Protect your bitcoin now even better with Shamir Backups for your wallet

Protect your bitcoin now even better with Shamir Backups for your wallet

Not your keys, not your coins. With this Andreas Antonopoulos refers to one of the most beautiful properties of bitcoin. If you are not in charge of the private keys of your bitcoin, then you are actually not the owner of your coins.

To make it easier, that private key is supported by one recovery seed and consists of 12 or 24 words. Satoshi Labs from Prague (and known from the hardware wallet Trezor) believes that one recovery seed brings too much risk, and they now have a solution for that: more recovery seeds!

Why is this a risk?

If you create a new wallet to manage your cryptocurrency, you get a list of 24 words. You can compare these words with a proof of ownership: if you have these words, you are in charge of the corresponding private key. The private key is a kind of digital key to prove that certain coins are yours.

You can choose to use a different wallet, in which case you enter your original recovery seed and you see that you are still in charge of your coins. You may already feel it coming, but one such string of words entails many risks. A thief only needs to have these 24 words to become the boss of your coins. There are also situations that there is a fire or water damage at home, then the paper on which you have written these words is also in danger. Or … and that happens to most, you simply lose your recovery seed.

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A solution is to make multiple copies of your list of words, but that again increases the chance that one of these copies will end up in someone else’s hands.

If you consider the security of your cryptos, it is good to take into account loss, theft and damage. But there are more things to take into account. Who has access to your bitcoin if something happens to you? And can crooks force you to give up your recovery seed?

The solution: more recovery seeds

After a good year of development, Satoshi Labs has come up with a solution. This is first introduced on their hardware wallet Trezor Model T. Satoshi Labs calls the solution Shamir Backup, named after Adi Shamir, the inventor of a cryptographic algorithm called Shamir’s Secret Sharing.

If you create a new wallet with Shamir Backup, Trezor Model T generates a number of word lists set by the user, each list consisting of a series of 20 words. You can then decide for yourself how many of these word lists are needed to gain access to the bitcoin on the wallet. Satoshi Labs comes with the example below.

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Not all word lists required

Create six word lists and set that you need four of the six lists to restore your wallet. It is then entirely up to you to decide where you keep these lists. Of course in all separate places, otherwise it will not help you. You can hide them, share them with people you trust, or combine the best of both.

The risk of something happening at all these six separate locations is considerably smaller than at one location.

Two more advantages: you do not have to enter those four word lists at the same time, you can disconnect the device and continue to restore later. It also doesn’t matter which four of the six word lists you use, this can just be a random combination.

This new security method is currently only available on the Trezor Model T. Do you already have a Trezor hardware wallet and do you want to use Shamir Backup? Then read this manual. If you have just purchased a new Trezor, read this manual.

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