Our multisignature key model

We have noticed a lot of buzz around our product so recently after our launch. Thank you all for your interest! There seems to be some confusion about our private key model, so we thought we would clarify how our system works.

The most common misconception that we have noticed is the idea that we control the majority of your private keys. This is not true.

As you may know, our system uses a 2-of-3 multisignature signing scheme for bitcoin transactions. The three bitcoin private keys are generated in separate locations, and are never exchanged over a network. The three keys are as follows:

1. A device private key which is generated on your Case, using a secure random number generator. Our dedicated cryptographic processor uses thermal noise to generate a random key. This key is generated once the Case is in your hands during first time setup, and never leaves the device. We do not ship any devices with pre-baked private keys.

2. A server private key is generated on our servers. Again, this key never leaves our servers, and is the only private key that we control.

3.a. The third private key is meant for recovery. We have a partnership with Third Key Solutions to provide an easy option for a recovery key. If your Case is lost or stolen, you can initiate a recovery process that includes rigorous protocols with strict operational procedures. The most important piece of this is that we are never given the recovery key. Instead, Third Key Solutions signs a “sweep transaction” when a recovery is initiated and it passes their internal sanity checks. More details to come on our process with Third Key Solutions in a future blog post!

3.b. For advanced users who wish to provide their own recovery key, it is still very simple to use. When you are setting up your device and you have selected the self-storage option for the third key, you will be prompted to scan an extended public key (xpub) via BIP-0032 that we will use to create multisignature addresses and redeem scripts. We never have access to your self-stored private key!

The disadvantage of storing your own recovery key is the responsibility that comes with it. If you lose your Case, we can provide you with a raw transaction for you to inspect and sign with the private key associated with the scanned public key. If you lose your self-stored private key and your Case at the same time, you no longer have 2 out of the 3 keys, and your funds are not recoverable!

Security is an enormous concern for us at Case, and we know it is for you too. This is why we have introduced an option for the extremely security-conscious to take a more active role in the security of their bitcoin. We hope this information gives you peace of mind, and look forward to hearing your feedback!

Our multisignature key model

Case launches pre-sale at TechCrunch Disrupt!

We’re so excited to have launched the pre-sale of Case at TechCrunch Disrupt. It was such an honor to take part in the event, and we’re thrilled to finally open up our pre-sale of 1,000 individually numbered wallets! Make sure you place your order promptly because a limited number of devices are available for the first shipment this Summer.

Engineering a truly secure and simple bitcoin wallet has been a long process, and we have been eager to finally reveal the first generation of Case. Back in late 2014 we manufactured our first small batch of devices, and have continued to run more small batches in the first few months of 2015. Just last week we were in New York demoing the device to Inside Bitcoins conference attendees, which was the very first time that we had unveiled Case to the community.

Case creates more opportunities to use bitcoin by employing GSM networks to relay transactions in over 100 countries, without having to rely on your phone or computer for an Internet connection. We’ve also equipped Case with biometric authentication, which adds an additional layer of security and allows you to establish ownership of your device. Ownership of a physical key increases the protection and security of your bitcoin. The key on the device is generated on first-time setup; we never ship devices with pre-generated private keys. Case Wallet_Product Location_Stephen S Reardon Photography_08190 copy

We’re also excited to announce that we’ve partnered with Third Key Solutions to offer you optional key storage services that safeguard your recovery key. In the unfortunate situation where your device is damaged or lost, Third Key Solutions will assist Case with migrating your funds to a new wallet. Third Key Solutions has the reputation and dedication to ensure a secure recovery process. If you’d prefer, we also offer you the option to import your own third private key.

We’ve worked very hard on Case and we know there is more work to do. We know that the Bitcoin community is very passionate and involved, and we welcome their feedback so that we can continue working hard to make the best Case possible.

Thank you so much for your continued support – we look forward to getting Case in your hands.

TechCrunch Disrupt NY 2015 is TechCrunch’s sixth annual conference in New York City. The format combines top thought-leader discussions with new product and company launches. Morning executive discussions debate technology-driven disruptions in many industries, while the afternoons are reserved for the Startup Battlefield, where some 30 new companies will launch for the first time onstage, selected to present from numerous applications received from around the world. The winning company will receive a $50,000 grand prize and the Disrupt Cup at the conclusion of the conference. The conference is May 4-6, 2015 at the Manhattan Center, 311 West 34th Street (at 8th Ave.) Manhattan.

Case launches pre-sale at TechCrunch Disrupt!

Bitcoin Increases Financial Inclusion

Case recognizes the importance of financial inclusion. Our device is available in 120 countries at launch, and that number is fundamental to the creation of new global consumers. 2.5 Billion adults are unbanked because they do not own enough assets to participate in a traditional banking system. These 2.5 billion people own goods that are valuable in local markets, but will not have the same value globally. Bitcoin is the vehicle that gives value to various goods on a global scale. A small landowner in Kenya cannot create a tangible claim to his property if he cannot create a document proving ownership that is universally accepted. The blockchain assigns value to assets that can be exchanged globally.

How bitcoin holds valueBitcoin Value

Bitcoin is a viable form of currency because it meets the defined characteristics of money. The characteristics of money are defined as scarcity, divisibility, portability, durability, fungibility, and recognizability:

  • Scarcity: There will only be 21 million bitcoin ever created
  • Divisibility: Bitcoin is divisible by 8 places (Unit Table)
  • Portability: Bitcoin has both digital and physical forms. You can carry a higher value of bitcoin than silver for example
  • Durability: Storage capabilities of wallets allow long term storage of bitcoin. Keys give the final authorization to exchange bitcoin held inside of a paired wallet. A key can be stored in a safety deposit box, on a cloud server, or on the wallet device itself for an extended period of time
  • Fungibility: A bitcoin is worth the same as another bitcoin. Users in the bitcoin economy accept each bitcoin by a majority consensus. There are no ‘safe’ or ‘bad’ bitcoins. All coins are valid and prices of an individual bitcoin are interchangeable
  • Recognizability: Block explorers display transactions that transmit to the blockchain. This trust-less network of validated funds maintain a record of the amount of bitcoin in each wallet. Each transaction is signed by both parties recognizing the amount of bitcoin being sent to the specified address

Scarcity creates a predictable rate of how many bitcoins will enter the market. If demand does not match the level of inflation, the price will fluctuate. Bitcoin’s overall market share is relatively small, which causes the price of bitcoin to shift when significant amounts of money are exchanged. Bitcoin’s price adjusts based on supply and demand, and the number of transactions (transaction volume) is a direct reflection of bitcoin adoption.

HacksilverIf bitcoin as a currency does not reach a high level of adoption, it will still hold value. Hacksilver was used by the Vikings as a means to exchange currency, and it still holds value today even though it is no longer in circulation. As long as there are people using bitcoin it will always hold value. The usefulness of bitcoin boils down to trusting the reliability of transactions recorded on the decentralized ledger. These validated transactions are referred to as blocks. It takes approximately ten minutes to solve, or validate, a block. Each validated block increases the validity of previous transactions.

It is difficult to translate how bitcoin works to those with lackluster technology experience. An analogy is a great way to parallel features of the blockchain in terms that are easier to understand. Andreas Antonopoulos gives a relevant analogy describing the scaling difficulty of validating blocks relating to Sudoku puzzles.

Adjusting Difficulty

Sudoku puzzles are easily provable by verifying that there are no repeating numbers between each row and column. A person can not solve a puzzle by inserting random numbers into each space. Imagine a room with 20 people solving the same Sudoku puzzle. The amount of rows and columns in this Sudoku have been formulated to be solved in approximately 10 minutes. An announcement was made that the first person to solve the puzzle will be awarded 25 bitcoin. As the timer begins people immediately start walking towards the front of the room to have their puzzle solution validated. After 9 minutes of continuous attempts, someone discovers the correct solution and receives the 25 bitcoin reward.

The next round begins, and someone solves the puzzle in 8 minutes. The puzzle is made more difficult because rounds are being solved in less than ten minutes. More rows and columns are added to increase the average time needed to solve the puzzle. After a few more rounds, a large crowd enters the room and now 200 people are attempting to solve the puzzle within 10 minutes. More rows and columns are added to the puzzle to adjust for the number of new players. The players continue to randomly guess and check their answers until the correct answer is discovered. That random element is similar to the bitcoin protocol as cryptographic nonces assign difficult mathematical problems to each transaction for verification. Miners are consistently attempting to validate these transactions.

Advantages of bitcoin over other non-traditional currencies

The benefit of bitcoin varies from person to person. Bitcoin will not be the most convenient payment solution for many individuals with already established banking systems. People without access to banking services in the developing world value a currency that is backed by an algorithm and not a central authority. Bitcoin gives unbanked users the ability toM-Pesa assign a global value to their goods. The need to participate in a global economy is forcing unbanked individuals to use unsafe alternative currencies. The lack of a traditional banking system in Kenya created a market using M-Pesa mobile minutes. M-Pesa allows mobile users to exchange money into M-Pesa units and exchange M-Pesa between customers. The increase in exchanging mobile minutes as a form of payment showcases the need for reliable financial services. The financial inclusion that Bitcoin offers is important to the developing world.

Bitcoin use creates a challenging learning curve for new users that want to use the technology properly. The challenge of making bitcoin easy to use and secure revolves around wallet security. Case is leading by example by engineering a secure device that is easy-to-use, especially for users that are not technically savvy. Properly storing your private key is not a compromise that any bitcoin user should make when selecting a bitcoin wallet. We are creating a product that is easy enough for novices to use without compromise important security features.

Follow us to learn more about how Case is creating a secure bitcoin wallet without compromising your security.

Bitcoin Increases Financial Inclusion

Reaching a Higher Security Standard

CCSS Our continued mission at Case is to provide an easy-to-use bitcoin wallet, without compromising security. Throughout the design and development process our engineers have been striving to reach a higher security standard with each milestone. We wanted to share how we measure our own security, why setting a community-wide standard is important, and why those standards are useful to both the end-user and developer.

Security standards are important from a user perspective because it is these standards that allow the user to compare similar services on a common metric, so that they can make an informed decision. As a more mainstream audience starts using bitcoin these standards become especially more important, as it can’t and shouldn’t be assumed that every person with a bitcoin wallet understands what a NIST SP 800-90A compliant DRBG is, or what data sanitization is – and why all of those things are so very important, and affect the security of their bitcoin. Security standards make all of this easier to digest.

Security standards are also important for every single developer building bitcoin products and services. We are protecting people’s money, their identity, their privacy, and a whole heck of a lot we can’t even imagine yet. This obligation and responsibility is HUGE and shouldn’t be something we experiment with. We’re all pretty lucky to be working on something so important, but that comes with incredible risk and security standards help to mitigate that risk. At Case we use the CryptoCurrency Security Standard (CCSS) as guidance for design and development, so that we are constantly reminded of what is necessary to reach the highest level of security. Using these standards as a benchmark helps us build a better, safer product that provides both us and our users with the confidence that we’ve built something truly secure.

The CryptoCurrency Security Standard (CCSS) was created in collaboration with the Crypto Currency Certification Consortium (C4) in the Fall of 2014. These standards are defined by a group of prominent figures in the Bitcoin community. Contributions to the CCSS were conducted voluntarily with the goal to create a security standard for all Bitcoin companies to achieve. There are also multiple certifications offered by C4 to demonstrate various levels of knowledge for aspiring Bitcoin Professionals.

CCSS The CCSS includes a checklist to measure 10 aspects of security with respect to how a company handles bitcoin from a technological and procedural perspective. This full CCSS Security Matrix is a permanent fixture on the desk of our engineers, and gives us all something to work toward. Each level requires satisfactory achievement of all previous metrics.

A greater level of explanation for each defined characteristic can be found on the Github “_data” directory. C4 is in the process of ratifying the CCSS and is working to offer official certification in September of 2015. Meanwhile, here at Case we continue to find the CCSS matrix useful and look forward to more industry-wide security standards being put in place!

Continue to read about our design process and subscribe for updates.

If you have any questions, please drop us a line at contact@cryptolabs.com

Reaching a Higher Security Standard

Ease-of-use

IMG_0370
Our CEO holding Case during our launch video shoot

Since the first day we started developing Case, our goal has been to develop a device that is both secure and easy to use. Often, products are designed in such a way that sacrifices one for the sake of the other, but this is a false dilemma. There are hardware wallets that provide secure storage, but you need to transfer your funds to an insecure hot wallet in order to spend them at your local bitcoin-accepting coffee shop. On the other hand, there are web wallets that are simple to use, but as we’ve seen time and time again, they’re not secure, and when you’re dealing with people’s money, that’s just unacceptable.

We developed Case to be just as convenient as a credit card, and most importantly, more secure than a credit card. When you’re making a comparison in security to a piece of plastic with your “private key” printed on it, the latter is a pretty low bar to set. We’ve started to explain the security measures we’ve implemented with Case, and there will be more to come about that in the near future. However, matching the convenience of a credit card is a pretty high bar to set. With an American credit card, all you have to do is take out your wallet, get your card, swipe your card, sign your name, and put it away. In other countries, they’re using even more convenient methods. How can we match that? First of all, Case needed to be small enough to carry in your pocket. Case is just barely thicker than a credit card (due to the thickness of the camera), and is the length and width of a standard-size credit card. To send bitcoins with our device, all you have to do is press the Ƀ button once and scan a QR code. If you’re paying a merchant, chances are, the amount is already embedded in the QR code, and all you have to do is swipe your finger. If you’re sending money to your friend’s address, the only extra step you have to perform is entering an amount to send before swiping. Until NFC-enabled terminals start accepting bitcoin, it doesn’t get simpler than this. We’ve timed Case’s QR detection and compared it against our smartphones (iPhones and S5’s, for the most part), and Case is noticeably faster.

With Case, we want to make bitcoin as easy to use and secure as Google Wallet, Apple Pay, or PayPal. Those services allow you to send money to friends and merchants easily, but there’s just one problem: they’re closed systems. If you have PayPal and your friend has Google Wallet, you can’t send money to them unless they create an account. If your friend has a Coinbase account and you have a Case, you can send money to them no problem, which they can then sell for their local currency or use bitcoin directly, even if they’re in another country. We expect other services to continue entering the Bitcoin space, and you’ll be able to interact with them without any issue because Bitcoin is an open protocol. Large corporations have been trying to solve the payments problem for the past decade with closed systems, but the problem is that all of these systems are too segmented to gain traction. Bitcoin is a potential solution to this problem, but everyday consumers need a secure solution that they can use every day without having to think about it. We’ve designed Case to be the first such solution. Stay tuned for some big updates!

If you have any questions, please drop us a line at contact@cryptolabs.co.

Ease-of-use

The importance of multi-signature HD wallets

We at CryptoLabs have been working hard for the past couple months, and we’re very excited to share a bit of our architecture with you. Because we designed our system from the ground up, we took advantage of new developments in the Bitcoin space, including both multi-signature wallets and hierarchical deterministic wallets.

As we discussed in an earlier post, we have three private keys for each user; one is embedded into the Case and never leaves the device, one sits on our server, encrypted with a device-specific key, and one sits in an offline vault. Two of these three keys are needed to sign a transaction, so even if an attacker breaks into our offline vault, or if they hack into our servers, they still would not be able to steal any user funds. We have taken special care to ensure that no employee of CryptoLabs has access to the encrypted database as well as the offline vault, which protects against inside attacks as well. Without multi-signature capabilities, your funds can either be stolen with a single data breach or be made unrecoverable if you lose your device. With our multi-signature architecture we can recover your funds if you lose your Case, as well as protect you from the theft of any of the three keys.

This multi-signature wallet concept is even nicer when married with a hierarchical deterministic (HD) wallet. In a classical non-HD system, new private keys and addresses are generated randomly to prevent transaction histories from being linked together on the blockchain. This makes it very difficult to coordinate signatures in a multi-signature system, as well as making fund recovery next to impossible (unless private keys are shared in multiple locations, which is a no-no!). These problems are solved by introducing HD wallets! With an HD wallet you can make a private key, called a “master node”. Using this master node, you can generate billions of new private keys that cannot be linked to the master node or each other! These private keys can be used to send and receive bitcoin just like regular randomly-generated private keys. The benefit of HD wallets is that even if you lose all of the child private keys, they can be recovered easily if you have the master node. While these private keys are never stored or sent over the network, an HD node enables us to store only the minimum of user data that we need to.

We use an HD node for the server key, while the other two (device key and offline key) are static non-HD. This gives us the benefits of multi-signature-HD wallets, such as unique change and receive addresses while keeping keeping the device and offline keys as simple as possible. This is particularly helpful on the device side, where using a single static key is faster and less intensive to sign and verify with. The server’s HD node is what provides uniqueness when generating new receive and change addresses. This helps keep your transaction history private by preventing address reuse, as well as saving us from encrypting hundreds or thousands of private keys for each user. It’s a win/win! Using an HD wallet also means that the device can be given a public key for the “change address” node and can verify that a transaction is sending exactly what it should (and where it should!), including to the correct change address. The device will only sign transactions being sent to the recipient address from a scanned QR code, or a change address that can be verified to be user-controlled. In other words, the device doesn’t trust our servers.

HD and multi-signature wallets are perfectly suited to hardware wallets where you don’t want to or can’t transfer sensitive information over an untrusted network. We have designed our system knowing that part of it will live on an embedded device. The fact that one private key is embedded into the hardware, and never leaves the device is an enormous security boost. Our use of HD wallets means we never need to transmit public or private keys over a network, and still allow your Case to verify a transaction is trustworthy before signing it. Combining the two together gives unprecedented security benefits.

If you have any questions, please drop us a line at contact@cryptolabs.co.

The importance of multi-signature HD wallets

CryptoLabs CEO speaks at Bitcoin Center NYC

Melanie Shapiro, CEO of CryptoLabs, had the opportunity to speak at the Bitcoin Center in New York. We were thrilled to be part of a great event and happy to support such a passionate group of people! Benjamin Rowland, Director of Operations at the Bitcoin Center, led the not-so-fireside chat with some great questions. We’ve got video of the event, so check it out!

You can always reach us at contact@cryptolabs.co

CryptoLabs CEO speaks at Bitcoin Center NYC