How the First Bitcoin Hedge Fund Approaches Security 124
An anonymous reader writes with a link to a story at Forbes about what's said to the first Bitcoin hedge fund; the article goes into some of the details of how the (literally) valuable data is kept. A selection: "The private key itself is AES-256 encrypted. After exporting Bitcoin private keys from wallet.dat file, data is stored in a TrueCrypt container on three separate flash drives. Using Shamir's Secret Sharing algorithm, the container password is then split into three parts utilizing a 2-of-3 secret sharing model. Incorporating physical security with electronic security, each flash drive from various manufacturers is duplicated several times and, together with a CD-ROM, those items are vaulted in a bank safety deposit box in three different legal jurisdictions. To leverage geographic distribution as well, each bank stores only part of a key, so if a single deposit box is compromised, no funds are lost."
Really? (Score:2, Insightful)
So hundreds of thousand of dollars of peoples money (most of it virtual none the less) relying on some $50 flash drives.....No thanks. Ill pass.
Armory (Score:5, Insightful)
Armory [bitcoinarmory.com] as a Bitcoin client would have been a better choice for this, since they could have used the same 2-of-3 method for storing the private keys, but then they'd have the ability to use watching-only copies of the wallet for accounting and auditing purposes.
Re:For the love of god, shut up about buttcoins! (Score:2, Insightful)
Scanning down through the day I can't find another story more fitting of the site's slogan "News for nerds, stuff that matters." As a nerd, news that a crypto-anarchists P2P currency has reached the stage of hedge funds only 4 years after being launched and details of how the fund manager intends to secure the keys for customers is simply fascinating.
PT Barnum (Score:1, Insightful)
"Bitcoin" and "Hedge Fund."
Two words that each should send a potential small-scale investor scurrying off in fear.
There's a sucker born every minute.
Re:Really? (Score:5, Insightful)
So hundreds of thousand of dollars of peoples money (most of it virtual none the less) relying on some $50 flash drives.....No thanks. Ill pass.
You think the bank's computer systems are safer?
Re:This makes no sense... (Score:4, Insightful)
That's pretty much what all hedge funds do, isn't it? Pick some asset they think will grow in value, buy it up (often using leverage), and then wait to see if their bet works out. Often they wait long periods of time. The fund is being targeted at people with lots of money and enormous appetite for risk - for these people, there aren't enough direct investment targets (like startups) so the easiest way to invest in the future success or failure of Bitcoin is indeed, buy and hold.