User Centric Security in Web3
Goal for today:
- Understand the different types of wallets - and the risks associated with them
- Get the basic foundation to be able to outline a strategy to protect your private keys
- Be familiar with the best practices to protect your computer and digital tools
Security is a process, not a product.
Bruce Scheiner (Click here to kill everybody, 2019)
Threats or what we need to be worried about
- Vulnerabilities on laptops/phones
- Network vulnerabilities
- Poor Operational Security
Vulnerably on Laptop - What not to do
Vulnerability on Network - What not to do
Poor Operational Security - What not to do
Risk
... What is risk?
Let's visit the C I A triad
Confidentiality - keep information private.Availability - have information accessible when you need it.Integrity - keep information as you have note it down when you stored it.
Risks: what can go wrong
- Keys compromised - Loss of confidentiality
- Keys lost - Loss of availability/integrity
Keys compromised - Bad risk management
Keys lost - Bad risk management
What are the private-public keys ?
(in Web3 context)
And the seeds?
The seed is a list of random words that is generated when you create a new “wallet” (a pair of cryptographic keys).
With the seed, you can generate a private and public key. This could mean a seed phrase is the mnemonic human readable version of a private key.
It is easier to note down this
"caution juice atom organ advance problem want pledge someone senior holiday very
than the following private key.
0x056a6a4e203766ffbea3146967ef25e9daf677b14dc6f6ed8919b1983c9bebbc
Key management
A key is protected by
- Strong math, overall length, ...
- Handling of the key (key management) by humans or machines
Key management risks - again
- Loss of confidentiality - your key is leaked or compromised.
i.e: someone else has access to the wallet. - Loss of availability - you cannot access your key anymore.
i.e: you don't know where you noted. - Loss of integrity - your key is wrong.
i.e: you noted the key incorrectly.
Keys overly simplified
Cryptocurrency user definitions
The public key is used to receive tokens (public)
The private key is used to sign transactions (private)
The seed is used to calculate the private key (private)
Multisig accounts
- One or more keys and a threshold
- The threshold defines how many signatories
must sign for a sig check t be valid.
What is a wallet
A wallet holds a pair of cryptographic keys (public and private).
Wallets
Hot n Cold
Hot wallets
- Heavy clients - full nodes (deprecated use as wallet)
- Light clients
Internet connection = bigger risk
The listening post (2005) - Exhibited in the British Museum
Cold wallets
- Full node offline (old school)
- Paper wallet (beware fo the change address!)
- (Hybrid?) Hardware wallet
- Offline seed backup
- EXTRA BALL: Polkadot Vault
Polkadot Vault
Polkadot Vault is a software app that transforms an Android or iOS device in an air-gapped hardware wallet.
Sharding (or divide and not be conquered)
Sharding is a technique to divide your secret in different parts, so an adversary could not have access to the full secret in case one of the pieces is compromised.
Sharding challenges:
- Recovery
- Fault tolerance - storage/persons
- Still secret?
Secret Sharing Technique
Is a method to distribute a secret in different parts/persons, in a way that no part holds any intelligible information about the secret. But the secret can be reconstructed with a minimum number of shares.
And remember: These secrets are managed by humans - that are driven by motivations. And motivations change.
Requisites for successful secret sharing
- Information should stay secure
- Flexible (n of m pieces required)
- Recoverable
How we can achieve this?
Using strong Math
Shamir Secret Sharing - Banana Split
Shamir Secret Sharing is an efficient Secret Sharing algorithm for distributing private information.
The secret is mathematically divided into parts (the "shares") from which the secret can be reassembled only when a sufficient number of shares are combined.
There are different implementation of it: we will take a look to Banana Split
Banana Split - bs.parity.io
- Offline HTML file used to generate and recover secrets
- To be used in air-gapped computers and local printers
- Uses QR codes to store information and cameras to retrieve
- It is flexible allowing n:m type of shared secret creation
Key protection Operational Security Logics
- Security is contextual
- Define your risk appetite
- Backups not only of information also for processes.
Do not rely on single point of failure. - Don't put all your eggs in the same basket
Some mental exercises (1)
What is the operational model to a wallet that is transferring funds to third parties every day?
Some mental exercises (2)
How to protect a personal wallet with 10 million tokens?
Some mental exercises (3)
How to protect an corporate wallet with 100 million tokens?
Some mental exercises (4)
sHow to ensure
CIAof a wallet, in a future when we would not be around?
Last but not least - Basic laptop/phone hygiene
- Software up-to-date
- Use of different profiles or even different computers
- Avoid malicious environments (links containing malware)
- Double-triple check the software we download for the internet
- Second factor of authentication where possible - physical key preferred
Never Assume - Practice a legitimate distrust.
Many actors or institutions have different objectives of the one you have.
Software have bugs and errors. They are made by people like you and me,
which needs to eat and go to sleep.No technology is agnostic. This includes they technology we communicate with,
we work with or the one we use to keep us entertained.Sometimes we are our worst adversary.
Be diligent. 🖖