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Bitcoin, About Bitcoin Privacy Key ,Bitcoin private key management options

 Bitcoin key management is probably one of the most intimidating aspects for a new user to interact with your money with any large amount of value. This is one of the most important aspects. One of the key aspects of Bitcoin that really sets it apart from its predecessors in the history of digital pricing is that you do not have to rely on some central authority or record keeper to control, seize and retain your own funds.



 It is the ability to transfer or spend. Without the ability to hold your own private key, it will not be possible to use Bitcoin in a sovereign way without a third party. It opens a door to huge possibilities and possibilities, but also opens the door to huge responsibilities and risks. As has been said many times over the years, Bitcoin has no customer support. There is no help desk to call, someone can hold your hand and undo the mistakes you can make, only you are there.


This is the most difficult barrier to overcome when it comes to taking custody of your own bitcoin, and it is an emotional and practical barrier. The space is filled with a variety of best practice ideas, how-tos, feedback on the best device to use, and bombarded with new information when new users arrive. The simple fact is, though, that there is no one-size-fits-all solution to how to store your bitcoin.


 There are some things that are more applicable to people than other things, there are some solutions that are more suitable for large or small quantities, there are some solutions that do not make any sense or make perfect sense depending on the circumstances of your life. But there is no best practice for managing your personal keys that applies equally to everyone. Anyone who tells you otherwise is probably not someone you should listen to for advice.



There are all sorts of ways to handle your keys, but things have come a long way since Bitcoin was first created. The original Bitcoin client created a single stand-alone key backed up in a password-protected digital file, and each time you accept a new coin you have to take a new backup or risk losing that money;


 Each new receiving address was a newly-generated key that was completely unrelated to the others, and was not included in the last backup you made. Nowadays we have commemorative seeds and asset wallets that allow a user to make a single backup and not have to worry about renewal every time they receive new funds.


However, there is more to managing keys securely than the form your backup takes.



SINGLESIG and Multisig

One of the first things people will notice when it comes to basic management advice is whether to use a single-signature wallet or a multisig wallet. Both "camps" take an extreme view that they are a one-size-fits-all solution for your average user, and bombarded with the use of only one or the other, "automatically more security!"  Each person is in their own personal situation and it needs to be considered above all else before deciding how to take things.


Before going to Multi sig, let's take a look at some of the benefits of Single sig Wallet. First, you only need to keep a copy of your memorabilia seed for the entire wallet to be recoverable. The Bitcoin address to which you send money can definitely be re-created on another device. Seeds are literally the only thing you need to recover all your coins. Another advantage is the cost-effectiveness.


 When sending coins using a single signature on a blockchain, they take up less block space and thus lower costs because a single signature is required on the transaction witness data. In the case of inheritance situations, the single-signature also has the advantage of being a common thing (memorable seed) that can be left for your friends and family.





 Unless they have an easy-to-use and secure device to import it, it's pretty easy to handle with some basic instructions. What are the obvious main bad aspects? The single point of failure. If your memorabilia or keys are compromised, he wrote it all down. This is what a corrupt actor needs to steal your coins, and once it's done it can't be undone. There is no support line for calling, no chargeback. They are gone for good.




What are the upsides of a multi sig wallet? There is no single point of failure; You are unable to spend coins in a multi sig wallet without accessing multiple sets of private keys. This allows the geographic distribution of commemorative seeds to increase the cost of accessing enough key sets to steal someone's bitcoin. It also opens the door to allow other people to occupy a set of keys or distribute the keys among a group of people, excluding the real owner, so that no one "owns" them from their point of view. 


They have enough to spend on themselves. This enables companies such as Casa or Unchained Capital to offer services that hold a certain amount of the user's hand, offering a safety net in the form of a recovery key to the service to protect the user against losing something (though not all) The keys are nearby. What are some downsides of Multi sig? Requirement to secure all master public keys involved in the wallet When you use a single sig, all you need to do to restore it is the seed of memory.




 But since a multi sig wallet uses all the public keys from each memory seed involved, you need to back them up as well. The problem here is that if you lose a memory seed associated with a multi sig, and the combined public key doesn't have a separate backup, you have no way to recover it, and without that public key you can't recreate the multi sig address. Find your funds in the chain, and therefore lose access to those funds. Multi sig (at least until Mu Sig schemes are adopted using  Taproot) is also more expensive to spend on a chain than a single sig, so sending your money is more expensive than a single sig address.




So let's look at a fictional bitcoin: they live alone in an apartment, they can't get along well with their family, their friends aren't the most responsible people, and they're thinking about how to set up their basic management solution. Some people trying to be helpful on Twitter suggested setting up a multi-sig wallet with Specter or Blue Wallet. 

How does Multi-sig help this person? There is no place to keep the keys apart from their apartment, so they will keep all the keys in one place. This prevents any advantage of spreading multi-sig keys from being unnecessary against loss or theft and comes with the cost of more expensive transactions in the chain.


 Also, although not the most likely scenario due to all the seeds being stored together, they run the risk of losing funds if they incorrectly transfer or damage a seed and do not maintain a public key backup. This adds no significant security, increases the cost of spending their bitcoin and adds additional ways to lose access to their money. 


What this means for such a person is to use a multi-sig service where the provider holds a key to assist in their recovery. If using a 2-of-3, they can keep two seeds in their apartment, the provider has one and can leave a single seed with unfaithful family or irresponsible friends knowing that a single seed is not enough to spend their funds. Even if someone loses or loses their copy, they can leave that one seed to more than one person, so they can recover funds even if they lose access to both of their seeds kept at home.


Let's take a look at another fictional bitcoiner: someone who has his own house, as well as a cabin somewhere in the desert that he owns as a vacation home. Maybe they are a senior software engineer, or a lawyer who has their own locked office at work. There are many different places under a reasonable amount of their own control. 


In this case it is understandable for this person to use a multisig setup with which no one is involved. They can make a 2-of-3 wallet, a seed house, a seed in their cabin and a seed in their office (obviously each seed leaves a copy of the three public keys with the backup). This provides them with geographical redundancy that protects them against both loss and theft of funds because they actually have access to multiple secure locations where they can store key elements, unlike the first speculative bitcoin above.


In both cases the strengths and weaknesses of both methods must be clearly demonstrated, depending on one's personal circumstances. Multisig is being used because "it's safer!" Not always a wise choice for everyone. Even if it does make sense, the way it will be used by someone else does not necessarily make sense. Before deciding on a single key and multisig key setup, you should think long and hard about your own living situation and what it means to you.


Passphrase

Passphrase is something that is billed as a catch-all solution for security. The reality is much more complex and concise than that. Assume for the purpose of this discussion that you have compromised the seeds of your memory (a passphrase is like any Internet password in that situation from a simple point of view). 


It only adds as much security as the entropy in the passphrase. If you use a secure passphrase, obviously it can be a good amount of extra security, but it comes with a trade-off that the more secure your passphrase, the harder it will be to memorize. The main purpose of a passphrase is to remember something, and is not physically stored anywhere, so using a passphrase becomes a balancing act to add security but it does not create too much risk of forgetting. If you do not remember your passphrase, you will lose access to your funds.


This article on Coldbit's website gives a good breakdown of the entropy of different styles of passphrase, from the use of BIP-39 memonic words to other word lists, to alphanumeric passwords. The article defines different classes of attackers based on their disposal resources: a single laptop, several GPUs, a special ASIC for passphrase cracking, and a large supercluster of passphrase ASIC.


 For each class of attacker, they rate the average length of a passphrase and how long it takes to force a passphrase based on what assets the attacker has. This is something that everyone who uses a passphrase should consider when choosing one. Unless you go to the same entropy as a memory seed, a passphrase is a temporary shield that allows you to transfer your funds to a new seed before the invaders force your passphrase and if you go to the same entropy as the memory seed and passphrase The risk of losing access to your funds is greatly increased.


The last point of the seed phrase is to memorize versus write it down and save it somewhere. If a seed is memorized, it may be wise to write it down temporarily until you are sure you have memorized it and then destroy the written copy. If you make a permanent physical copy of it, I think it is best to consider it as a multisig setup.


 Your memory and passphrase each form two "keys" in a "multisig" at that time and storing both in the same place is a bad security risk. The main advantage of a passphrase is to add "something you know" with "you have something" (your memory). If you deviate from using a passphrase, remember it and plan to keep them separate and not easy to find together.



Save seed backup

This is a key issue to consider when setting up any wallet; Hardware wallets usually provide physical security to keep your keys from the device very expensive, and any software wallet is safe to use. Encrypting your keys will be stored when the wallet is not open and is being used. However, all of these protections are incomplete if you just sit around a desk and leave a memory seed. 


The physical safety of a memory-impaired seed is crucial, depending on your circumstances, whether it comes from a safe or hiding it in a place where no thief or invader can see it. But it should not be anywhere that is easily accessible without you. A safe one that is difficult to remove or access would be a good place, or somewhere that is not immediately obvious, like writing across a page inside a book or under a loose floorboard (don't take these examples literally, but the idea is that somewhere The thief is not thinking of finding anything valuable).


If you stop storing souvenirs anywhere other than your own home, I can't stress enough, don't do it without a decently strong passphrase, and especially not with any kind of temperproof bag or setup so you can check in periodically. That seed is still there. And no one else has cheated on her since your last check. Personally I think strong physical security or ambiguity (concealment) is the way to your own home, but if you need to save somewhere else due to safety or disaster risk, I would recommend saving it to someone you trust regardless. Any temperproof system or passphrase is in your place (Security deposit box is a terrible idea for a single address).


One last thing to consider if this is a situation you may find yourself in, is how do you destroy a metal seed backup? Imagine that you are leaving the country and never come back, yet you have a seed of words that is in the letter press or engraved. You cannot bring it through customs. You do not want to be frustrated if you cannot get the right pitch so invest in a good capo. 


If this is a scenario you could potentially see in your future, using tile-based seed backups might make sense if you want to keep steel for sustainability, otherwise you will need to transfer all your funds to a new seed before or after you leave. This can be a time consuming and complicated thing if you separate funds between different passphrase, or manage to keep your UTXOs separate, because you have to transfer funds bit by bit without connecting to them to maintain that privacy and isolation.


Big picture

Managing your own keys is the key to making Bitcoin special, but it's also a big responsibility. It's like going for a walk in the desert. There are many different paths you can take; There are some difficult and difficult, all the way up, some pretty easy paths, and some obstacles. Even if you like, you can walk out of the way perfectly, but it carries the risk of getting lost. When you go out in the elements, there is no one you can count on. The level of preparation and understanding required is not the same for everyone and you should not allow yourself to fall into such traps.


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