/anonymous_internet/electrum/index.en.html

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August 30, 2017, 03:23:50 PM
 #9

Is all of this an overkill? Are there simpler ways?

There are some things in your requirements that are not exactly clear, but depending on the exact details of the requirements, I'd consider using locktime and multisig to handle most of your concerns.

The biggest issue you'd run into with such a solution is that there could be a significant gap in time between when you die and when your heirs can access the bitcoins.

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August 31, 2017, 06:07:13 AM
 #10

Ask yourself this question : How are your other assets and wealth being handled at the moment? You use a Will, right? I would suggest that you make it a riddle that only your family would be able to understand and put it in your Will.

The Passphrase could be the answer to a question that only your family would be able to answer. Example :

~ Where was our first family holiday.
~ What was the name of our first dog.

You also hide the paper wallet < Metalstamped seeds/keys > in a location only they will know about.

~ Lemon tree at the orchard.

Do not use safe deposit boxes, because they are raided regularly by banks and thieves.

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August 31, 2017, 06:18:11 AM
 #11

Ask yourself this question : How are your other assets and wealth being handled at the moment? You use a Will, right? I would suggest that you make it a riddle that only your family would be able to understand and put it in your Will.

The Passphrase could be the answer to a question that only your family would be able to answer. Example :

~ Where was our first family holiday.
~ What was the name of our first dog.

You also hide the paper wallet < Metalstamped seeds/keys > in a location only they will know about.

~ Lemon tree at the orchard.

Do not use safe deposit boxes, because they are raided regularly by banks and thieves.

I always found these security questions funny. I know first names of many pets from multiple families. And by now, a family holiday would probably be documented with pictures on Facebook Cheesy
You can also more often then not, ask people those security questions and they would very gladly tell you, even if you are a stranger to them.
You need to use something that is considered atleast kind of secret in the first place, something that you won't just show to anyone or tell anyone.
However the most useful thing is to just make a password with your family, that would be the most reliable and quite simple way. Or as with the will, use the multisig with the person you are leaving the funds to and your lawyer, if your lawyer is hip to that.

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August 31, 2017, 06:35:34 AM
 #12

Do not use safe deposit boxes, because they are raided regularly by banks and thieves.

That was my concern also. That is why I would leave only encrypted paperwallets/stamped seeds in 2 different safes which would require from a bank thieve to know about both and rob both.

Is all of this an overkill? Are there simpler ways?

There are some things in your requirements that are not exactly clear, but depending on the exact details of the requirements, I'd consider using locktime and multisig to handle most of your concerns.

The biggest issue you'd run into with such a solution is that there could be a significant gap in time between when you die and when your heirs can access the bitcoins.

I thought about that but I do not know of any easy tool to put multisig or timelock into practice. Any suggestions?

I feel that by using something I am not comfortable with I would be my own worst enemy and essentially lock myself out of funds.
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September 04, 2017, 12:05:49 AM
 #13

I thought about that but I do not know of any easy tool to put multisig or timelock into practice. Any suggestions?

I feel that by using something I am not comfortable with I would be my own worst enemy and essentially lock myself out of funds.

As it happened to me since I wasn't able anymore to remember the password I was assigning my cold storage a couple of months ago.  Undecided

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September 05, 2017, 06:21:10 AM
 #14

nice idea, i think this one's relevant but in case to case basis i believe. it just make me wonder what will be the solution for your second scenario which is the amnesia think. i am no expert to this but it really makes me wonder how. i think there will be resolve for that in the near future, who knows?


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lukaexpl
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September 06, 2017, 09:52:38 AM
 #15

nice idea, i think this one's relevant but in case to case basis i believe. it just make me wonder what will be the solution for your second scenario which is the amnesia think. i am no expert to this but it really makes me wonder how. i think there will be resolve for that in the near future, who knows?

Well the requirements for amnesia are the following:
1. someone you think you love and care about (spouse, children, parents whatever) should receive clear and unambiguous instructions on how to gain access to your bitcoins should you become incapacitated
2. they should have no ability to gain that information as long as you are sane in the head

So my idea went something like this:

1. Create PGP keys for instructions that you want to share with your family. Give them private keys.
2. Encrypt clear instructions how to access bitcoin with aforementioned PGP combination
3. Use that message on some software equivalent of dead man's switch or delayed mail.
3. Store part of the puzzle in a safe (like Trezor with PIN that is mentioned in instructions or encrypted 24-word seed)

So if you end up in a coma or dead then:
1. Your "heirs" will receive an email from dead man's switch or delayed Gmail (that you are no longer able to postpone) which is encrypted and readable only for holders of the private PGP key.
2. They now have the instructions (like Trezor PIN, location of the safe, passphrase to metal-stamped encrypted seed or whatever) but need physical access to the secret. Presumably in case of amnesia someone would be named a guardian or in case of your death your family can be named as beneficiaries of your safe deposit box.

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September 07, 2017, 12:57:22 AM
 #16

give your family an empty wallet. make a signed transaction, unbroadcasted in your safe deposit box. if you die, they can broadcast it to their wallet.

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September 10, 2017, 06:02:40 AM
 #17

give your family an empty wallet. make a signed transaction, unbroadcasted in your safe deposit box. if you die, they can broadcast it to their wallet.

Nice idea. Never thought of that. How do I do it?
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September 10, 2017, 06:12:04 AM
 #18

give your family an empty wallet. make a signed transaction, unbroadcasted in your safe deposit box. if you die, they can broadcast it to their wallet.

Nice idea. Never thought of that. How do I do it?

It's called an nLocktime transaction.

You can do it on greenaddress.it or you can do it manually(complicated as hell, i have never done it myself). Basically when a certain block height is reached your family member is able to get the transaction and broadcast it to the network, before that block height is reached they can't do anything with the raw transaction.

See here for an example and a tutorial: https://www.reddit.com/r/Bitcoin/comments/397xv3/howto_nlocktime_transaction_as_a_dead_mans_switch/

Just make sure that the private key that your family member holds is secure and completely offline as well, otherwise this setup is useless.

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September 11, 2017, 01:13:04 AM
 #19

Quote
Suppose you have the following tools available:

1. twothree would probably be better Trezor hardware wallets a trezor will come with a "wallet card" that you can write your seed on, you will need this as well
2. offlineI don't think it needs to be an offline computer, but it should be free from malware, maybe previously offline bootable PC with Ubuntu
8. twothree (or more) would probably be better rented safe deposit boxes in two banks in two different European jurisdictions

Quote
How would you go about designing a "perfect" cold storage that should fulfill the following criteria:

1. be resistant to my death hence inheritable
2. be reistant to my amnesia
3. be resistant to being denied physical access to both safe deposit boxes
4. be resistant to malevolent staff opening the contents of the safe deposit boxes
5. be resistant to goverment confiscation/access denial to your safe deposit boxes
The government is a very powerful entity, they are likely to be able to use sufficient force to compel you to provide sufficient information for them to access your private keys. Also, if the government denies you access to your safety deposit boxes, they are likely to arrest you when (or before) you learn you are being denied access to your safety deposit box.

I think your best bet would most likely be to purchase a pack of three trezors directly from trezor.io, and create a new seed with your trezor. When you setup your trezors you will want to use an encryption passphraise in addition to the seed that is created (you may want to actually create two encryption passphraises on top of the same seed -- more on this later). When you are creating the new seed, you will be directed to write down each of the words on the wallet card, you should write down half of the words on one card, and the other half of the words on the other card. You will also want to set a PIN on the trezor itself.

I will assume that in the event of your amnesia, the same person who will handle your finances will be the person who will inherit your bitcoin held in cold storage. You will want to put your trezor along with the wallet card, and a "hint" as to what half of the encryption key, either written on the wallet card, or handwritten on a separate pice of paper. Ideally, this person will be your spouse as there will be many things you can give as hints that *only* your spouse will know -- for example, you could give the hint 'place where we met(first word only)' and although you may tell other people you met your spouse at disney world, you actually tell eachother that you met sitting in the third row of the space mountain ride, so while others would think this hint means "disney" your spouse would know it means "third". In each safety deposit box, there should be instructions advising how many safety deposit boxes need to be visited, and detailed instructions on how to put all the information together to redeem the bitcoin.

You will not want to have major banking relationships with either bank, however I would suggest you have sufficient money in a checking account for the bank with withdraw many years worth of rent to avoid the boxes being closed for non-payment of rent. Ideally you will want your safety deposit boxes to be located in specific branches that are frequently busy, which will reduce the risk the branch will close in the future.

You will want to maintain physical possession of a third trezor that uses the same seed as above. You will maintain two wallets with this trezor, one with the encryption passphraise noted above, and one with a different passphraise, that you will spend bitcoin out of (this is necessary if you plan on spending money in your cold storage on any regular basis. When you run low on bitcoin in your "spending" passphraise, you sign a transaction out of the passphraise in your safety deposit boxes transferring bitcoin into your "spending" passphraise.

For extra security, you can rent out a third safety deposit box containing instructions listing the banks/branches the portions of the seed are located. If you are worried about losing access to the safety deposit boxes, you can open two additional boxes at different banks, each containing one additional trezor and copy of one half of the seed/passphraise instructions.

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September 13, 2017, 03:37:16 AM
 #20

Some great ideas guys. It's weird how some ppl are happy just keeping coins on an exchange or in an online wallet. With all the goings on these days, don't discount EPM attacks. Possibly locking usb's and trezors etc in a metal safe would suffice. Although I guess if there were any EMP attacks most crypto would be wiped out and crypto would be the least of our worries.

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