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Wallets

not your keys, not your crypto

Types of Crypto wallets​

Not your keys not your coins

  • Hot wallets

    • These types of bitcoin wallets are connected to the internet and are typically available online or on your smartphone.
    • Custodial wallets

  • Cold wallets / Hardware Wallets

    • These types of bitcoin wallets cannot be accessed through the internet. They often involve physical devices (like a USB stick), where bitcoin and other cryptocurrencies can be stored securely offline.
    • Authentication with hardware wallets like the Grid+ Lattice1, Keystone, Ledger, and Trezor.
    • Ledger Nano S Plus | Ledger

  • Paper Wallets - 5 Steps to Creating an ULTRA Secure Bitcoin Paper Wallet (2023 Updated)

How to Store Your Bitcoin

Hardware Wallets And MetaMask: The Best Security Combo | ConsenSys

What is Metamask? Simple Cryptocurrency Wallet - YouTube

"Not Your Keys, Not your Crypto" (Meaning + Issues) - YouTube

How Bitcoin Wallets Work (Public & Private Key Explained) - YouTube

wallet.fail (or How to Break the Most Popular Cryptocurrency Wallets) - YouTube

Crypto Wallets​

Metamask Learn: Your guide to getting started in Web3

TOP 3 DEFI WALLETS FOR 2021 - What Features Do They Support? - YouTube

Wallets vs Accounts​

'Wallet' describes the MetaMask software you're using. 'Account' refers to a public-private key pair.

Your wallet doesn't have an address; an account within it does. Instead, a MetaMask wallet is a software tool that allows you to manage and access accounts.

You can derive more than one account from a Secret Recovery Phrase (seed phrase).

A wallet is a client (a piece of software) with which you manage your accounts.

An account is a public-private key pair derived from your Secret Recovery Phrase (SRP).

Your accounts in MetaMask are each represented by a public address (the 'public' side of your key pair), which you may have seen referred to incorrectly as a 'wallet address'. There is no such thing: there is only an account address.

What's the difference between a wallet and an account? - MetaMask

Working​

How Many Bitcoin Addresses Are There​

As long as Bitcoin uses the RIPEMD160 hash function, there are 2^160 Bitcoin addresses.

That number is: 1,461,501,637,330,902,918,203,684,832,716,283,019,655,932,542,976

Bitcoin addresses are created using public keys. The public key is first hashed with the SHA256 algorithm, then that hash is taken and hashed again using the previously mentioned RipeMD160 algorithm.

Analogy​

There are 2^63 grains of sand on all of the beaches of Earth, combined. That’s roughly 9 quintillion grains of sand (or 9,223,372,036,854,775,808).

Imagine that each grain of sand on Earth is another planet Earth, and that each of those planets has 7.442 billion people living on it. Now, if we divide up the number of Bitcoin addresses per person, each would get 3.5 billion for their lifetime.

And if each of those people lives for exactly 100 years, they have 110 Bitcoin addresses to use every second starting from the second they’re born.

How Many Bitcoin Addresses Are There (2022 Update)

So how do wallets determine if an address belongs to you?​

They simply draw them at random. This means, of course, that two different Bitcoin wallets could theoretically generate the same address, and that the two owners could then spend the same funds. Shocking? Yes, but you will be told that such an event is unlikely to happen. Let’s examine together the probability for such an event to happen.

The total number of possible Bitcoin addresses is 2^160. By performing statistical calculations, it is possible to determine the probability that two wallets will randomly generate the same address. For mathematical details, please refer to this article.

We can therefore conclude the following: the probability of having a 99.9999% chance of having an address collision, ie. your wallet randomly generating the same address as another is one in 6.35.10^24.

What if my wallet generated an existing Bitcoin address? | Coinhouse

Wallet Signature Request​

In the blockchain world, every on-chain event (a transaction that interacts with blockchain) requires a processing fee. The signature request is off-chain so doesn’t. Users might not understand this at first and be put off from connecting to your dApp. Be explicit that this won’t cost your users anything.

Writing for blockchain: wallet signature request messages | by Ryan Cordell | HackerNoon.com | Medium

What is a signature in MetaMask? - MetaMask

Institutional​

  • Bitgo

Technologies​

Threshold Signatures Explained | Binance Academy

Multisig​

Threshold Signature Scheme (TSS)​

The resulting signature looks the same as one created without the threshold scheme, but it is not created with a single private key. Rather, it is created with multiple private key shares, which are distributed such that no single person controls the private key entirely.

To sign a transaction, enough Approvers must participate to meet a threshold. This threshold structure is typically conceptualized as "t of n", in which n refers to the total number of signers, and t refers to the number of Approvers who can sign a transaction on behalf of the entire group. For example, you might have a group of 7 signers (n), and require 4 of them to authenticate a transaction: t of n = 4 of 7.

What Are Threshold Signatures?

Threshold Signature Schemes. by Ahmet Ramazan Agirtas, Jorge… | by Ahmet | Nethermind.eth | Medium

Shamir secret sharing scheme (SSSS)​

The Shamir secret sharing scheme (SSSS) provides a way to store the private key in a distributed manner such that while the private key is at rest, it is stored in multiple locations.

There are two differences between SSSS and TSS:

  • Key Generation: in SSSS, there is a single party called "the dealer" that is in charge of generating the private key secret shares. It means that at time of Key Generation, the private key is generated at a single location and then distributed by the dealer to the different locations. In TSS, there is no dealer as its role is distributed such that the full private key is never at a single location.
  • Signing: in SSSS, the parties must reconstruct the full private key in order to sign, which again results in a single point of failure each time a signature is needed. In TSS, the signing is done in a distributed way without ever reconstructing the secret shares.

As we can see, in TSS the private key (which represents the security of the system) is never at a single location throughout its entire lifetime.

Tools​

BIP39

Bitcoin financial services - Unchained

Caravan - Bitcoin Multisig

Building A Best-In-Class Hardware Wallet For Bitcoin Multisig | Ledger

How to Create a Multi Signature Wallet for Your Crypto | by Genson C. Glier | BlockToken | Medium