Bitcoin multisig setup

[BlackHatCoiner]

I have always considered multisig to be kind of an overkill.

Multi-sig does two things:

• It protects you against one vulnerability that may cause your funds to get drained remotely, as with the Coldcard case. People who used Coldcard for one co-signer and a simple Electrum wallet for the other co-signer weren't affected by the drain.
• It protects you against someone who finds your seed phrase and tries to brute force passphrases. (Unless you've set a very secure passphrase, which is usually not the case.)

In exchange for:

• The convenience of having only one seed phrase and significantly less chance of getting yourself locked out.

It's a difficult tradeoff.

[babo]

Using a multisig has pros and cons, I thought about it a lot at the time and I'll explain how I see it


pro
- security increases a lot, it is not enough to "hack" a single seed, but you have to hack the N seeds that give you access to the N valid parts to unlock the funds

cons
- it's not easy to use
- very very uncomfortable
- multiply by N seeds the need to safeguard the seeds, it's not easy... printing a seed on a sheet of paper doesn't help you keep it safe, I don't know if you understand what I mean


so at the time I thought a hw wallet was enough

[Lucius]

~snip~
Ledger is closed-source, and it's currently open-source, thoroughly reviewed projects where AI finds vulnerabilities. Imagine what happens if they de-compile Ledger's source code, or someone inside leaks the code.

They are a ticking bomb regardless of the opinion of some "experts" who still defend them. To be honest, I didn't sleep peacefully until I moved all the coins off their devices, and I wonder how those who still use them sleep.

Considering the damn AI, I think I'll have to try harder and secure myself additionally with multisig, because even though I use an air-gapped wallet and a strong passphrase, I'm no longer sure that even that is enough.

[BlackHatCoiner]

- it's not easy to use

It'll take you some time to learn it. You could sit down in an afternoon and learn a lot within 2-3 hours. After the Coldcard hack, I wouldn't put exclusive trust into one piece of hardware. If you consider staying in single-sig (with or without passphrase) I would strongly recommend you roll a dice and not trust the internal RNG. Also, verify that the dice results are passed correctly. (You can use iancoleman tool to verify that.)

Considering the damn AI, I think I'll have to try harder and secure myself additionally with multisig, because even though I use an air-gapped wallet and a strong passphrase, I'm no longer sure that even that is enough.

Definitely consider it if you used hardware for generating entropy.

I might sound a bit paranoid, but I've seen with my own eyes what the AI is capable of, and it's ugly.

[Cricktor]

I do have multiple backups. No worries here.
...
The idea would be to store each wallet in a different physical location such as work or a bank safety deposit box (not the seedphrase though).
...

Have you actually verified that you can successfully restore your wallet from one of your backups? Having redundant backups is good and highly recommended, but a backup is only good when you know (and verified!) you can fully restore from it completely.

To prevent physical attacks, I'd rather focus on keeping a low profile and avoiding a digital trail of crypto coin related gear purchases. If possible buy your hardware wallets in physical stores, as someone else here already suggested. It may be worth the hassle to plan a trip to a town where that's possible. You can also build decent signing devices yourself from innocent hardware parts, like a Seedsigner or similar.

I don't know if a multi-sig setup really could drive off a determined physical attacker who is in the business of cutting fingers and other body parts. I don't want to imagine any of that. It's way better to avoid exposing yourself. But data leaks can happen everywhere, including where you purchase or trade your coins. Thanks to KYC-everywhere sadly (only mildly exaggerated), potential data leaks are only a matter of time.

My (personal!) issues with N-of-M multi-sig setups are the following:

• to generate your wallet's addresses you need ALL M extended public keys, can't afford to loose a single one of them
• to sign transactions you need at least N of your sets of mnemonic recovery words
• for a redundant backup at different locations, you likely need at least two different secure storage locations per signer
• if you don't have N signers in one secure place, you always need to move around for an outgoing transaction from your wallet
• verifying restore from backups is more tedious (but frankly only needed once); lerning to securely use the multi-sig setup is more advanced; you definitely should practice it

If you don't trust a hardware wallet's entropy generation, get 10 normal dice, through them in box, shake well for every draw of ten dice samples, place the box on a table, open it and read the dice from left to right for a sample of ten dice numbers. Easy-peasy, you don't really need casino grade dice for that as long as yours aren't severely rigged which is unlikely the case for quality dice.

If you generate your own entropy by dice be sure to use the proper and well-known software in a secure offline environment (should be easy to dispose afterwards, like some Linux distro or TAILS running in RAM only) and that you understand what you're doing.

[Pmalek]

If you are alive but have lost your memory, your heir can use their option, opposite to the scheme involving the will that leaves them singlesig wallet.  I said opposite because I'm not sure if the will could have full force and effect when the person is still alive but has no memory at all.

That's why it's important to get these things sorted out while you are still alive and kicking and in a healthy mind. Avoiding lawyers, representatives, trusts, and wills is the much better option. Teach your heirs about Bitcoin yourself and get them acquainted with your setup in due time. Then you won't need decaying multisigs and overcomplicated systems. On the other hand, we do live in a fu**ed up world where anyone can turn on anyone and family and blood doesn't mean what it did in the past.

I might sound a bit paranoid, but I've seen with my own eyes what the AI is capable of, and it's ugly.

Which models are you talking about?

If you don't trust a hardware wallet's entropy generation, get 10 normal dice, through them in box, shake well for every draw of ten dice samples, place the box on a table, open it and read the dice from left to right for a sample of ten dice numbers. Easy-peasy, you don't really need casino grade dice for that as long as yours aren't severely rigged which is unlikely the case for quality dice.

Even if your dice are biased to one or a few numbers, the attacker attempting to bruteforce your seed would need to know about that bias. Theoretically he could but it's very unlikely.

[BlackHatCoiner]

• to generate your wallet's addresses you need ALL M extended public keys, can't afford to loose a single one of them

This is actually one big trouble, because xpubs are stored in QR code, which is not human readable. One solution to solve this problem is to use N-of-N, such as 2-of-2. This way, you only need the seed phrases.

Which models are you talking about?

Fable 5.1 and Opus 5.5. Me and other people working on Bitcoin wallets have found plenty of critical vulnerabilities that allow for even remote theft of funds.

[Pmalek]

Fable 5.1 and Opus 5.5. Me and other people working on Bitcoin wallets have found plenty of critical vulnerabilities that allow for even remote theft of funds.

That's scary to think about. Are you part of a known whitehat group like the Bitcoin Red Team or something similar? Is the information about the projects you guys investigate and your findings publicly known and do you report them to the development teams of the wallets?

At least Ledger is safe from you. You can't prompt an AI to check a codebase for vulnerabilities if there is no codebase to check.

[BlackHatCoiner]

That's scary to think about. Are you part of a known whitehat group like the Bitcoin Red Team or something similar? Is the information about the projects you guys investigate and your findings publicly known and do you report them to the development teams of the wallets?

No, I'm not a part of a group, and yes, I do disclose it privately to the development teams.

At least Ledger is safe from you. You can't prompt an AI to check a codebase for vulnerabilities if there is no codebase to check.

There has to be a way to reverse engineer the binaries from Ledger into its native programming language. If When Ledger vulnerabilities are found, you can return to this topic and have a guess of what the hackers did.   (Hopefully they are white hats.)

[cryptosize]

Me and other people working on Bitcoin wallets have found plenty of critical vulnerabilities that allow for even remote theft of funds.

Including Electrum and BlueWallet?

[BlackHatCoiner]

Me and other people working on Bitcoin wallets have found plenty of critical vulnerabilities that allow for even remote theft of funds.

Including Electrum and BlueWallet?

No, I haven't worked on either.

[ABCbits]

Which models are you talking about?

Fable 5.1 and Opus 5.5. Me and other people working on Bitcoin wallets have found plenty of critical vulnerabilities that allow for even remote theft of funds.

And that's why some people suggest to run your own Electrum server or run Electurm using always offline device, even without knowing such vulnerabilities actually exist.

At least Ledger is safe from you. You can't prompt an AI to check a codebase for vulnerabilities if there is no codebase to check.

There has to be a way to reverse engineer the binaries from Ledger into its native programming language. If When Ledger vulnerabilities are found, you can return to this topic and have a guess of what the hackers did.   (Hopefully they are white hats.)

I don't know if it's possible to find vulnerability, but i remember people used to mess with the assembly code (not programming language used) of the binary, in order to crack paid software.

[Pmalek]

Me and other people working on Bitcoin wallets have found plenty of critical vulnerabilities that allow for even remote theft of funds.

Including Electrum and BlueWallet?

No, I haven't worked on either.

Electrum is probably the most reviewed piece of bitcoin software (software wallet) after Bitcoin Core. Security-wise, I am sure it's very safe as well. I am an Android BlueWallet user myself, but it surely doesn't have the same sets of eyes checking the code, investigating, and reporting bugs and vulnerabilities.

And that's why some people suggest to run your own Electrum server or run Electurm using always offline device, even without knowing such vulnerabilities actually exist.

Using Electrum as a cold wallet wouldn't save you if it's weak entropy issue as we recently saw with Coldcard.