Monthly Archives: April 2017

Creating paper wallets:

Problematic action: Create a paper wallet on a paper wallet service website without disconnecting from the internet. Reason: It's extremely insecure for many reasons, some being 1) the website is hacked with generated private keys sent to the hacker; 2) there may be malware in the browser or in the operating system that sends the private keys to the hacker. Solution: The bottom line is to disconnect the internet before creating the paper wallet. It's not secure enough because 1) the malware can save the private keys and wait for internet connection to send them out; 2) the malware can interfere with the generation process itself and give you a private key that is already known to the hacker, which is called backdooring the random number generator; 3) the private keys may exist on the hard disk therefore may be extracted by malware or after the computer is disposed. Better solution: Use a live operating system, such as a Ubuntu live CD, to run the paper wallet software. This is not ultimately bullet-proof, especially for high-value targets, because there exist malware that can hide in the BIOS and firmware of your computer and can infect your live operating system. It should be secure enough for average Joes.

Problematic action: Create a paper wallet without serious verifying. Reason: There may be incompatible issues with operating systems and browsers. Solution: Run tests on various operating systems and various browsers before putting BTC in. Make sure the generated private keys are identical. This applies to regular paper wallets and BIP38 paper wallets. Make sure the decrypted BIP38 keys are correct.

Problematic action: Use a wireless printer. Reason: It's insecure because wireless networks are insecure. Solution: Use a wired printer.

Problematic action: Use an advanced printer, which has internal storage, such as a hard drive. Reason: It is insecure because the private key of the paper wallet printed may be stored on the internal storage, therefore may be recovered if the printer is sold or scrapped. Solution: Use a dumb printer. Or smash the printer, including and especially the internal storage, or keep it locked up and never sell or scrap it.

Problematic action: Leave the printer open for other people to access after printing without turning it off. Reason: It's insecure because the private key printed may still be in the memory of the printer. Solution: Turn the printer off after printing.

Problematic action: Leave the computer untreated after printing. Reason: It's insecure because the printer driver and/or operating system may be keeping copies of the documents you print in some sort of "spool" or print queue. Solution:

Quote from https://bitcoinpaperwallet.com/#popupDelete (the popup doesn't work).

Macintosh:

Enable 'FileVault' to encrypt your filesystem so that cache files cannot be 'undeleted'. Set up a symbolic link from /private/var/spool/cups/cache/ to a removable media volume (e.g. a SD card) and disconnect it when not in use.

Windows:

Use an encrypted filesystem so that your cache files cannot be 'undeleted'. Read this FAQ on how to change the destination of your cache (spool) files to removable media.

Linux:

Use a live-boot CD instead of a regular hard drive OS install. This way when you reboot your computer, all cache files are deleted from memory and no jobs are ever written to disk.

Problematic action: Use a shared printer (at work or school, for example). Reason: It's insecure because 1) the printer may have a glitch and someone else may get your printouts; 2) the printing jobs may be centrally logged. Solution: Don't. Use your own printer.

Problematic action: Use a printer to print the private key or the QR code of the private key. Reason: See above. Solution 1: Don't use a printer for private key stuff. Hand-write the private key. Ignore the QR code since hand-drawing the QR code of the private key may be too time-consuming. Double check. Then check it again, preferably on a different day. Get someone you trust to check it. Then get him/her to check it again, preferably on a different day. (Testing the private key in a wallet app can make it sure. But it comes with risks.) Solution 2: Don't use a printer for private key stuff. Use brain wallet. Write down the passphrase and the relevant information, e.g., the name of the tool used (bitaddress.org/WarpWallet/etc.) and the instructions. Store it the same way as a paper wallet. Save and store some copies of the tool, in case the future versions become incompatible. (There are pitfalls for creating man-made passphrases. It is beyond the scope of this post. In a nutshell, don't create passphrases with your brain.)

Problematic action: Import a paper wallet private key into a wallet app, then spend directly from the paper wallet address.

Mistake: Expect the paper wallet automatically receives/holds changes, similar to a real-life wallet, which may not be the case. Reason: Early wallet apps didn't handle the changes correctly. The changes became the transaction fees of the miners. Explanation: It's a misunderstanding of how Bitcoin works. There is no account balance of any kind in Bitcoin. There is only Unspent Transaction Output (UTXO). The receiving addresses of changes, which will become the new UTXOs, must be specified when BTC is spent. Otherwise, the changes will become the transaction fees. This depends on the implementation of the wallet app, which should not be trusted.

Mistake: Think nothing is wrong if changes are handled correctly. Reason: It's called address reuse, which is not recommended in Bitcoin because 1) it reduces anonymity of both the sender and all the consecutive receivers; 2) it reduces the security by exposing the public key, which is vulnerable to quantum computing. Addresses are hashes of public keys, which are safe from quantum computing.

Mistake: Destroy the paper wallet after it's imported into an HD wallet, thinking that it has become a part of the HD wallet and it's safe to destroy because the master seed of the HD has been backed up. Reason: It is not a part of the HD wallet. If the paper wallet (the paper) is destroyed and the app is uninstalled, the BTC is gone even if the HD wallet is recovered from its master seed.

The right way: Spend (transact) all BTC in a paper wallet to an address of your wallet app. Spend BTC from there. After all the spending is finished, create a new paper wallet and transact all the remaining BTC to it. Store the new paper wallet. Keep the old one for future reference, or destroy it if you don't want the trace.

Problematic action: Destroy a paper wallet after it is used. Reason: You may need to prove you had control of that address some day, e.g., for taxation purpose. In the case of a chain split, you may have a balance on the other chain. Solution: Don't ever destroy a paper wallet. Keep it on file. Mark it with the relevant information, e.g., "Used in April 2017". Unless you don't want to be tied to the address.

Problematic action: Google a famous wallet app, click the first link or the sponsored link, download/install it, and use it, without serious research. Reason: It's insecure because the wallet app may be a scam. Solution: Do thorough research prior to deciding which wallet app to use. Find the official site prior to downloading/installing it.

Additions and corrections are welcome.

Edit: multiple editing for additions, corrections, and clarifications.

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Summary: pitfalls of paper wallets : Bitcoin

TechCrunch

Bitcoin and Ether prices hit all-time high TechCrunch Something is going on in the cryptocurrency world, but it's hard to figure out why prices are jumping. Both bitcoin and Ether prices are currently trading at an all-time high. According to Coindesk's price index, you could buy one bitcoin for $1,343 ... Bitcoin hits all-time high in trading against the dollarUPI.com Bitcoin Exchange Rate Hits New RecordMarket Leader - news and previews making you rich. all 5 news articles »

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Bitcoin and Ether prices hit all-time high - TechCrunch

The Cabinet of Antigua & Barbuda has instructed the Attorney General, Steadroy CutieBenjamin to draft laws for the implementation of Bitcoin.

This, after a group connected with the Antigua Leisure & Gaming Association met with Cabinet, on Wednesday, to discuss and share knowledge and experience on a new method of transacting the sale of goods and services, which is known as the Bitcoin technology.

The Cabinet has agreed to place the country on the cutting edge of this new technology.

Here in Antigua & Barbuda we know we are always very much front and centre of new developments; we are leaders, trendsetters in the Caribbean, Minister of Trade and Consumer Affairs, EPChet Greene said at the post-Cabinet briefing, yesterday.

He added that what is of interest to the country is the fact that this new currency is immutable; you can always go and trace transactions, so in the context of allegations of our country being involved in tax havens, it allows for better traceability.

The currency benefits us in Antigua & Barbuda in respect to our Internet gaming sector. It will allow us,the satisfaction needed as a jurisdiction in respect to questions that would be asked of us in the Global Environment, Greene said.

Several countries, including Korea and Japan, have already begun the process of recognising and regulating the use of the virtual currency, BitCoin, for business transactions, while other countries, such as Switzerland and Malta, are either already engaged in this technology or have given commitments to get onboard with this development.

The minister is encouraging the public to conduct online searches on BitCoin which came onstream in 2009, and has increased in value several times since it was patented.

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A&B looking to embrace Bitcoin | Antigua Observer Newspaper - Antigua Observer

Bitcoin now out-values gold, but could new BitTorrent plans be the beginning of the end for the virtual currency? We explain what is Bitcoin and how you can earn the virtual currency on your PC or laptop. We explain how you can use your PC or laptop to generate bitcoins, and whether you'll ever get rich in doing so

By Jim Martin | 27 Apr 17

Bitcoin is wildly confusing. And heres the bad news: the fact youre reading this now means youre late to the game, and its going to be tough to turn a profit in Bitcoin mining. Nevertheless, if you want to try your hand at mining bitcoins, here we present the beginner's guide to generating bitcoins. Also see: How to make money from your hobby.

Following a dodgy patch in 2016, Bitcoin's value has recovered and actually surpassed the value of gold. At the time of writingone Bitcoin is equivalent to 1021.66, whereas an ounce of gold is equal to 981.89. This increasehas been attributed to a surge in demand in China.

But now Bitcoin is once again said to be under threat, as BitTorrent founder Bram Cohen plans to launch his own crypto-currency within the next few months.

Bitcoin is overhyped, Cohen told Steal This Show, and his alternative willrely on the power of pre-existing digital storage rather than mining.

"I have this plan, a slightly crazy plan, for making something that doesn't have computers burning electricity as part of its mining," Cohen said. "The short of it is what you do instead of computers burning electricity to mine you have storage space that's mining."

If you're finding yourself baffled as to what we're talking about, please let us explain.

Bitcoin is a digital currency that operates independently of a central bank. Encryption is used to regulate both the generation of Bitcoin units and the transfer of the currency.

According to Reuters, the European Union will move to clamp down on this digital currency which has reportedly been used to anonymously fund terrorism - the Paris ISIS attackers reportedly had a Bitcoin wallet worth more than $3m.

EU interior and justice ministers will gather in Brussels later this week to discuss ways in which they can"strengthen controls of non-banking payment methods such as electronic/anonymous payments and virtual currencies and transfers of gold, precious metals, by pre-paid cards", according to draft conclusions of the meeting seen by Reuters.

In essence, the more bitcoins mined or found, the harder it is to find more coins. While once it may have been possible to use a high-powered PC at home to mine Bitcoin on its own, the sheer popularity of mining Bitcoin means its viable only to join a pool. This is where your computer works alongside others to mine bitcoins. Its much like [emailprotected], where clusters of computers work together to try and find extra-terrestrial life. See also: The rise of Bitcoin and why you can't mine them on your own.

Without getting bogged down with the technicalities, the groups of computers in a Bitcoin pool are crunching numbers to mine a block. For every block mined, you get 25 coins.

Update March 2017: Currently each coin is worth 1507, which is almost10 times the value it was when we originally wrote this in 2015.

Indeed, some analysts thought in 2015 that Bitcoin was doomed. Here's what the graph looked like around two years ago:

Google's currency converter lets you check very quickly how much a Bitcoin is worth.

As we mentioned in the introduction, these days it's difficult to turn a profit miningBitcoin. But it has been known, especially for early adopters of the virtual currency.

For example, the Guardian reports on how aNorwegian mans $27 investment in Bitcoin turned into a $886,000 windfall four years later.

"Kristoffer Koch invested 150 kroner ($26.60) in 5,000 bitcoins in 2009, after discovering them during the course of writing a thesis on encryption. He promptly forgot about them until widespread media coverage of the anonymous, decentralised, peer-to-peer digital currency in April 2013 jogged his memory," reports the Guardian. At which point, they were worth a small fortune at $886,000.

Let's say you try and mine a block of bitcoins with just one home PC. This is a bad idea: the electricity costs will be higher than the money you make from any mined bitcoins and you may have to wait months - or longer - before you get any return. By joining a pool, you should get smaller payments more regularly.

However, you could still end up out of pocket even if you join a pool such as Slushs Bitcoin pool one of the most popular ones. When a block is completed, you get a share based on the number of other workers who helped mine the block. A fee around 2 percent will be deducted from this, and you could well earn only half the amount youve spent in electricity costs.

Of course, if youre able to run the mining software on a computer for which you dont pay the electricity bill, you might be quids in (but we dont recommend running it on your work PC!).

So, if youre still interested, heres a simple step-by step guide to getting started with Bitcoin mining:

Step 1. Youll need a wallet to start with. This is a bit like a PayPal account where your bitcoins can be stored. You can store this wallet online, or locally on your PC. Youll need to download a large blockchain file to use a wallet. For an online wallet, you might like to try coinbase.com. With a coinbase account, you can buy, use and accept Bitcoin currency.

Step 2. Join a pool, such as Slushs Bitcoin pool. Theres always a danger that the pool owner might keep all 25 bitcoins when a block is mined, since the whole 25 coins are paid to one person: the pool owner.

Youll need to choose a trustworthy pool owner. Slushs pool was the first and has been operating since December 2010. By the sites own words, it has a a long history of stable and accurate payouts.

Step 3. Install a Bitcoin miner on your PC. There are two types: CPU and GPU. For beginners, Kiv's GUI miner is recommended. You can find out more about how to use Kiv's GUI miner here.

Step 4. Log into your Bitcoin pool account, and enter your wallet address. You will be able to get this by checking your wallet account which you created in step 1.

Step 5. Register your workers. Each worker is a sub-account within your Bitcoin pool account. You can have more than one worker running on each computer.

Step 6. Enter your worker credentials into your Bitcoin mining software, and then enter the main pool URL so your workers can start mining.

See also: How to mine altcoins

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What is Bitcoin? How to Mine Bitcoin - PC Advisor - PC Advisor

Lawmakers in the state of West Virginia have completed work on a bill that would make it a felony to use bitcoin or other cryptocurrencies for money laundering.

As reported in February, West Virginia House Bill 2585 constitutes an update to the state's anti-money laundering statutes, specifically creating a definition for cryptocurrency that is recognized as a 'monetary instrument' in the state.

The definition included in the bill reads:

"'Cryptocurrency' means digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, and which operate independently of a central bank."

The measure is on the cusp of becoming state law, public records show.

Lawmakers have finished drafting the bill following a conference period, according to LegiScan, a legislation data service provider. The state'slower chamber initially passed the bill by a 7821 vote, with the senate approving the measure unanimously a month later in a 340 vote.

The bill, though subject to approval by the states governor, Democrat Jim Justice, forms part of a larger legislative trend happening in the US today.

State lawmakers in a number of states, including Arizona, New Hampshire and Nevada, have passed or advanced bills focusing on either bitcoin or blockchain in recent months.

West Virginia State House image via Shutterstock

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West Virginia Lawmakers Complete Bitcoin Money Laundering Bill - CoinDesk