Bitcoin company Coinkite has launched its latest hardware wallet, Tapsigner, in an effort to facilitate the self-storage of bitcoins in cold storage.
The product, which is more like a credit card than a traditional hardware wallet, costs $40 and aims to serve as a more intuitive Bitcoin signing device to bring more people around the world into automated settings. More secure bitcoin custody.
Challenges in Bitcoin self-storage
Self-custodial Bitcoin is not easy. It has come a long way over the years but is still far from becoming intuitive.
Hot wallets, where the private key stays “hot” online on a phone or computer, are probably the most popular bitcoin wallets because of their convenience. Users simply load an app onto their phone, create a wallet, record recovery words – and voilà, it’s ready to go. The trade-off is of course security: – being connected to the internet makes this setup vulnerable to hacks, thefts and other attacks.
The alternative, cold wallets, keeps private keys “cold” offline, increasing security at the expense of usability. Cold storage solutions often require users to go through many more steps to move their bitcoins. While that may be a feature rather than a bug for larger holdings, a less fluid trading experience can be a problem for smaller bitcoin pools.
So what’s the solution?
Tapsigner: A competitor for the midfield “Lukewarm”
Coinkite’s Tapsigner strives to bridge the gap between the hot and cold storage worlds with a more intuitive user experience.
The new product, which has already begun shipping to consumers, brings the element of security –– security chip inside hardware wallet –– in NFC tag. This not only allows for better transportability as it is about the size of a regular credit card, but also allows users to interact with their bitcoin holdings in a familiar way –– tap to pay or in this case, tap to sign.
Basically, Bitcoin transactions work in phases. First, the transaction is built by having the user –– or the application –– choose an input (bitcoin sending address), amount to be sent, amount to pay fees, and output (bitcoin receiving address) . Then the owner of the input element needs signal Transaction; Philosophically, this is the owner of the fund saying, “I own this bitcoin and authorize this transaction.” The transaction is then broadcast to the peer-to-peer network so that the nodes can check its validity.
While there are risks involved with every step in the process of building, signing, and broadcasting a transaction, signing is arguably the most important step as it directly approves the movement of funds. . This is where Tapsigner comes in. The card aims to take what’s good about hot wallets –– convenience –– and combine it with what’s good about cold storage –– security –– at a lower price point than traditional hardware wallets.
When used with a hot wallet, such as a mobile wallet, Tapsigner maintains the transaction build and broadcast process as a phone responsibility while taking on the signing burden –– providing more security than With pure hot storage and more convenient than traditional cold storage method one will be set to save their life. It’s a middle ground where more frequent transactions can borrow the security of a hard cold storage setup.
Software wallet compatibility
Since Tapsigner fully signs transactions, it relies on a software wallet. However, not all wallets are compatible with the card.
At the time of writing, users can avail Nunchukfamous bitcoin wallet with multi-user approach to multi-signature, to have Tapsigner is the key to a single sign, a key in multisig, or both. As any private key, the token can be used in many ways with different wallet structures.
Software wallet options other than Nunchuk are coming soon and potentially the next software that is fully compatible with Tapsigner is Hexa Wallet. Popular BlueWallet Now Available an open PR to incorporate NFC capabilities into the project.
Into the weeds
Tapsigner comes with no private key. The card uses the Bitcoin cryptographic library in its secure factor to generate keys before first use with the help of a software wallet. Users can either let the wallet provide entropy (the randomness needed to generate a “good”) private key, or alternatively provide it themselves. The tag combines the provided entropy with the secret entropy of its own choosing, to actually generate the keys in Tapsigner.
The private keys generated by the card are obeyed 32 . BIP instead of BIP 39. In other words, the card obeys extended private key (XPRV) instead of the current popular mnemonic seed phrase. In practice, this means that users interested in backing up their private keys will not be able to store their backups as 12 or 24 words; instead, an encrypted backup of the private key file is needed.
When a user requests a backup of private keys, Tapsigner encrypts the keys with a 16-byte key printed on the back of the card. Therefore, to recover the wallet, the user will need the encrypted private key file as well as the decryption key printed on the back of the Tapsigner. If the card is lost, the user can only take advantage of these two pieces of data to recover the funds. (So it might be worthwhile to write down the key on the back of the card.)
While a software wallet may prompt the user to save the file in cloud storage, it should be noted that symmetric encryption –– used in this process –– is not as brute-force as asymmetric encryption is. worthy. While the possibility of compromise remains low, users are encouraged to store the backup file offline and protect the encryption key.
Other Signatories (Future)
Entrepreneurs and other businesses are also interested in connecting hot and cold storage to find the best of both worlds. Jack Dorsey, the billionaire tech co-founder of Twitter and financial services firm Block, formerly known as Square, is perhaps the most famous of them all.
Block announces plans to build its own hardware wallet in October 2021and earlier this year details its approach would look like. Plans include a mix of software and hardware products, which users can leverage to strike their own optimal balance of security and convenience.
Block will create a mobile application and have it as the main interface to interact with customers, while the hardware wallet will be a simple NFC device, no screen with fingerprint authentication used only to sign larger transactions on the app.
However, there is still no clear timetable for when Block’s product could be released.