- Vitalik Buterin, the co-founder of Ethereum, recently shared some insightful tips on securing cryptocurrency holdings, highlighting unconventional but highly effective methods.
- Buterin adopts a sophisticated approach known as multisignature for over 90% of his personal funds, a method that decentralizes security measures.
- Buterin also critiqued the Shamir Backup, another method that splits a seed into multiple parts, arguing that it is easier to mishandle compared to a multisig setup.
Vitalik Buterin shares unconventional but effective methods for securing cryptocurrency holdings, including the use of multisignature for over 90% of his personal funds.
Buterin’s Approach to Cryptocurrency Security
Vitalik Buterin recently shared his approach to securing cryptocurrency holdings, highlighting the risks of hardware wallets due to human error. Common pitfalls include misplacing the recovery seed, hiding it so well that it is eventually forgotten, or unforeseen situations like needing to move, leaving the seed in a bank safety deposit box.
Adopting Multisignature for Enhanced Security
To counteract these risks, Buterin adopts a sophisticated approach known as multisignature for over 90% of his personal funds. This method is not just about diversifying security measures — it is about decentralizing them. In a multisig setup, a transaction requires the approval of multiple, separately held keys to proceed, which significantly mitigates the risk of loss or theft.
The M-of-N Scheme and the Critique of Shamir Backup
Buterin recommends an M-of-N scheme, where “M” represents the minimum number of approvals needed from a total of “N” possible keys. Importantly, not all keys are held by one person, and the identity of the holders is kept confidential, even from each other. This technique enhances security by not relying on a single point of failure. If one key is compromised, the funds remain secure as long as the other required keys are safe. However, it does depend on the trustworthiness and reliability of those who hold the other keys.
Conclusion
Buterin’s approach to securing cryptocurrency holdings offers a unique perspective on the importance of decentralizing security measures. By adopting the multisignature method and the M-of-N scheme, the risk of loss or theft can be significantly mitigated. However, the effectiveness of these methods relies heavily on the trustworthiness and reliability of those who hold the keys. Therefore, it is crucial for individuals to carefully consider their options and take necessary precautions when securing their cryptocurrency holdings.
