Topic: Square is considering making a hardware wallet for Bitcoin - page 6. (Read 3812 times)

They are, but that doesn't mean they should get rid of Bitcoin's underlying security feature. More precisely, they aren't getting rid of it, they are just keeping the information for themselves in a cloud.

One should never generalize and think that everyone is the same, but that's not that far from the truth. When I consider my friend circle, I know many instances where they have been hacked, or had their devices and social media infected with nasty stuff. It was particularly funny when one friend got some malware that would shout insults over private messages to random people, so his parents got pissed at him for cursing at them. The occasional invitation for group sex from your aunt and uncle is also not to be forgotten, or links to download Severina's porn movie. I have seen how people work their phones. They open weird links that redirects them somewhere with popups and messages and without thinking or reading they just click the first button they see in an attempt to close the ad or whatever it is as fast as possible. But not everyone is like that. 7/10 or 8/10 probably are.   

Square/Block is right about one thing in their latest blog post, people are generally terrible at creating and remembering secure passwords, and even worse in remembering seed phrases.
However, I think they are wrong when they say that most of the new people are intimidated by seed phrases, but they can act irresponsible and enter seed words in random phishing scam websites.
According to them people shouldn't be allowed to use any passwords or pin codes in their life, and they would need to have virtual babysitter cloud for everything they do in life.
If I understand correctly they have a plan to use some kind of Cloud Backup and I don't like this, even if it's encrypted, it's someone else computer device.

Just reading some of the comments on their Twitter post and some people ''can't wait'' for this device to be released... like it's solution for all their problems 
https://twitter.com/max_guise/status/1557400948737069057?s=20

The more I have thought about this the more uneasy I am that they are doing away with seed phrases altogether. The only way to fully back up your wallet with the description they have given is with social recovery. Without using social recovery, then if you lose your phone and hardware wallet then your wallet is permanently lost (actually, Block can still access it, but they say they won't).

By using social recovery, you are reducing the security of my wallet and my coins to that of my recovery users' email passwords. And as we all know, people are in general horrible at generating or using secure passwords, at not reusing passwords across sites, at keeping passwords safe, and at continuing to use passwords which have been compromised in data breaches. You also have to blindly trust the email providers of all your recovery contacts, for both the security and the ongoing functioning of their service. And you also have to blindly trust Block themselves, for both the security and the ongoing functioning of their service. If any of these things fail, then you do not have a back up of your wallet.

Just give me a seed phrase already.

I don't disagree, but I don't see how what they're offering is any more convenient, more simple or gives the user more confidence than going through a multisig setup with a professional from https://keys.casa/ step by step and doing it right with a helping hand guiding you along.

If I think about technologically 'weak' people around me, I'm sure as hell they'd prefer Casa over a complex system like this and there is ZERO chance they'd be able to restore a cloud backup of their phone, have friends who can be trusted to still have access to their email address in a few years' time, etc...
While giving them a phone number to call and providing instructions as to which words to put into which software is definitely something I can see them able to do.

This is my benchmark and Square is probably going to losing it on every point (in my opinion).

It would only make sense if the adoption of cryptocurrencies reaches a certain level.

Then you can guarrentee that some idiot somewhere is going to think that shelving their physical gift card system and converting their digital gift cards to be backed by fixed units of CDBC is a good idea, and everyone's going to copy the first company that does it (probably Apple, if nobody challenges their supremacy by then).

It's 2022. We already have Corporate Business Digital "Currencies". Apple Pay, Meta Pay, Google Pay etc. It doesn't matter if you're paying in USD, it's as centralized as possible. There are already countless of merchants who adopt these payment methods, and these mega companies have massive control. Tell me why an "AppleCoin" would make any sense.

On the other hand, a Central Bank Digital Currency (these companies can use as their software's unit) makes a lot more sense.

There. You (and Hal) hit the nail on the head.

I don't think anyone here is going to be surprised if Amazon indeed launches an "AmazonCoin" to replace their Gift Card system, Apple launches an "AppleCoin", etc, around 2040, only instead of using a decentralized blockchain, it is actually just a CBDC (Corporate Business Digital Currency) that can only be settled on their own servers i.e. there is no offramp.

Social recovery is used if you have lost both your phone with the Block app installed and your hardware wallet. So you would be emailing Block or filling in an online support form with details such as your name, address, or whatever else you handed over to Block when you first set up your account, or perhaps some of your bitcoin addresses so they can identify your account. It stands to reason that one of your trusted contacts, if they were conspiring with your other trusted contacts to steal your money, would be able to spoof this information without a huge amount of trouble. I don't think that presents any real barrier over your own multi-sig set up.

I accept those points, but I guess this goes back to what we discussed just the other week here: https://bitcointalksearch.org/topic/m.60661465

We are not the target audience for web wallets like blockchain.com, but we still discuss it and we still warn newbies (who are the target audience) just what a terrible idea it is to use such a wallet. And while I am not the target audience for this Block wallet, that doesn't mean I shouldn't discuss all the security and privacy vulnerabilities they are introducing with their recovery methods, especially since they themselves seem to be glossing over all these disadvantages and presenting their set up as some sort of new gold standard.

I don't disagree with what you are saying, and you are right. However, those who know or are willing to learn how to create multisig systems won't be targeted by Square as potential customers. Those who don't know how, aren't willing to learn, or just want it done as quickly as possible without lifting a finger, those are the potential customers. And I am afraid that group is much bigger then the first one.

Square might change their opinion about this and make it possible that the trusted contacts start the recovery process as well. They really shouldn't though. What happens if the owner of the coins dies and the social recovery is the only way to get access to the coins? 

But the catch with that is they collude and can recover the BTC without you.
Even if you have 9 of 12 multisig if 9 of those people get together they can take your money.

With the square wallet YOU have to start the process. Not saying it's better, but it is something to think about.

I thought about it more since I posted it, and I am still going with we are not their target audience. And looking at it as if we are gives a certain view.

There are some people who are perfectly happy with the coffee at 7-11, there are others that these people: https://georgioscoffee.com/collections/frontpage are just about adequate in a pinch and the 7-11 coffee is good for cleaning drains....

You can probably take a look at just about anything and see how enthusiasts look at items that are way way way sub optimal perhaps to the point of being actively bad in their opinion but are just fine for people who 'just want to use it' and don't care.

See the above 7-11 coffee as an example, some people think of coffee as just being a caffeine delivery system vs people who like good coffee vs people who setup their own coffee roaster in their garage.

-Dave

I appreciate your points, but here's the thing - the keys aren't fully theirs. One is stored by Block. One is stored in the cloud. One can be accessed by your trusted contacts. There are a lot of additional attack vectors here beyond a classic hardware wallet and a seed phrase back up.

Then set up your own multi-sig and give the seed phrase/xpub back ups to your trusted contacts yourself. Absolutely no need to involve a centralized third party with all the trust, security, and privacy implications.

I actually don't dislike the "social recovery" method that much. I wouldn't use it, but judging by the brief explanation you provided, it remains an option. Not one I would take rather then seed phrases and passphrases, but still. If we rule out the possibility that all your trusted contacts turn on you and they don't lose access to their emails or get hacked/phished at the same time, they will be able to confirm if you are the one who is trying to access your seed or not. They can meet you in person and ask, they can call you, they might even live in the same house as you...

2 out of 3 persons have to confirm it really is you. And it's an optional feature. But they didn't mention if it's possible to change your trusted contacts in the settings. If your best friends sleeps with your wife, maybe you should change both.

It still remains an unappealing system altogether, but no one will take us seriously if millions of people around the world decide that's exactly what they need.

The other side of this is I really don't think we are their target audience. Taking a GIANT step back from good / bad I think I see where they are going with this.

They seem to be heading down the rode filled with people who want to buy / sell / trade / use crypto but not really deal with it or learn about it.

The kind of people who take 2 online security classes and think they are not cybersecurity experts even though they have no idea how to do a DNS query from the command line.

The kind of people who buy a Corvette and now think they can drive better by virtue of having a sports car.

etc.....

OTOH it's probably the same way professional stock traders look at people here and go "Oh, how cute, you bought 2BTC for $20000 last week and just sold them for $24000, I bought 500000 shares of F at $15.95 yesterday at 11:55 AM and sold them at $16.07 45 minutes later PM but yeah, you are a trader......"

We look at this thing and see a security / privacy disaster. Others look at it as something entirely different.

Look at is as a device for people who don't know, BUT ALSO DON'T WANT TO KNOW. They understand the "Not your keys, not your coins" but don't want to know what a key is or why it is or anything else. They can just now know that their keys are in this thing and they are theirs and if something goes wrong they can get them back.

Not saying it's good, just what I think it is.

-Dave

Latest update: https://wallet.build/losing-your-keys-without-losing-your-coins/

In summary:

• If you lose your phone, you can recover the app and its associated private key from a cloud back up. Because we all know how legendarily secure cloud back ups are.
• If you lose your hardware device, you can sweep all your coins to a new multi-sig set up after a delay. Better hope you see the app notification warning so you can cancel the transaction if someone else requests the sweep!
• If you lose both, you can use social recovery if you set it up in advance. Block will email some trusted contacts who will then be required to confirm it is you who is making the request. You can then use the server key plus your cloud back up to access your coins. This becomes a massive attack/phishing vector as well as relying on a whole bunch of unknowns, such as trusted contacts remaining trusted, continuing to have access to email accounts, not forgetting passwords, email clients not shutting down or locking them out of accounts, etc.

The blog post goes to great lengths to explain how bad seed phrases are. It also gives three scenarios in which the above three recovery methods would be necessary. In all three of those scenarios (lost your phone, lost your hardware, your house burned down), a seed phrase back up secured off site would solve all your problems immediately without having to rely on cloud servers, trusted contacts, delayed sweeps, etc., and all the attack vectors and points of failure that these things introduce.

It also seems quite concerning that if you don't set up social recovery, then you actually have no way of recovering your wallet.

Alright, nice. I will try it out soon with Passport. In theory, watch-only of Passport's xpub + PSBT input / output support would fully qualify as 'hardware wallet support' for this specific device..

The Android version of Electrum doesn't support hardware wallets. During the creation process, there is no option to pair it with a hardware wallet. Regarding PSBTs, I have never tested it personally, but since Electrum for Android allows for scanning of QR codes, I am guessing that it should work. 

That's a good point! Green doesn't have Square's whole recovery problem (allowing to recover after losing 2 keys) - this is about security.
But what about privacy? Is there a way they (or Electrum) can implement 2FA without knowing about every single one of your addresses (and transactions) or not?

Do you know whether Electrum on Android supports hardware wallets or exporting and importing PSBTs in general? Being able to do so would also be handy if someone had a PC-based airgap setup (keys on old offline PC).

Blockstream Green used to be known as GreenAddress until Blockstream acquired it and made it their own. I think the difference here between this and whatever Block are making is that Blockstream are open that they only hold one key and therefore cannot access your funds. If you lose your other two keys, then you lose your wallet. This is obviously in contrast to Block, who say if you lose your other two keys then they can somehow manage to recover them.

In terms of your question about mobile wallets, I would just stick to Electrum. If you want to use it easily but not very privately, just install and run. If you want to go a bit more technical but a lot more private, point it towards your own Electrum server.

I might be focusing too much on semantics here, but it looks like an optional feature to me based on how they said it. We offer you the option to use Multisig Shield... etc., etc. Maybe it works in a different way as well. I am just guessing here, I am not agreeing with any type of shared custody.

With the Multisig Shield, the user seems to have access to two signing keys while Blockstream keeps one. That's similar to what Electrum does with its 2FA. It's an optional feature that you don't have to use. And even if you do, you can still recover your coins and get access to your bitcoins since you have 2 out of 3 signing keys. 

I just had a glance at Blockstream Green wallet, since it's one of the reproducible mobile wallets on https://walletscrutiny.com/.
Apparently, Blockstream actually invented shared self-custody, before Block??


Has anyone looked into this further? It seems like a similar concept where you need to cosign using a second factor, but their server is what enforces this and ultimately cosigns, after you present ownership of the second factor.
For example, has anyone had a look whether all transactions are sent to the server (massive privacy issue) and whether there are other problems with the wallet?

I'm telling you guys, the number of wallets that I can safely recommend nowadays is so tiny..
Especially for mobile. How hard can it be to make a Bitcoin wallet that actually follows Bitcoin core principles?

I get it that in some fields, all the software that's available is super complex and has more features than what the majority needs; thus, there's a market for a more convenient, even though maybe less privacy-friendly alternative.
But...
[1] This is Bitcoin. Its whole purpose is to leave the responsibility with the user and let them be their own bank. With both the risks and the benefits that this entails.
[2] The situation I described above, was over 10 years ago - when Bitcoin Core was the only wallet around. I totally agree that it's not possible for every person on the world to download the whole blockchain and lots are willing to offer up some privacy to be able to use Bitcoin. That's why Electrum came around and became so popular (and still is till today).

But aren't there enough 'convenient, but not totally private' wallets around by now? At a certain points, no one is better than another and just looks a little different. I believe we've reached a point where simply bringing Bitcoin Core to mobile would be a huge revolution.