Misthos Bitcoin Wallet Helps De-risk Using Multi-Sig Storage System
Misthos Walks Us Through Their Multi-Sig Wallet System
This week has seen Misthos enter the spotlight in a big way, as it's showcased as one of the ways in which blockchain technology will serve to disrupt the business and freelancer relationship.
One of the ways in which it plans to do this is with its wallet, which is purpose built inconjunction with their perspective that consensus should be the new dynamic in the world of business, this is especially true wherever there's a shared ownership of Bitcoin.
How does Misthos intend to do this? By creating a truly intuitive, frictionless wallet that works well for a mainstream user-base. But how exactly does Misthos intend to do this? Through this piece, we will explore just how exactly the company is developing their wallet and how it functions.
One core component that often goes overlooked, especially for businesses with wider teams or for venture firms, which rise and fall as needs change, is the fact that the names and faces will change. The best course of action? Make the chopping and changing of people going in and out of this select group as straightforward and simple as possible.
Unfortunately, for the security of money in digital wallets, this desire for frictionlessness and simplicity is something that runs against the grain, especially when considering the aspects of security. Specifically, this is contradictory to how a primitive multi-signature wallet works.
When considering the number of users using one specific wallet, that individuals identity and code are hardcoded into the system. This means that simply ‘Switching out' users is not an intuitive process; any attempt to ‘switch out' one person means a complete change in address: which is more work, not less.
How does Misthos intend to fix this? The company uses a system of mitigation, which essentially simulates the use of one continuous digital wallet that stays in operation, even when its users change over time.
It always serves the interest of any wallet, ones containing Bitcoin are certainly no exception, to generate a new code and address when a new transaction is committed. It allows for a higher level of security for both the giver and receiver. How Misthos' wallet works are that when a wallet custodian leaves and another enters, a new address is generated, which contains all the keys and configurations used by the previous user.
While this sounds like it would be the whole solution to the problem, it really isn't. The prospect of one continuous wallet used by a collective group brings up a whole range of outstanding issues, with handovers being just one of them.
- What happens with Bitcoin that is secured by old addresses when the wallet configuration is updated?
- What if Bitcoin gets sent to an old address that no longer represents the current configuration?
- What if Partners have left and the old addresses aren’t accessible anymore?
- How is the user able to assess the risks involved and know what actions must be taken to ensure the funds always remain accessible to the current group?
Under the circumstances of the individual, both from a user and company standpoint, none of these issues would come up, but the fact that, for a collective of people using one wallet containing Bitcoin, those assets must always be, in some way, retrievable.
There are a number of measures that Misthos have implemented in order to prevent these questions from presenting a recurring pain for users.
Automatic Transfer System
Whenever a payout is instigated, all Unspent Transaction Outputs (UTXOs) that are stored in the old addresses are selected as potential inputs to the new transaction. This means that the Bitcoin that's being moved to a different address is moved to a change address generated from the current configuration.
With Misthos' wallet, there are two distinct types of consensus. The application of consensus needed by the application of logic before a transaction is enacted is called the policy and currency defaults to N of N, this means that of the three partners within a consensus, they all must agree to a transaction before it's enacted.The policy itself has limits, it's not equal to the configuration of the addresses, under those circumtances, they'll default to N/2 of N. What this means is that even if (N-1)/2 partners associated with a given address leave a venture the Bitcoin will still be accessible.
Dead Man's Switch
While features like redundancy do prevent a certain number of risks, the system still has certain vulnerabilities, however. One being that, hypothetically, if Bitcoin was sent to the address of a user who was no longer with the group?
One of the last resorts that can be used is to make the Bitcoin accessible to the whole group, this means that all addresses would be spendable by one key. In order to do this, Misthos introduced a Bitcoin Scripting language which introduces a smart contract with a time lock attached, including a default lockup period of 12672 blocks (approx. 3 Months).
Exposing All Relevant Information
Usually, a wallets address history shows a complete list of all other wallets with which transactions have been initiated. Misthos' wallet provides a clear overview of these wallets, including balance, risk-status, custodians, and activity history. This gives users an additional layer of security when moving payments on.
In-UI Calls To Action
A locked down wallet can be the most painful thing in the world. For users of Misthos, if a wallet is at risk of being locked down, the system notifies the respective users of the wallet, prompting them to move their funds out of the wallet.
It's expected that these features will be able to provide the right balance of frictionless transactions while assuring a strong level of security to coincide with it.
The Misthos Bitcoin wallet is introducing some of the most advanced group fund management features on the planet – and it's built on Blockstack and Bitcoin script. Never bet against innovation on Bitcoin.https://t.co/zXMzwCgaU3 pic.twitter.com/5ROaxSjHXg
— Ryan Shea (@ryaneshea) July 31, 2018