New Project Seeks to Combine Security and Simplicity in a Bitcoin Wallet

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NEW YORK (InsideBitcoins) — When it comes to Bitcoin wallets, it seems that developers always have to make a choice between security and convenience. In the case of one new project from the minds of Chris Pacia and Alon Muroch, the Bitcoin community might be able to enjoy the best of both worlds.

This new wallet offering, temporarily-named the Bitcoin Authenticator wallet, is able to pull together many well-known wallet features into a new package that could be the best option on the market when it’s released to the general public. With Tor integration, multi-sig addresses, OneName usernames, and more, there’s good reason why this wallet is already getting a large amount of hype in the Bitcoin community.

Two-factor authentication with multi-sig addresses

The main feature of this wallet is that it allows users to create Bitcoin addresses that require signatures from both their computer and smartphone when sending a payment. Other wallets, such as Armory and GreenAddress, have multi-sig implementations of their own, but this will be the first wallet to use the Bitcoin feature as a sort of two-factor authentication.

In simple terms, this will require physical access to both the personal computer and smartphone to send a payment. Any hackers trying to steal a user’s bitcoins over the Internet now will have another obstacle in their path. It’s also important to note that the two-factor authentication process is carried out on the blockchain, which means it is completely decentralized.

More private and secure than Dark Wallet?

With all of the privacy features that come with this Bitcoin wallet, it has already drawn comparisons to Dark Wallet. When I asked the open source developer about the security features included in both wallets, developer Chris Pacia pointed out that his creation has a few differences with the Chrome extension in development by Unsystem.

Although the decentralized two-factor authentication feature seems like a huge advantage, Pacia was quick to point out that the code is open source and other wallets could implement it with “a little hacking around.” Instead of focusing on this part of his wallet’s possible security advantages, Pacia decided to instead talk about CoinJoin.

The Bitcoin developer seemed concerned with Dark Wallet’s current CoinJoin implementation where other parties may be able to snoop on one’s bitcoin mixing. When speaking about Dark Wallet’s two-party mixing solution via an email to InsideBitcoins, Pacia claimed, “The other party in your mix knows where your coins were sent. It would be rather easy for malicious actors to keep logs [of the mixed transactions]. The general idea is, if you make enough transactions, it’s unlikely everyone will be logged and eventually your coins will be mixed well enough.”

The Bitcoin Authenticator wallet will use a new protocol for mixing called CoinShuffle. The new option for mixing bitcoins comes from researchers in Germany and was recently shared on the Bitcoin development mailing list. Pacia described CoinShuffle as having a “fairly novel layered encryption scheme for preventing linkage between inputs and outputs.”

In addition to the security enhancements mentioned above, this new wallet also has its own internal Tor client to keep even the most novice users of anonymity software secure.

Simplifying Bitcoin addresses

If all those privacy features weren’t enough for you, then users may appreciate the integration that allows users to send bitcoins to a name rather than a Bitcoin address. Lengthy, confusing Bitcoin addresses have long needed a replacement, and such an improvement could help prevent new users from being scared off by long strings of random numbers and letters.

You can see all of the Bitcoin Authenticator wallet’s features in action in the video below:

Written by Kyle Torpey
You can follow @kyletorpey on Twitter.

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