gATO rEAd - In the last 2-3 weeks a Chinese Bitcoin Bank is robbed of 4.1 million, earlier another Bitcoin Bank in Australia got robbed 1.3 million and the stories go on and on. So how can you protect your Bitcoin wallet so nobody can steal it or your Bitcoins? Oh did I mention the robberies may be insider robbing the accounts of all their BTC. Why because they use the old Bitcoin wallet.
The new Bitcoin HD wallets are called BIP 0032 Hierarchical Deterministic Wallet these wallets will prevent these types of robberies if used the right way. The BIP- Bitcoin Improvement proposal are how new Bitcoin features are added to the Bitcoin code. https://en.bitcoin.it/wiki/BIP – staying with these standards will make it compatible with other BIP 32 hd wallets client.
With these newer wallets, if you do it right, nobody can steal your Bitcoin currency. The Seed and the keychain has private key-phrase and public key-phrase to do different thing in the wallet. Make a copy of all your wallet credential. Print It! Stored the credentials in a thumb drive! Put the paper or/and thumb drive in a safe or better yet put it in a bank safety deposit box. Now your wallet can be stolen or destroyed, it doesn’t matter the criminals cannot get to your Bitcoins without the private key-phrase.
With the secret seed private key-pair you can recreate all your wallets, sub-wallets, transactions and your currency from the central Bitcoin p2p network blockchain ledger. You can create sub-wallets that other people can use to do everything except make a transaction. You can allow office to office Bitcoin wallets to exchange transactions or not. With the Master Bank-Wallet you have total control.
The Blockchain is the public ledger were all Bitcoin transactions are stored forever and it’s all public anyone can get access to this information. The new BIP 32 specification consists of two parts. In a first part, a system for deriving a tree of key-pairs from a single seed is presented. The second part demonstrates how to build a wallet structure on top of such a tree. This will prevent the robberies of the Bitcoin wallets.
We are starting our own Bitcoin Wallet Service http://bitcoinwalletnetwork.com/blog/ to prevent this kind of robberies of Bitcoins. We will go live in Jan 2014 but you can use the basic FREE Bitcoin HD Wallet Generator you can create a Cold Storage Paper Wallets and Bulk wallets, we are also adding a few other wallet functions. Our Online HD Master Wallets will start in Jan-2014. Come on over and give it a shot if you want.
The Bitcoin standard BIP 32 describes these new - hierarchical deterministic wallets (or “HD Wallets”): which can be shared partially or entirely with different people or department, each with or without the ability to spend coins. From a cold storage Bitcoin Wallet to a full fledge Master Bitcoin Wallets for your organization. You can also departmentalize our Master Bitcoin Bank-Wallet into your business. The specification is intended to set a standard for deterministic wallets that are flexible and that can be interchanged between different clients. Our New Master Bank-Wallets can also be used with Bitcoin, Namecoin, Litecoin, Devcoin and PPCoin.
As Figure 1 shows you have a main wallet tree from this you can spawn sub wallets and even sub-sub wallets but everything is tied to the master wallet, the tree trunk roots and that is tied to the Bitcoin blockchain ledger were everything is recorded.
Wallet Use cases
With HD Master Bank-wallets you can share it with anyone or any device – cell phone, iPad or PC workstation wallets or family and business units that can have full control authorized only from the master wallet. Using Sub and sub-sub-wallets will give you more privacy from the IP aspect to the Audit trails of your transactions. Audit trails from sub wallets need not see other wallets or master wallet transactions trail,s giving you more audit trail control of all your wallets.
In case an auditor needs full access to the list of incoming and outgoing payments, one can share the master public extended key [read access only - cannot create a transactions]. This will allow the auditor to see all transactions from and to the wallet, in all accounts, but not a single secret key to keep your currency safe.
When a business has several independent offices, they can all use wallets derived from a single master wallet. This will allow the headquarters to maintain a super-wallet that sees all incoming and outgoing transactions of all offices, and even permit moving money between the offices.
Recurrent business-to-business transactions: Bitcoin Supply Chain Wallets
In case two business partners often transfer money, one can use the extended public key for the external chain of a specific account as a sort of “super address”, allowing frequent transactions that cannot (easily) be associated, but without needing to request a new address for each payment. Such a mechanism could also be used by mining pool operators as variable payout address.
Unsecure money receiver:
When an unsecured web-server is used to run an e-commerce site, it needs to know public addresses that are used to receive payments. The web-server only needs to know the public extended key of the external chain of a single account. This means someone illegally obtaining access to the web-server can at most see all incoming payments, but will not (trivially) be able to distinguish outgoing transactions, nor see payments received by other webservers if there are several ones.
This is why with our BitcoinWalletNetwork we plan to use Tor behind the scene to mask some of these transactions and our public side and our pay wallets are different so none of this information will leak out. Yes Bitcoin came with a port 9050 hookup to the Tor network. This way you can send some of your transactions thru Tor and every time it will use a different Exit-relay node IP address. By mixing these up it will make it harder to find your Master Bank-Wallet with normal IP traffic analysis and server logs. Tor is another game changer when you add the Bitcoin infrastructure to it that can add a lot more IP address to my wallet address. Like I said before it’s all about the Wallet the Bitcoin just rides the p2p wallet network. The new HD wallets will give the user a safer way to not get their money stolen. This new digital currency is not the first or the last, I plan to support Bitcoin, Namcoin, Litecoin, DevCoin and PPCoin – this is just the beginning… gAtO oUt
Warning: Please be careful with your money. Bitcoin is just like CASH, when you make a cash transaction once the cash leaves your hands and the other party get’s it. There is no going back unless you trust them. Research all your Bitcoin transactions. Be careful with whom you do business. When sending money to an exchange or seller that you trust. ONCE AGAIN DO YOUR RESEARCH !!! Because Bitcoin services are not highly regulated a service can continue operating even when it is widely believed that it is insecure or dishonest. Exchanging or storing significant amounts of funds with third-parties is not recommended.