REST ASSURED WITH FINNEY™’S ADVANCED WALLET SECURITY
When individuals within the crypto community hear about the new trend of blockchain-enabled smartphones which include a cryptocurrency wallet, many fear for the security of their stored currencies. These fears are far from unfounded due to the number of software wallets and exchanges that have been hacked over the last 18 months alone.
There are several different precautions that all crypto users should take to ensure the security of their wallet’s private key, and all of the crypto that the wallet contains. A few examples include: storing wallet information offline, exclusively using cold-storage wallets, and only using secure devices in order to access the cold storage wallet. While these factors can be incredibly effective at preventing nearly all cyber-attacks, there remains the frightful and elusive $5 Wrench Attack.
The $5 Wrench Attack is a heinous crime (beating the crypto holder with a $5 wrench) by which someone attempts to circumvent all of the digital protections placed on a wallet by threatening the owner with harm or death if they do not transfer the content of their wallet. While this is also a legitimate fear, FINNEY™ users will be able to use an advanced security precaution to protect their currency, even in the case of such an attack.
The FINNEY™ wallet is a Hierarchical Deterministic wallet, also known as an HD Wallet. These wallets have the ability to create multiple public keys for the same private key. Each additional public key is, in practice, a unique and functional sub-wallet with a unique public key and an additional passphrase.
The ability to create multiple sub-wallets from a single seed is similar to keeping funds in separate checking and savings accounts. These additional sub-wallets provide FINNEY™ users with the ability to store small amounts of crypto in the main wallet for regular or daily use, and larger amounts of crypto in a sub-wallet.
This passphrase is called The 25th Word, since it is supplemental to (and just as important as) the 24-word phrase used to recover the seed in the event that the owner loses access to their wallet account. This passphrase serves a number of different functions.
First and foremost, it’s important to recognize that neither the phone nor the blockchain has any identifying information which indicates that any sub-wallets exist. This is called Zero Knowledge, where none of the devices or networks retain any information about sub-wallets.
Secondly, the added passphrase acts as an additional safeguard to protect stored crypto. In the event that wallet security is compromised, not only would the malicious actor need to know that a sub-wallet exists, they would also need to crack the additional passphrase for the sub-wallet as well as the main wallet.
Lastly, this is a method for users to be able to protect themselves from the $5 Wrench Attack. For example, if a FINNEY™ user were to set up their wallets in this way, in the rare occurrence that they were attacked and the attacker demanded their crypto, the majority of their crypto would be protected.
Upon entering the wallet’s password, the balance shown would be the balance of the main wallet only. The balance of the sub-wallet would remain hidden, with no knowledge that the additional currency is stored at all.
This wallet functionality, although somewhat advanced, is still a relatively simple process to go through. It doesn’t require a whole lot of in-depth knowledge regarding blockchain or coding and is one more way that SIRIN LABS is able to provide security, safety, and peace-of-mind to all of our FINNEY™ users. Most importantly, it’s a significant step towards the advancement of blockchain technology and cryptocurrency towards the mainstream.