3. AGENDA
• Exchange & custodial threats
• Self-custody threats
• What to protect?
• How to protect?
4. NOT YOUR KEYS, NOT YOUR COINS
• Custodial wallets can be hacked
• Exchanges might not be solvent
• Bankruptcy takes years and you get cents on your Euro
• Exchanges selling you paper Bitcoin also suppress the price
• Exchanges might ask your for strict KYC and Source of Wealth
documentation
• Having exchanges hold a large % of all Bitcoin is a systemic risk
• Bitcoin is not valuable if it can be confiscated and you need to ask
permission to send it
5. NOT YOUR KEYS, NOT YOUR COINS
• Use 2 Factor Authentication, without SMS
• Watermark your KYC documents!
• Journey from exchange to personal custody
• Learn about sending coins to your personal (non-custodial) wallet
• Learn about sending coins between wallets
• Practice and become confident
• Buy a hardware wallet
• Don’t wait for a bank (exchange) run to start!
6. BITCOIN KEYS
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Mnemonic Seed
Phrase
Public
Private
Bitcoin private keys
Bitcoin receive addresses
0.3BTC 0.5BTC
7. THREATS
• Theft
• Destruction
• Take them with you to your grave
• Multiparty/Institutional ownership
• Receiving coins on your behalf: web server, teller/waiter
• Privacy
• Low-entropy keys
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Mnemonic Seed
Phrase
Public
Private
Bitcoin private keys
Bitcoin receive addresses
0.3BTC 0.5BTC
9. TOOLS
• Use these tools to protect your coins
• They are building blocks to mix and match like LEGOs
10. FIRST RULE OF FIGHT CLUB
• Don’t talk about your Bitcoin
11. TIERED WALLETS
• Cellphone: spending cash
• Hardware wallet: savings
• Multisig with cold wallets: long term investments
12. MEMORIZE THE SEED PHRASE
• Useful if you have to walk from Syria to Germany and you have to
swim across the Mediterranean
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Mnemonic Seed
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13. CRYPTOSTEEL
• Store your seed phrase
• Protects against fire
• Protects against water
• Split in two: password and
encrypted seed
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14. SAFETY DEPOSIT BOXES IN GREECE
• One master owner
• Multiple co-owners
• Can only access the box while the master own is alive
• When the master owner dies the box is sealed
• Opened in the presence of public notary, heirs, heir appraiser
and an appraiser sent by the tax office
15. GENERATE YOUR OWN SEED PHRASE
https://iancoleman.io/bip39/
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Mnemonic Seed
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16. KEYS NEVER EXPOSED
HARDWARE WALLETS
Key generation
Transaction signing
Devices are offline
Ledger
Trezor
Coldcard
17. RISKS OF SOFTWARE WALLETS
• Insecure, general-purpose computing devices
• Seed copied off screen
• Private keys stolen after you unlock your wallet
• Keyboard sniffers or learning/prediction algorithms
• Fake wallets
19. ONE ADDRESS PER TRANSACTION
• Wallets automatically
generate new addresses
• Preserve your privacy
• Preserve everyone’s privacy
20. DEAD MAN’S SWITCH
• “If something happens to
me” movie line
• Does nothing as long as we
are alive
• Acts when we stop
demonstrating signs of life
• Google’s Inactive Account
Manager
• Test it!
21. LAST WILL AND TESTAMENT
• Gifting €5,000 vs gifting
€500,000
• So your loved ones can
spend your coins
• Read articles by Pamela
Morgan https://medium.com/
@pamelawjd
22. SHAMIR’S SECRET SHARING
• Break any secret into X pieces
• At least Y pieces required to reconstruct the secret
• Y<=X
• e.g. 3 out of 5
• https://en.wikipedia.org/wiki/Shamir%27s_Secret_Sharing
24. MULTISIG USE CASES
• Authorizing payments as a group of people: 2 of 3: CEO, CFO,
Accountant
• Gift your coins to your descendants after you get hit by a bus: 2 of 4:
your phone, your hardware wallet, bank vault, a relative
• Use your coins with untrusted wallets: your phone, your computers,
bank vault. Optionally: go Seedless.
• Use your coins with an offsite wallet: your phone, authenticated
payment provider, bank vault. See https://greenaddress.it
• Payment escrow: 2 of 3: Buyer, Seller, Trusted Escrow Agent. See
https://www.openbazaar.org
25. MULTISIG WALLETS
• CoPay/Bitpay
• Electrum
• Casa (Seedless)
• Bluewallet
• Sparrow Wallet
• Multisig has extra backup requirements
• You need to backup a copy of everyone’s public key (xpub)
26. COLD WALLETS
• Private keys only used on an offline computer
• Private keys can be permanently or temporarily stored
• Can sign transactions
• http://docs.electrum.org/en/latest/coldstorage.html
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Mnemonic Seed
Phrase
Public
Private
Bitcoin private keys
27. WATCH-ONLY WALLETS
• Wallets with public addresses only
• Can view balance
• Can generate receive addresses
• Can generate transactions but cannot sign them (cold wallet will
do the signing)
• Can broadcast signed transactions
Public
Private
Bitcoin receive addresses
0.3BTC 0.5BTC
28. SEED BACKUP & RESTORE
• Restoring a seed might show no or less funds!!!
• Keep in mind derivation paths!
• You can try them all, there are only a few options
• Keep in mind the 20 address gap!
• Your family should also be aware of this
29. DISTRESS WALLET
• A distress wallet has some coins and looks plausible. You can give
up this wallet
• Offered by Ledger and Trezor
30. NLOCKTIME TRANSACTIONS
• Sign a transaction with nLockTime into the future e.g. next year
• Give the transaction to recipient
• Move the funds off your address if you are still alive and repeat
• Bitcoin Core wallet is introducing support for such non-standard
transactions
31. MOVE KEYS IN PARALLEL
• How to destroy your privacy:
• Bought a shiny new Trezor or Ledger and merged all your keys
into one
• Split your keys for a coin fork and merged all your keys into one
• You could clone keys one by one :) Some software to automate
the process would be great!
