The Next-Gen Security for Cryptocurrency
Space-based Multisignature Wallets
An article by Business Insider highlighted one of the most prominent questions troubling crypto investors nowadays — How secure is cryptocurrency and blockchain technology? With emerging, multifold use cases of blockchain and extensive adoption of crypto payments by major corporations like Microsoft, Starbucks, PayPal, Etsy, etc., the question becomes all the more relevant.
Blockchain, which is the underlying technology for crypto, despite its inherent security attributes, is not immune to cyber threats. Cases of fraud and cyberattacks concerning blockchain have surfaced sporadically over the years.
For instance, in 2016 Bitcoin worth $72 million was stolen from the Bitfinex exchange in Hong Kong. The New York Times (in 2016) documented another malicious episode where hacking of more than $50 million created a stir in the world of virtual currency. Stolen private keys (personal digital signatures) and code exploitation were suspected to be the likely rationales for these incidents, stressing upon some major vulnerabilities of crypto transactions i.e. thefts and hacks.
With these threats still looming over blockchain, SpaceChain’s flagship application i.e. the space-based multisignature wallet technology will be a crucial counter mechanism. In 2019, SpaceChain received a grant from the European Space Agency (ESA) to develop its space-based multisignature wallet. Subsequently, SpaceChain was able to execute the first multisig wallet transaction in space, adding a layer of military standard satellite communication to the transactions processed on the blockchain.
Why do we need space-based multisig authentication?
Typically, when cryptocurrencies are stored in a single private key address, it implies that one person will be able to access the funds without authorization from anybody else. In case that person loses the private key, the funds stored on that address are lost forever. This is why a multisignature technique is required.
SpaceChain’s technology manager, Ziheng Xiang, mentions that most of the current and secure blockchain transaction schemes use multisig wallets. Instead of having one key affiliated to the wallet address, it has multiple keys. Consequently, users have to find ways to store these keys. The simplest way could be just noting it down manually, but this would only increase the odds of losing the key which has happened numerous times.
Another way of storage is the USB, which could be plugged into the computer or a physical device that generates a One-Time Password. However, “Physical connections to a device are always risky since the I/O security cannot be 100% guaranteed. This applies to existing hardware wallets as well. When physically accessed by a third party, hacking of such devices can be initiated”, says Ziheng. He further adds, “While these methods are acceptable, the devices are still accessible. What SpaceChain brings here is a hardware wallet, which is located in space with a much higher barrier of accessibility.”
By using SpaceChain’s multisig technology that incorporates the remoteness of outer space, users can prevent issues caused by the loss or theft of a private key. Even if one of the keys is compromised, the funds are still safe as SpaceChain allows users to store one of their keys in space, thus putting part of their transaction validation in orbit.
Another threat to digital asset transactions is hacking. Ziheng mentions that SpaceChain’s multisignature technology integrates a satellite communication layer. Satellite communication is perceived to be ultra-secure. It cannot be easily hacked by a third party because satellite communications are essentially radio or laser communications. To penetrate those security layers, you need to first build a receiver and then decrypt the message.
“What SpaceChain provides is a hardware wallet with space-grade security, as well as a highly-encrypted satellite link. Both these features add extra security to blockchain transactions ”, says Ziheng.
How does space-based multisignature technology work?
In general, the multisig security feature is configured to give several users access to a single wallet and requires a certain number of those users to validate or approve transactions. The transaction is processed only when all the parties are in agreement. But SpaceChain takes this feature to a whole new level by adding an element of outer space to it. This means that one of the parties needed to approve the transaction is a space node. SpaceChain has pioneered new levels of cybersecurity with the world’s first space-based multi-signature authentication service.
The following diagram illustrates the workflow of SpaceChain’s multisignature transaction for Bitcoin and the International Space Station.
When a user, in this case, “Bob” initiates a Bitcoin transaction on his laptop, the transaction is encrypted and sent to a secure ground station that passes it on to the space node installed in the International Space Station (ISS). A space node is a node being operated in space. It employs hardware specially designed for aerospace. Meanwhile, the communication between space and ground is via the wavelength and coding format for aerospace.
Space node secure payment employs a 2-out-of-3 multisignature scheme. Users have a signed private key and a backup private key. The space node owns a satellite private key. In this secure payment service, the third private key is generated after the space node is launched in orbit. After the generation of the satellite private key, the space node then sends the public key that corresponds to the private key back to the server on the ground. These three keys generate a common multisignature wallet. When a user uses the multisignature wallet to transfer cryptocurrency, an unsigned transaction is generated first.
Subsequently, the transaction is signed by the user and satellite respectively. Once both signatures are obtained, the transaction is broadcasted to the blockchain network and is regarded as a complete transaction.
SpaceChain can incorporate as many signatures as required for your business.
How SpaceChain’s technology will impact blockchain?
SpaceChain has come a long way in terms of the practical implementation of the world’s first space-based multisig technology. The company created history in the year 2020 when 0.01 BTC was sent to two bitcoin addresses in space utilizing the ground facility of the International Space Station (ISS).
“The success of the first multi-signature blockchain transaction in space demonstrates the onboard computer’s capabilities in supporting decentralized constellations in space with unparalleled data processing performance,” said Niels Buus, CEO of GomSpace, the primary supplier of SpaceChain’s blockchain hardware wallet. He added, “This milestone has built momentum for the use of space systems and services in the commercial market.”
In 2021, SpaceChain hit another major milestone by empowering customers with highly secure on-orbit ethereum multisignature transaction services on the ISS.
The integration of space and multisig will propel mass adoption of crypto payments by reinforcing security within these transactions. SpaceChain’s multisig technology enables ultra-secure transactions for financial services that include digital currency exchanges, wallet providers, and enterprise custody solutions.
“As we continue to identify more use cases for blockchain-based satellite networks in space, we hope to bring blockchain to mass adoption,” says SpaceChain co-founder and CTO, Jeff Garzik.
