it's time to end the cold storage ice age and adopt multi-sig

IT’S TIME TO END THE COLD STORAGE ICE AGE AND ADOPT MULTI-SIG

Inside Bitcoins Las VegasOctober 7, 2014

Will O’Brien@willobrien

© 2014 BitGo, Inc.@BitGoInc

COPYRIGHT © 2014 BITGO, INC. 2

Who Am I?

• Will O’Brien• CEO & Co-Founder of BitGo• FinTech, trading platforms and capital markets• Startups and mid-size companies in consumer,

payments, video games, and media• Computer Science, Harvard; MBA, MIT Sloan• Obsessed with Bitcoin since 2012

Copyright © 2014 BitGo, Inc.3

BitGo: Securing the World’s Bitcoin

Leading Bitcoin security platform and pioneer in multi-sig technologyLaunched the world’s first multi-sig wallet in August 2013

$14m in total funding from veteran investors and finance luminaries

Our products:

• BitGo Enterprise

• Platform API/SDK


What Types of Customers Use BitGo?

Why They Choose BitGo:Family office

investors

Hedge funds

Bitcoin miners

eCommerce companies

Marketplaces

Exchanges

• Secure storage & transactions

• Corporate treasury policies

• Multi-user wallets• Financial reporting &

audit capabilities

5 Copyright © 2014 BitGo, Inc.

“This is the year of the multi-signature wallet.” -- Gavin Andresen, chief scientist of the Bitcoin Foundation, May 2014


0.831% source: p2sh.info

% of all bitcoins stored in multi-sig wallets

http://p2sh.info/

7

“$1.2M hack shows why you should never store bitcoin on the internet.”

“From treasure to trash: Man tosses out bitcoin wallet on hard drive worth $9 million.”

“To achieve wider adoption, bitcoin needs to address significant issues related to security…Mt. Gox was like a bank storing valuables in the lobby entrance.”

“Some see the security issues as teething pains, but it is possible that the security of the core transactions technology will be outweighed by the insecurity around the core...almost 10% of all Bitcoins have been stolen or seized as part of a criminal venture in the last year.”

We Know Security is a Fundamental Threat

Copyright © 2014 BitGo, Inc.

8

Does This Even Qualify as “Digital” Currency?


The Bloomberg reporter opened up his paper wallet to show the private key, and, not too surprisingly, the funds were quickly stolen.“

”

9

We Need a Secure Bitcoin Ecosystem


Financial Services Payment

Processing

Wallets & Vaults

Trading & Exchanges

Mining

Consumer Apps

10

Multi-Sig: The Digital Equivalent of a Safe Deposit Box


19frDKN7XwWL2wwhz35as7PtRFcL4vCNYG

335Zc8furTKgD32bWewYwGYGai7sMrtKseMulti-sig!

Not multi-sig

11

Multi-Sig Solves the Trade-Off of Security and Ease of Use


Security

Ease

of U

se

desktopwallets

low

low

high

high

multi-sigwallets

hosted wallets, vaults& exchanges

(single key cold storage)

offline storagepaper wallets

brain wallets

12

Single Key vs Multi-Sig Wallets

Single Key Threat Vector Multi-Sig Solution

Customer loses private key or password Recover wallet with Backup Key

Customer’s login credentials stolen 2-factor authentication and fraud detection

Server key stolen or service provider unavailable

Customer still has 2 keys and can transact directly on the blockchain

Malware, fraud or insider theft within customer’s organization

Service layer corporate treasury policies: spending limits, whitelisted addresses and secondary approvals


18

Call to Action for the Industry:Embrace Multi-Sig as a Standard• Based on P2SH (BIP 16)• Build it internally or use a security platform provider

Key Tenets:• Funds held on blockchain in multi-sig, not in cold pools• Maintain independent auditing of holdings• Enable customer segregated accounts (where appropriate)• Set corporate treasury policies and protections• Leverage security of multi-institutional key distribution

– Use a 3rd party co-signer on transactions– Store backup key with a custodian


19

Analogy: Origins of SSL the Standard


20

Case Study: Enterprise Corporate HoldingsCustomer needs enterprise-grade security for its bitcoin holdings and outside auditor views

• Create a BitGo multi-sig wallet for your corporate holdings. Set low spending limits for additional security.

• Add officers as administrators on the wallet. Add members of the Finance team as spenders. Add outside auditors as view-only.

• Use reports for monthly financial statements.

BitGo, Inc. Confidential


Bank-Grade Software for Bitcoin

Multi-user enterprise wallets with network fraud detection, spending limits, whitelisted addresses, approval chains and financial reporting

Corporate Holdings Wallet

Accounts Payable Wallet

Marketing Dept. Wallet

Wallet purpose Primary holdings Pay suppliers and vendors

Advertising payments

Spending limit $100,000 $10,000 $5,000

Admins CEO, CFO, COO CFO, VP Finance, Dir. Accounting

CFO, VP Finance, VP Marketing

Spenders VP Finance Members of Finance and Accounting

teams

Members of Marketing team

Auditors Financial analyst, outside auditor

Financial analyst, outside auditor

Financial analyst, outside auditor

26

Case Study: Trading OperationsCustomer needs the ability to share wallets with pre-set rules to initiate transactions

• Create a unique BitGo wallet for each trading partner• Add your trading partner to the wallet to spend and approve transactions• Queue orders by depositing BTC in the wallet. When a price is hit, the

trader can withdraw from the wallet• Spending limits can be set to require secondary approval for large orders• Reconcile trades at end of period using BitGo reporting

BitGo, Inc. Confidential

28

After Multi-Sig: Future of Bitcoin Security

• BIP 32 HD (hierarchical deterministic) wallets

• Corporate treasury policies

• Industry standards for managing keys

• Hardware fobs and security modules

• Multi-institutional models of trading and settlement


Read more….https://medium.com/@willobrien/its-time-to-end-the-cold-storage-ice-age-and-adopt-multi-sig-8589733c9fd6

https://medium.com/@willobrien/its-time-to-end-the-cold-storage-ice-age-and-adopt-multi-sig-8589733c9fd6




29

Thank you.


[email protected] - @[email protected] - @BitGoInc

it's time to end the cold storage ice age and adopt multi-sig

Technology