At the 3rd Bitcoin Workshop being held in conjunction with the Financial Cryptography Conference in Barbados, my group will be presenting a new idea for improving Bitcoin wallet security and deterring thefts today.
The write-up is here: http://hackingdistributed.com/2016/02/26/how-to-implement-secure-bitcoin-vaults/ The paper with the nitty gritty details is here: http://fc16.ifca.ai/bitcoin/papers/MES16.pdf The core idea: Our paper describes a way to create vaults, special accounts whose keys can be neutralized if they fall into the hands of attackers. Vaults are Bitcoin’s decentralized version of you calling your bank to report a stolen credit card -- it renders the attacker’s transactions null and void. And here’s the interesting part: in so doing, vaults demotivate key theft in the first place. An attacker who knows that he will not be able to get away with theft is less likely to attack in the first place, compared to current Bitcoin attackers who are guaranteed that their hacking efforts will be handsomely rewarded. Operationally, the idea is simple. You send your money to a vault address that you yourself create. Every vault address has a vault key and a recovery key. When spending money from the vault address with the corresponding vault key, you must wait for a predefined amount of time (called the unvaulting period) that you established at the time you created the vault -- say, 24 hours. When all goes well, your vault funds are unlocked after the unvaulting period and you can move them to a standard address and subsequently spend them in the usual way. Now, in case Harry the Hacker gets a hold of your vault key, you have 24 hours to revert any transaction issued by Harry, using the recovery key. His theft, essentially, gets undone, and the funds are diverted unilaterally to their rightful owner. It’s like an “undo” facility that the modern banking world relies on, but for Bitcoin. The technical trick relies on a single new opcode, CheckOutputVerify, that checks the shape of a redeem transaction. Note that fungibility is not affected, as the restrictions are at the discretion of the coin owner alone and can only be placed by the coin owner ahead of time. We suspect that this modest change could actually be a game-changer for bitcoin security: clients and keys are notoriously hard to secure, and a facility that allows you to possibly recover, and if not, permanently keep the hacker from acquiring your funds, could greatly deter Bitcoin thefts. As always, comments and suggestions are welcome. - egs, Ittay Eyal and Malte Moeser.
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