[Bitcoin-development] [RFC] Proposal: Base58 encoded HD Wallet root key with optional encryption

[William Yager]

On Wed, Mar 12, 2014 at 3:24 PM, Pavol Rusnak <stick at gk2.sk> wrote:

> On 03/12/2014 09:10 PM, William Yager wrote:
> > implement this is to allow semi-trusted devices (like desktop PCs) to do
> > all the "heavy lifting". The way the spec is defined, it is easy to have
> a
> > more powerful device do all the tough key stretching work without
> > significantly compromising the security of the wallet.
>
> By disclosing "preH" to compromised computer (between steps 4 and 5) you
> make further steps 5-9 quite less important.
>
>
Yes, that was my chief complaint as well. A compromised computer removes
most of the extra security offered by key stretching (should you choose to
outsource the bulk of your key stretching).

However, I think we have a good compromise, which is the inclusion of a
number of PBKDF2-HMAC-SHA512 based KDFs. For anyone who doesn't want to
trust any external device, but also wants to use memory-contrained devices
(that group of people includes me), PBKDF2-HMAC-SHA512 is very easy to
implement even on devices that only have a few kB of RAM, and even though
our number of rounds is very aggressive (2^16 and 2^21), it will still run
in reasonable time even on very slow embedded ARM processors.

Will
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