The Bitcore team has been developing Cosign: A Multisignature Wallet. This technology would provide additional layers of security to protect Bitcoins. This wallet would allow for a multi-signature wallet to validate all transactions before they are sent, thus significantly reducing theft that occurs within businesses that deal with digital currencies. Let’s say we have a 5 signature wallet, one person can spend the Bitcoins like normal; however, the transaction will appear as partially signed and not be broadcast to the Bitcoin network unless it is signed by 3 of the co-signers of the wallet.
Let’s look at this in terms of running an exchange. We will name the exchange, Exchange ‘X’ just to be generic. Exchange ‘X’ had a system compromise, and now they fear they have lost their private key to they address holding the exchange’s funds. With the new Cosign multisignature wallet, the thief would be unable to extract the funds because the other co-signers would not sign the transaction,, and it would not be broadcast to the bitcoin network. In order for the bitcoins to be stolen, the thief would not only have to take your private key, but the private keys of two more cosigners. The security of this wallet is like nothing we have seen before. Once it is completed it will be an absolute necessity for all exchanges, and hopefully get rid of all of the theft problems that have been occurring recently. The cosign multisignature wallet will make it easy to run an exchange responsibly.
The first user creates a new wallet on Cosign and shares the ID of the wallet with the four other cosigners. When the other cosigners join it creates an extended private key, which has a new extended public key. The extended public key can be shared to receive payments, and extended private key is kept in secret. This system effectively gives all of the cosigners equal control of the wallet and prevents a thief, or one of the members of the wallet from running off with any of the funds.
HD wallets solve the problem of low privacy by allowing one master extended private key to generate as many public/private keys as you need. Extended public keys come from the master extended public key. Once one extended public key is generated for the cosigners of the wallet, all members of that wallet will have access to the same addresses generated and every future address that is derived from the original public key.The wallet will use Web RTC; that will further strengthen the security of the wallet by minimizing the need of the wallet to connect to a central server. The wallet will be able to connect P2P rather than going through a server for the entire transaction, the server is just needed to initiate a connection.
The Cosign Multisignature Wallet will bring a new era of security to Bitcoin, and exchanges that deal with Bitcoin. I believe that many issues regarding security of exchanges will be fixed when this new wallet is released. The security features of this wallet are substantially better than anything else we have available today.
Last modified (UTC): March 26, 2014 18:18