Multi-Signature for Wallet Security

This guide is designed to help you review and understand material related to wallet security, multi-signature transactions, and context-based authentication. This guide contains the following sections:

Quiz

What are the benefits of a distributed wallet?

How does EPID (Enhanced Privacy Identification) play a role in wallet transactions?

Explain what the "M of N" policy means in wallet transaction authorization.

Describe the use of revocation lists in securing wallets.

Briefly describe the process of synchronizing balances in distributed wallet shares.

How do fractional transactions enhance wallet security?

How does context-based authentication contribute to wallet security?

Explain how Physical Unclonable Functions (PUFs) enhance wallet security.

What are some applications of RFID technology in wallet security?

Describe methods of using time limits to enhance wallet transaction security.

Answer Key

Distributed wallets improve security by storing wallet keys on multiple devices instead of in one location. Even if one device is compromised, the attacker cannot access the entire wallet. This approach also helps in recovery in the event of a lost or stolen device.

EPID is an anonymous authentication technique that allows wallets to conduct transactions without revealing their identity. It allows transactions to be signed while protecting the user's privacy and enables transactions to be verified on the blockchain without revealing the user's identity.

The "M of N" strategy requires M of N wallet shares to approve a transaction before it can be executed. This approach enhances security by requiring multiple devices to authorize a transaction, making it more difficult for a single compromised device to approve an unauthorized transaction.

The revocation list contains signatures of wallet shares that have been identified as compromised. Miners use this list to verify the validity of wallet shares before processing transactions, preventing fraudulent transactions using revoked keys.

When a wallet share approves a transaction, it sends a wakeup signal to the other shares. It then shares the transaction details and random number with the other shares. Each share that receives this information signs the random number and returns it to the initiating share, confirming balance synchronization and preventing double spending.

Fractional transactions reduce the risk of wallet theft by breaking transactions into smaller amounts and distributing these amounts among multiple wallet shares. This approach prevents any single wallet share from holding large amounts of funds, minimizing potential losses.

Context-based authentication enhances security by considering the user's context (such as location, time, and device) when authorizing wallet transactions. If the transaction context does not match the user's usual behavior, the transaction can be flagged or blocked.

PUF is an unreplicable physical feature in hardware that can be used to generate a unique identifier that authenticates and protects e-wallet transactions. Even if the device is compromised, the attacker cannot replicate the PUF, providing a strong defense against counterfeiting and unauthorized access.

RFID technology can be used to track the location of the e-wallet and provide another layer of security. By integrating RFID sensors into the e-wallet device, its location can be tracked and action can be taken when suspicious activity is detected, such as the use of the e-wallet in an unauthorized location.

Time constraints can increase the security of e-wallet transactions by requiring transactions to be completed within a specific time frame. If the transaction is not completed within the specified time frame, it will be invalidated, providing additional protection against unauthorized access and potential fraud.

Glossary of Key Terms

Distributed e-wallet: An e-wallet whose keys are stored on multiple devices rather than in one location.

EPID (Enhanced Privacy Identification): A technology that allows anonymous authentication, allowing users to conduct transactions without revealing their identity.

M of N policy: A security policy that requires M of N e-wallet shares to approve a transaction before it can be executed.

Revocation List: A list containing signatures of Wallet Shares that have been identified as compromised.

Fractional Transactions: A method of breaking a transaction into smaller amounts and distributing them among multiple Wallet Shares.

Context-Based Authentication: A secure method that takes into account the user context when authorizing transactions.

Physical Unclonable Function (PUF): An uncopyable physical feature in hardware that can be used to generate a unique identifier.

RFID (Radio Frequency Identification): A technology that uses electromagnetic fields to automatically identify and track objects to which a tag is attached.

TEE (Trusted Execution Environment): A secure area within the main processor that provides a secure execution area for code.

Blockchain: A distributed, decentralized ledger that records transactions and protects against tampering.