Topic: Newbie question about cold storage electrum wallet: how secure my method is? (Read 397 times)

I haven't really heard about bitkey before. Is there a widespread use of it? Again I ask this question because of trust. For electrum, I can be pretty sure that (due to its widespread use) its source code has been thoroughly vetted before. So I just have to trust the signature. Sure, as you indicated, there's the source code of bitkey, but how many people have gone through the code to check it?

On the other hand,  bitkey seems to be similar to tails, which I have been considering to use as a form of more secure linux. How different bitkey is with respect to tails?

This is new to me. If I understand this concept correctly, it should eliminate the need to trust an abstract website and its security setup. Rather, I could trust a real person that I know, or even better several individuals to verify that I have, e.g., an authentic electrum wallet. Has this concept been accepted to date? I mean, do you people use it when installing sensitive software from the internet?

This is new to me. If I understand this concept correctly, it should eliminate the need to trust an abstract website and its security setup. Rather, I could trust a real person that I know, or even better several individuals to verify that I have, e.g., an authentic electrum wallet. Has this concept been accepted to date? I mean, do you people use it when installing sensitive software from the internet?

I haven't really heard about bitkey before. Is there a widespread use of it? Again I ask this question because of trust. For electrum, I can be pretty sure that (due to its widespread use) its source code has been thoroughly vetted before. So I just have to trust the signature. Sure, as you indicated, there's the source code of bitkey, but how many people have gone through the code to check it?

On the other hand,  bitkey seems to be similar to tails, which I have been considering to use as a form of more secure linux. How different bitkey is with respect to tails?

i agree with @ranochigo, i just want to add a little thing about Web of Trust [1]. the way using PGP should really be like is that you build a WOT of your own. for example you start from somewhere, lets say you know me personally so you meet me face to face and get my PGP pubkey and then go home and add it to your trusted signatures. then some day you want to install Electrum and since i have been around a long time and i know for a fact what the right pubkey of Electrum dev is, you ask me to confirm it. then what i do is that i sign 0x2BD5824B7F9470E6 with my PGP private key and give you the signature to verify with my public key that you already had. now your WOT is grown a little more.
[1] https://en.wikipedia.org/wiki/Web_of_trust

You can try Bitkey: https://github.com/bitkey/bitkey and https://bitkey.io/.

As a beginner in the world of bitcoin, I wanted to ask the more experienced members of this forum how secure my cold storage method for keeping bitcoin is.

This is something I picked up on the internet, while searching for an affordable but relatively secure solution. I know that hard wallets are supposed to be super secure (or at least majority of people think so), but the up-front investment was too much for me at this time.

The method I am describing below is based on this guide http://docs.electrum.org/en/latest/coldstorage.html but I have no idea if I'm doing everything right.

For this, I basically used 2 electrum wallets and 2 computers.

Computer A + Wallet A --> for cold storage, always disconnected from internet
Computer B + Wallet B --> for broadcasting transactions and as "watching-only wallet"

So here it goes:

1) Set up computer A: In my case, this was an old laptop nobody uses any more to be used as cold storage.

2) Install electrum A: Here I installed electrum, just the way one would normally do. After installing it, but before creating my wallet, I disconnected the network. I decided never to connect it to internet again. I even turned off the wireless connection in the BIOS, so that there's no back door that could potentially be exploited.

3) Create wallet A: Now I created my NEW cold storage wallet A. Then I exported its Master PUBLIC Key (MPK), and stored it in a file on a USB stick, so I can transfer it to computer B.

4) Install electrum B on computer B: This is my normal computer that I use every day, always connected to the internet. Here I installed electrum again, but I didn't create any new wallets.

5) Import MPK on computer B, wallet B: This time, rather than creating new wallet, I imported the Master Public Key of wallet A, and created a " watching-only wallet".

So far so good, everything seems to work great.

In particular I can watch my funds, knowing that electrum B wallet doesn't contain my private keys.

The only downside to this approach (that I can see on my own) is that there's a little bit of hustle when I have to make a transaction.

It goes like this:

Create my transaction as unsigned on wallet B -->save it on USB stick --> transfer to computer A --> import in wallet A --> sign the transaction by wallet A --> save the signed transaction on USB --> transfer back to computer B --> open by watching wallet B --> broadcast by wallet B.

Now to my question again: how secure do you think this is? Is this juggling with files and USB's something that could pose a danger? For example, is it possible that I somehow transfer a virus via USB to my cold storage computer? Any suggestions to improve on this solution? Thanks.

Great point. But, just for the sake of argument, what's the possibility of this forum or Github being hacked?

Great point. But, just for the sake of argument, what's the possibility of this forum or Github being hacked?

additional to visiting the wrong or malicious Electrum website you can never know whether Electrum.org (the real website) is compromised or not. for all you know, when YOU download the wallet a hacker might have hacked the website 10 seconds ago and replaced the files with his own malicious versions.

which it also means that it is a good idea to check and see if you are really getting the real Public Key of the real author (Thomas V). like asking on the forum (0x2BD5824B7F9470E6), checking Github (https://github.com/spesmilo/electrum/blob/master/pubkeys/ThomasV.asc)

(note that you should remember to verify the signature of the tarball here)

This would require to download a malicious version of electrum (with a smaller key space) or it would require the malware to somehow influence the entropy of electrum before the wallet is created.

Is this juggling with files and USB's something that could pose a danger? For example, is it possible that I somehow transfer a virus via USB to my cold storage computer?

The worst case scenario would be that the virus managed to create an address that was somehow predictable and your addresses are weakened.

The worst case scenario would be that the virus managed to create an address that was somehow predictable and your addresses are weakened. I've never heard of any virus that is able to do this though so take that as a hypothetical scenario.

If anything, you should be using a Raspberry Pi with Raspbian. Linux are pretty hard to have malware on it, especially if its a computer that you probably wouldn't use. It costs 35 bucks and its easy as hell to setup. I've done it in an hour.

In fact, I thought of that myself, that my wallet A could have been contaminated before, while computer A was still connected to the internet.
But here's my logic.
Even if computer A was compromised before wallet A was installed, say, even if there was a virus, what could it do?
It could steal my private key, but there's no network to transmit it. Wouldn't I still be safe?

when we say "cold storage" it doesn't mean a wallet that is offline. that is an incomplete definition. instead Cold Storage means a wallet that (1) was created in a safe environment and (2) will remain in a safe environment...
... another part of the cold storage definition that is omitted is that this wallet is your cold wallet not hot wallet, a cold wallet is where you store funds that you don't want to use every day.

your wallet A was not made in a safe environment because your computer was connected to the internet before.

The only downside to this approach (that I can see on my own) is that there's a little bit of hustle when I have to make a transaction.

If you want to read QR codes, yes.
Scan the QR code from the offline computer with the online one.

Does that mean that this could work with QR codes on 2 linux computers?