Topic: Square is considering making a hardware wallet for Bitcoin - page 7. (Read 3812 times)

Yeah, that's him.  Not a fan, as you can tell.  Sorry to start slinging mud in this thread, but HE started it. 


Brilliant.  I think you just coined the term for the next generation of Hardware Wallet Shysters.

I'm loving the technical understanding with which this thread is able to call out their bullshit word by word..



How about this for a name: The 'trust me, bro' wallet by Block / Square?

In the beginning, I assumed that the whole thing was still in draft phase ('good enough to attract investors') and 'we'll figure out the technicalities later'. But by now they should have an idea if what they envision is possible and if not, adjust their promises accordingly. Mistakes are human, and honesty is crucial.

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This one's for you Pmalek, 'shared self-custody' - that's too funny!

Square just invented shared self-custody. You are in custody of your keys, but they have custody of your keys as well.

Unless the userbase they are targeting starts asking such questions, they probably won't do that. It will be interesting to observe how this approach of theirs has been received by their community members. If the feedback is positive and people only have good things to say about what Square is doing, it will just give them the needed motivation to keep pushing forward. 

Absolutely, and I can't really believe that this is what is underpinning Block's entire security schematic, but there is simply no way for them to be able to help a user recover the key from either their phone or their hardware device without Block having access to those keys in some form.

This is what it all boils down to. A self-custody wallet that requires complete trust in a third party, which is not a self-custody wallet at all.

It would be great if they could actually just reveal how their recovery mechanism will actually work, but each additional little bit of information they leak out over time are doing nothing to change my mind that I will never be using nor recommending this wallet.

Yeah, obviously. They know that what they are saying is not true. But they want the potential users to feel as stupid as possible by telling them you can't do that. You don't know how to. You are going to make a mistake. Your only choice is trusting us with our new revolutionary innovations that will make your life easier.

I'm not following; is this about Jack Dorsey? I honestly have no idea about him except being Twitter CEO and Square founder.

An account- / password-based system that encrypts the seeds and then uploads all of them to Square may potentially be sold as viable alternative to simple 12 or 24 seed phrases, because it abstracts away the importance of the password (in this case as important as an actual Bitcoin seed phrase!!) and lets them recommend customers to store it in their password manager like every other password.

It would - again - be a very bad scheme with low security and no benefit compared to just storing the seed phrase yourself.

Reading through their blog posts and Twitter accounts, it sounds very much like you can recover either the phone or the hardware wallet (or even both) just by using some as-of-yet unknown recovery tools. This necessitates them storing all three keys. The only way I can see this being possible with them still being able to claim they only have access to one key (without just outright lying) is for them to store your other two keys but encrypted. The only way this would (kind of) work* is if those keys were encrypted by a client set password, but then you still have the problem of if the client forgets the password. Which then leads us back to square one of how they can promise recovery if the client loses/forgets everything. The only way I can see this happening (client loses phone, loses hardware wallet, forgets account password and can still recover their wallet) is via KYC. And don't even get me started on that.

And don't even start to tell me that all this is somehow simpler than me typing 12 words in to a new wallet.

*I mean, not really work at all, since we would have absolutely no way of verifying that they were encrypted, encrypted securely, and that Block couldn't access them, even if that's what they claimed.

I just find it ironic that some bloated-ego blowhard who tried, (and failed) to lecture us on "misinformation," ending up wrong more often than not, and trying to prevent open discourse which would allow people to make up their mind still thinks so highly of himself that, once again he's trying to protect us from ourselves.  And, to do so, he's spreading misinformation.

Even if it was the best hardware wallet on the market I wouldn't give that shitforbrains a single penny of my money.

If I remember correctly, there was another (unrelated) service (wallet?) in the past that claimed you had 'self-custody', since you could display, backup and restore your seed words, but also access your account (which included the seed) using an email and password login.
This means that you did have 'full self control over the funds', but they did, too!

I'm not saying Square is doing this, just saying it wouldn't be the first time..

Nevertheless, I think you might be onto something.  It's not beyond a company with that kind of ego to decide the general public are not to be trusted with their own security.  Yet they keep digging in, and continue to use phrases like "self-custody" and "self-serve recovery."

This is from the latest post on their blog;

I just thought real hard and came up with an idea on how the highlighted part may be solved.

It's certainly not a good one and would make the device look even worse, but be technically correct. Hear me out:
[1] One key on Square server
[2] One key on hardware signer
[3] One key on the phone -- but -- not actually on the phone, but in an app on that phone, which is just a software client for essentially an online wallet

This way, if you lose phone and signer, you login to your account on a new phone or on your PC; then together with key number 1, you can restore the multisig wallet.

Besides the obviously flawed nature of online wallets (not your keys), this would also actually put 2 out of 3 keys on their server, as obviously this 'email + password' account will be on their server.
But it's the only way I see their 2 following statements working together:

• It's a 2-out-of-3 multisig setup.
• Quote from: https://wallet.build/how-the-wallet-works/
  If you lose your hardware device, or lose both your phone and your hardware device, there will be ways for you to recover your wallet based on the security settings you’ve defined when you set up your wallet.

Here's the issue:

They are creating a 2-of-3 of multi-sig set up. They state that there will be one key is on your mobile app, one key in your hardware wallet, and one key on their servers. However, they also state that if you lose your phone you can recover your app using your hardware wallet and your online account, and if you lose your hardware wallet, you can recover this via your app and your online account. They also state that if you lose both your phone and hardware wallet, you will still be able to recover your wallet via your online account:


Now, these two positions are mutually exclusive. They cannot claim that they are only storing one of your private keys on their server, but then also state that if you lose both the private keys you are storing that you will be able to recover them from their servers. They cannot be able to provide a back up of two of the keys if they aren't storing either of them. Which means either they are lying, deliberately trying to pull the wool over the eyes of users who don't understand this, or they haven't actually figured out how any of this is going to work yet.

I find it pretty disingenuous that they keep pushing this recoverability as a big selling point while providing absolutely zero details on how it actually works.

She did mention that their hexagonal shape HW components are part of the recovery process in case someone loses their phone ^{[at 14:51]}, but I'm going to argue that it's a lot easier to lose those tiny HW components than the phone itself!

Leaving out all the other comments as to why I don't like this device, I will actually give them a small pass on this.

For 20+ years now businesses have been conditioning people not to write down passwords for security reasons and that if you forget your password to your bank or whatever there is a way to recover it. So on one hand we have 2+ decades of oh you lost information, here it is. On the other side we now have sorry you lost a few words out of 24 word seed, sucks to be you your BTC is gone forever.

Many other reasons not to like them, this is one of the smaller ones.

-Dave

I've now stumbled across this video from Consensus 2022, again with Lindsey Grossman as we saw in a previous video. Skip to 12:42.

She says that all software and hardware wallets are "very difficult to use" and "anxiety producing". She again repeats this nonsense that people are "remembering" their 12 or 24 word seed phrase, comparing it to people forgetting passwords. I suspect this strawman is going to be a large part of their marketing to users who simply don't know any better. (And still no information about recovery. Almost likely they are keeping this part deliberately hidden?)

Yeah, I said as much on this post: https://bitcointalksearch.org/topic/m.59309830

I just don't follow what they are trying to do here. They say writing down 12 words is too complicated and they want to make something simpler. So they create a wallet which requires two devices, an app (with presumable a PIN or password), an online account (with an email and password), will require the user to set up these three things and manage the interplay between them, will likely require KYC or some form of identity verification for their recovery tools, and will be filled with integrations to "exchanges, other wallets, traditional financial institutions, and payments providers" (no doubt meaning the app will be filled with ads, affiliate links, and loads of unnecessary features like swapping bitcoin to shitcoins, staking/lending, etc.)

I just don't see how any of this is simpler.

Thanks for the update!

Yeah; that's very questionable. Essentially a classic strawman argument.
For usability, I find that giving customers two microSD cards and extremely easy instructions to follow ('pop it in and click a button'), as well as telling them to write those words on a securely stored piece of paper, is easy enough for anyone.
By the way, the 'original password manager' (paper book) that older people are ridiculed for, has been shown not to be as bad as you would expect. Writing down any type of 'secrets' and storing the paper holding them securely (for decades) is very natural to humans, even going back hundreds and thousands of years, so I don't see why the 2022 human should be too stupid to accomplish it.

It already begins with them sharing the customer data with their other (sub-)companies, which is standard business practice.. So far, I'd say: keep your hands off this device at any cost.

Integrating exchanges and API calls to all sorts of '' is something I've never understood.
Like Loyce, I'm a big fan of the KISS principle, so it's unbelievable to me how companies think they need to maximally dumb down their products, whilst at the same time throwing waterfalls of garbage at their customers such as myriads of shitcoins to choose from, as well as more often than not NFTs, leverage trading and all this sort of stuff.
This doesn't all need to exist in your wallet (if at all, but that's another question).

Most recent blog update: https://wallet.build/product-principles/

Still absolutely no information about how these recovery tools will work or where else your keys are going to be stored to allow recovery to happen...

Does say a couple of things I found interesting though:
I find it hard to believe that the people are Block honestly believe that most people are trying to memorize their seed phrase or have it written on a post-it note and stuck on their monitor, when every other hardware wallet in existence which uses seed phrases is very clear that it should be written down and stored somewhere safe, secure, and hidden. I suspect this is part of their marketing - sow the seed (no pun intended) that seed phrases are bad by focusing only on the most insecure way of using them, so their overly complicated 2-of-3 app/hardware/server solution seems better in comparison.

Sounds like a privacy nightmare.

It's not my scenario; it's one of their two aforementioned 'killer features' they've confirmed multiple times: you can set a threshold below which the hardware signer is not needed since they'll provide the second signature.
For higher amounts their server will deny to sign and you will need to use the hardware device. The idea is that if the phone gets stolen the thief can't spend all your funds.

Precisely. Either their solution requires you to back up a strong password, which is no different to backing up a secure seed phrase, in addition to being much more complicated to use and recover from, OR it is completely insecure and Block can steal all your coins at any time. Neither is good.

Even if you decide to never use their server and co-sign all your transactions with the hardware device, the initial set up of a 2-of-3 multi-sig requires all three devices to have the master public keys from the other two, meaning Block can still see all your addresses and transactions, even if you never interact with them (although I'm certain that their mobile app will connect to their servers and their servers alone, so even without the multi-sig set up they could still monitor everything you do).

In this scenario of yours, does the user still have access to his mobile app and device where the keys are stored or did he lose one/both of them? If it's a normal 2-out-of-3 multisig, Square's signature wouldn't even be needed. Having the control of how much the user is and isn't allowed to spend from his own money is another highlight in the long list of 'no thanks' for this product of theirs.