Master Key Splitting for Bitcoin Payment Security
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Solution Overview
Problem
Existing Bitcoin systems lack effective security measures to protect private keys from theft while allowing users to make payments, particularly during checkout processes on merchant pages.
Innovation Solution
A key ceremony application creates a for-distribution master key, splits it into shares, distributes these shares among custodians, and clears the master key from memory, while an API key generator manages API keys, and a payment module securely generates and signs transactions using encrypted private keys.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of operation
If private keys are stored in wallets for Bitcoin transactions, then users can make payments, but the private keys may be stolen from wallets
Solution Approach 1:
The master key is divided into multiple shares using secret sharing methodology. Each share is distributed to different custodians, so that no single custodian possesses the complete private key. This segmentation ensures that even if one custodian is compromised, the entire private key cannot be reconstructed, thereby reducing the risk of key theft while maintaining the ability to execute transactions when sufficient custodians collaborate.
Solution Approach 2:
Multiple custodians act as intermediaries between the user and the private key. The custodians hold shares of the master key and must collaborate to reconstruct it for transaction signing. This intermediary layer adds security by distributing trust and requiring multiple parties to authorize access to the private key, preventing single-point compromise.
2Ease of manufacture
If the for-distribution master key is kept in memory for key splitting, then key management can be performed, but security is compromised if the key remains in memory
Solution Approach 1:
The master key is generated and stored in memory only temporarily during the key ceremony process. Before the system enters normal operation, the master key is split into shares and distributed to custodians. After distribution, the master key is cleared from memory. This preliminary action ensures that the master key exists in memory only when absolutely necessary for key generation, minimizing the window of vulnerability.
Solution Approach 2:
The master key is discarded from memory after it has served its purpose of generating distributed shares. The system recovers functionality by using the distributed shares stored securely in different locations, rather than retaining the master key in a single location. This approach eliminates the security risk of storing the master key long-term while maintaining the ability to reconstruct it when needed through the secret sharing mechanism.
3Adaptability or versatility
If API keys are generated on-demand for service requests, then service accessibility is improved, but key security management becomes more complex
Solution Approach 1:
The API key generator enables on-demand key creation automatically in response to service requests. Rather than requiring manual key management or pre-configured keys, the system self-generates API keys as needed, reducing the burden on users and simplifying access while maintaining security through automated key lifecycle management.
Data Source
AI summary
A key ceremony application creates bundles for custodians encrypted with their passphrases. Each bundle includes master key share. The master key shares are combined to store an operational master key. The operational master key is used for private key encryption during a checkout process. The operational private key is used for private key decryption for transaction signing in a payment process. The bundles further include TLS keys for authenticated requests to create an API key for a web application to communicate with a service and to unfreeze the system after it has been frozen by an administrator.