Wallet Security and Its Corners

Security Is Not a Certainty

Our core belief is that you should never treat security as certainty, and following this point of view will always put you ahead of potential problems.

Technology, whether mechanical or information, is transitory, along with its security requirements. Security is part of technology and only lives as long as it suits the needs of its underlying application and accomplishes the desired result. What seems excellent for protecting your digital assets today may be redundant tomorrow. Security, in simple words, is buying time.

Metal Gadgets

Metal devices are the first choice for protecting the keys; indeed, they are a good choice. Using metal plates or other types of metal gadgets is advertised as a top security approach everyone should opt for.

Durability is most often the selling point. As much as durability is significant, it is arguably not the most crucial protection aspect.

How important is durability compared to other types of risk, for example, losing your keys by being stolen? Theft is an incomparably more common way of losing your assets than damage to the keys caused by fire or other natural causes. A thief can compromise your keys by taking a photo with a smartphone.

Preventing this can be challenging if your storage does not have extra protection. As much as you cannot do anything to stop someone from capturing your keys on camera, your focus should be on making access to your assets as complicated as possible. One way is obfuscating the keys, for example by splitting them so that obtaining only the exposed portion would be meaningless.

Why the High Melting Point May Not Matter as Much as You Think

A building burns at an average of 800°C (1500°F) to 1,100°C (2,000°F). Physical storage made from the most durable substance is often considered critical for better protection. Stainless steel — the most common material used for storage devices — has a melting point of 1400–1450°C (2552–2642°F), which should be durable enough to survive a fire.

In reality, however, a high melting point may not matter as much as one may think. In the event of a fire, you will likely be the last person to inspect the ruins to find your metal plates. And if the metal plates contain a complete seed phrase, you better hope that whoever examines the remains does not find them before you.

Saying so does not mean the durability of the key storage is irrelevant, but using a material with a higher melting point than 800°C (1500°F) does not significantly improve the odds of recovery after such an incident.

Passphrase

Along with using metal protection, many recommend using a passphrase. It is a very clever way to double-bet your security. A passphrase is supposed to prevent you from losing your digital assets when the keys have been compromised. If you are unfamiliar with this solution — it is an additional set of words appended to your seed. It often works as a disguised mechanism to distract potential thieves from the main assets. You set up the main wallet with a passphrase and another without a passphrase with an insignificant amount of digital assets to mislead the attacker.

The passphrase feature is great but has some serious caveats that often slip attention during discussions.

• Misusing it can be problematic at best and disastrous at worst.
• The often neglected fact is that it is very easy to make costly mistakes even if you are a tech and security-oriented individual.
• Providing an incorrect phrase will never highlight a wrong entry — it will most likely return an empty wallet, which can be a nerve-wracking experience.

The fundamental key to understanding a passphrase is that it is not a password and should never be handled like one. The critical difference is that the passphrase cannot be recovered. Protecting your keys is already a complex job. Taking care of a passphrase with less attention often leads to poor security.

Always consider it as an integral part of your keys and treat it with the same respect. Never keep the passphrase in proximity to your seed phrases. Do not use it if you do not understand it. Using a passphrase requires great responsibility.

Our position here can be quite controversial: we would not push its usage for mass adoption. The particular reason is that mass adoption of the passphrase can lead to misusing it, and as a result, many may become victims of losing access to their wallets forever. You should use it only with a good security strategy and a deep understanding of its limitations.

Multi-Signatures

Multisig (abbreviation for Multi-signatures) is yet another method at your disposal. The concept is simple — it requires more than one participant to make a transaction; thus, this procedure relies heavily on trust between parties.

Each stakeholder keeps their private key, without which the transaction cannot take place. With multi-signatures, you can set up threshold criteria — for example, you could mandate that 2 out of 3 stakeholders authorize the transaction in the wallet. Another way is without the threshold, where all strict participants are required. This has one significant weakness — a single point of failure. All parties must be aware of this and have a good backup plan in place.

Where Multisig Might Not Be Wise

Perhaps in a setup where you need to rely heavily on other participants, particularly if they do not have as extensive security knowledge as yourself. Try especially to avoid multi-signatures without a threshold if you are not certain other parties can manage the keys. Using a multisig setup with your partner can also be problematic — you both need to take care of your own keys in the most disciplined manner in order to prevent limiting access to funds in case one of you is no longer around.

Where Multisig Makes Sense

Multi-signature with a threshold is perfect for organisations where decisions are made by majority vote.

Paper

Back in the days when cryptocurrencies were still a hobby, one of the ways to store the keys was by printing them on paper. Although not recommended by many, we would argue that this method is not pointless and still has robust utility.

The primary advantage is that paper is a cheap way to store your keys. Of course, paper is a very delicate material — it can be damaged and lost quickly, its prints are not durable, and it does not carry the same weight as dedicated gadgets. Moreover, it is easy to print too many and place them in unsecured locations.

We understand that you should not make security decisions based on costs. But we want to stress that our argument for using paper is not because it is cheap. We see the opportunity to guide you to adopt our main principle: treat security not as a certainty but as a transient solution, where your job is continuously taking care of your setup.

One of the main dilemmas when using metal gadgets is — what should you do if your keys were compromised, yet a passphrase still protects them? Should you re-evaluate your strategy and move your assets to a new wallet? Are you confident that a passphrase is enough to secure your coins? In the end, the fabric of your security setup may be broken.