How BetKing.io Secures 5000 Bitcoin of user funds

27/9/2016

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Note that this is an old article and on 1/12/2016 BetKing stopped taking crowdfunded investment and does hold on to the funds listed below.

BetKing.io is the most popular and most trusted crowdfunded Bitcoin casino with almost 5000 Bitcoin invested in the house bankroll.

As one of the first Bitcoin casinos, launching in April 2013, we have years of experience in securing large amounts of Bitcoin belonging to players and investors.

In the past few years there's been a number of gambling and dice sites hacked and had their player funds stolen or the owner has just run away with player funds! We've seen almost every major exchange being hacked and losing thousands of Bitcoin and in each case there has been very basic steps that each of these sites could have taken to prevent the loss of millions of dollars worth of Bitcoin.

This is our latest method of how we keep your Bitcoin safe from hackers, thieves and bugs.

Hardware Wallets

One of the biggest difficulties for the average user keeping their Bitcoin safe is not having the technical knowledge to setup offline cold storage wallets. This is a complicated process of using a computer not connected to the internet where a lot of things can go wrong and you could lose your money.

Trezor provides a solution to securing your Bitcoin on a hardware USB device that cannot be hacked or infected by viruses, even when connecting it to a known compromised machine. Trezor also eliminates any chance of new users losing funds when spending Bitcoin from their cold wallet if they don't know how change addresses work.

There's still important steps that need to be taken even when using Trezor hardware wallets when holding a large amount of Bitcoin though.

Trezor Seed Backup

A Trezor wallet can be backed up by a 12-24 word "seed". If you lose your Trezor device or it gets damaged you can restore the wallet on a new Trezor or a MyCelium wallet.

One thing this allows that is not mentioned often is having multiple Trezor wallets even if you only own one device. You can create a wallet, back it up then wipe the device and create a new wallet as many times as you like so you don't have to keep all your funds in one wallet on one device.

At BetKing.io we made multiple wallets and split 5000 Bitcoin between them. Not equally, one is used as an intermediate wallet with a small amount of Bitcoin on it to top up our hot wallet if needed.

We need to make sure these backups are not lost, damaged or stolen.

To do this we get a spare computer. An old laptop or a cheap new one will do. We want to run Linux from a USB on this so be careful when buying a spare as some new laptops do not allow you to boot from USB. You must disable Wi-Fi/internet, Bluetooth and sound.

We use this laptop to encrypt the Trezor seed.

We then use a copy of PassGuardian on the offline laptop to split the seed into multiple parts using Shamir's Secret Sharing algorithm. We chose nine parts where any six parts can be combined to restore the encrypted seed.

Each of the nine parts are separately printed out on the offline laptop and also stored on a brand new USB key. The paper/USB pairs are stored in separate geographical locations.

We now destroy the computer and printer!

All this effort gives us a few benefits:

No one can restore the seed with just one part.

Even if one part gets lost you can recreate the encrypted secret from any six parts.

Even if an attacker recovered six parts they would not be able to steal your Bitcoin without the password to decrypt the seed.

Storing Bitcoin securely is hard!

Trezor makes this so much easier with their hardware wallets that even beginners can.