There's a very simple solution if you care about security.
Buy a hardware wallet (e.g. Trezor in my example) note down the 24 words that are basically your privatekey. But enable the passphrase (25th word/phrase) which you type yourself and could keep just in your mind.
You have the safety of multiple backups for the 24 words and the extra security from burglars and others with the 25th passphrase.
It also serves as a plausible deniability because when you input your passphrase it will never say it's incorrect, it will merely open a different wallet (generate a different private key).
Helps with the $5 wrench attack. You could setup a "fake" wallet with some activity and a low amount of Bitcoins, and have a different passphrase for the real wallet with the big amount.
If you're handling millions of bitcoins, belonging to other people, I would go with something more hardened than a Trezor. Hardware Security Module with M of N authentication... Use that as a main vault. Keep a smaler number available as liquid. I don't understand why this isn't common sense among these people.
The products I'm talking about are tens of thousands of dollars, but that's a drop in the bucket compared to the security architect that will set that up. This is not a solution for personal use. If you are in this kind of business, and are honestly clueless, then you probably need to be looking to hire a security director who is qualified to handle this. I'll probably venture to say that only the founder/owner or CFO/controller of the company should ever, EVER have unrestricted access to the vault wallet, and depending on the size of the company then even that will need to be addressed somehow (of which I have no idea the best practice on). The security chief does not need to have unlimited access to this in order to do his job. I'd not trust one who asked for such access.
"Simple" ones start at about 5k but require a proper business to buy and can usually do m of n. If you want to go all out you should write your own firmware module and use that. Those engineers are even more expensive than the security architect.
And how would that help Nicehash? They have automated processes paying out amounts. An inside job is enough. Some disgruntled employee having access to scripts and giving someone the private keys the script accesses and KABLOOM!
M of N requires multiple private keys in order to withdraw. The script that handles the automated payouts would have access to a wallet that has a relatively small amount of money. When that wallet gets too low or too high, the security and finance team can go to the HSM with their keys, and perform an agreed upon transfer of funds from the vault wallet to the online wallet, or vice versa.
I won't say it's impossible for the vault to get robbed, but with a proper security setup, such a heist would be unprecedented. It could even garner some respect on this forum (toward both the attacker and the victim), rather than shame. The online wallet could get hacked, but it would be a smaller fraction of the funds lost, rather than the entire farm. Of course, if you have a decent security team, they'll also be taking other measures to lower the likelihood of that happening. And unless you pissed the wrong people off, you'd be very unlikely to be sunk due to a random hacking. You would be too difficult of a target for it to be worth even trying.
Disclaimer: I'm not a security specialist, so don't take this as real security advice. However, was technical lead for payments system of a non-crypto fintech company (this doesn't imply that that company's security is or isn't set up in this way).
Indeed, my suggestion was merely about an approachable secure way for everyday people. Business etc. have do as you say and have more sophisticated setups.
This sounds pretty good, but what if the $5 wrench attacker knows your real wallet needs 25 words, and not just 24... Wouldn't they just hit you with the wrench a few times until you added the 25th word?
That's not how it works. You create two wallets with the same initial 24 words and a different 25th word, and put a small amount of money in the second one. If an attacker has the first twenty four words and tries to beat the 25th out of you, you give them the word that unlocks the fake wallet. They have no way of determining if you have more than one wallet, or how many you created. The only way they could tell it was a decoy would be if they had some other way of knowing the approximate value of your wallet.
Or scopolamine. Who needs a wrench when you've got angel's trumpet growing on the fence outside? Especially when it comes to the right 25th word (or the right VeraCrypt volume password, etc).
Your tone showcases your emotions.
I can send bitcoins to anyone that wants to accept them, anytime.
I can send my USD only if my bank permits me to do so and depending on their schedule.
That's one of the core values for me, however I can see that people are used to or just fine with their current bank relationships. Thinking that it's either the one or the other that work for everyone is naive.
“I can send my USD only if my bank permits me to do so and depending on their schedule.”
I can login to my online Bank of America account now and transfer money to most anyone I know in about 100 countries. I can do the same from my bank account in A foreign bank account.
Freedom = I don’t want the government to know. I don’t have anything to hide and I am perfectly fine with the government seeing to whom I send/receive my money.
But bitcoin’s utility of it being a mechanism for transactions is over. It has become a mechanism to hoard wealth. The same way Tulips were used to hold wealth. The bulb will burst and it will lose that mechanism as well.
That said I think crypto currencies are the future...I just don’t think it’s bitcoin...
Crossing into outright incivility is definitely the wrong direction to take a discussion on HN. Please read the site guidelines and please don't do this again.
FDIC insures up to 250k so you have to spread it around to get protection above that. Not like that is a problem to most people just saying there are limits to that protection.
Crypto currency accounts have some massive accounts now, not sure those would be covered much in those cases even with FDIC protection though it would be nice.
If there truly was a banking crash where more banks went down than in the Great Recession, I wonder how FDIC would hold up based on how many over leveraged games were being played that led to that implosion. Crypto currency is probably a reaction to that as well, trust in banking is immensely low in history.
Buy a hardware wallet (e.g. Trezor in my example) note down the 24 words that are basically your privatekey. But enable the passphrase (25th word/phrase) which you type yourself and could keep just in your mind.
You have the safety of multiple backups for the 24 words and the extra security from burglars and others with the 25th passphrase.
https://blog.trezor.io/hide-your-trezor-wallets-with-multipl...
It also serves as a plausible deniability because when you input your passphrase it will never say it's incorrect, it will merely open a different wallet (generate a different private key).
Helps with the $5 wrench attack. You could setup a "fake" wallet with some activity and a low amount of Bitcoins, and have a different passphrase for the real wallet with the big amount.
BYOB, freedom comes at a price.