Trust-Minimized External Recovery

Phil GeigerBy June 30, 2020 October 23rd, 2020 Bitcoin, Product, Unchained Capital

If the last decade of bitcoin has taught us anything, it’s that centralized services have a spotty track record in protecting client funds and staying active during periods of volatility. In 2019 alone, over $280 million worth of bitcoin was lost or stolen from exchanges. Bitcoin stored with a custodian is at risk from hackers and from the custodians themselves making a mistake or disappearing. 

In bitcoin, there’s a phrase repeated ad nauseam for good reason. “Not your keys, not your bitcoin.” Holding private keys gives you unilateral access and control over your bitcoin. 

At Unchained Capital, we take these lessons to heart, and have engineered an entire financial services platform leveraging the power of bitcoin private key ownership in a way that removes ourselves as the primary risk to our clients’ bitcoin. 

One of the most justifiably common questions we receive from clients concerned about the security of their bitcoin is, “What if I lose access to my Unchained Capital account? Can I access my bitcoin externally to Unchained’s website?”

Out of respect for the revolutionary currency we’re helping manage and to reduce the amount of trust clients place in Unchained Capital, we have engineered an easy workflow to remove Unchained Capital from the risk equation, and we’re excited to share the process below. 

External Spend Information Available by Default 

Every Unchained Capital product comes standard with the information clients need to easily recover and spend their money in a workflow that is simple enough to complete on their own. We’ve accomplished this in a few ways. 

  • We published an open source multisignature tool called Caravan that lets clients seamlessly build and spend from any multisignature address directly in the browser without installing software. It lives on GitHub and is available for everyone to make their own copy.
  • All Unchained Capital products contain a single downloadable file that can be used either with Caravan or another multisig standards compliant wallet, such as Electrum, to rebuild and spend from the product’s address along with 2 signatures from private keys

Caravan works with all hardware wallets that the Unchained Capital products support, so if you’ve used a hardware wallet to construct your Unchained Capital address, Caravan will be able to interface with the same hardware wallet without any setup. Importing your external spend information file and connecting your hardware wallets gives you full freedom to move your funds without interacting with the Unchained Capital website in any way. Below are step-by-step instructions for saving external spend information and using Caravan to recover vault funds. 

The Steps to External Recovery

This is a short video of the full external recovery workflow from vaults using Caravan, and below the video, you will find complete written instructions. 

Guide

  1. After creating your multisignature address on the Unchained Capital Website, select the external spend information menu, and download the external spend file.
    1. This file can be stored safely on an encrypted hard drive or in a password manager. The file contains important information that you would need to spend bitcoin externally to Unchained, but does not give someone who discovers it the ability to spend bitcoin. Since the addresses are 2-of-3 multisignature, signatures from 2 private keys are needed to move funds out of the address. The information included in the downloadable file is the extended public keys and BIP32 paths related to your vault or loan which can be used to rebuild the wallet externally with Caravan or Electrum.
  2. Navigate to Caravan in Chrome, Brave, or FireFox browser: https://unchained-capital.github.io/caravan/#/wallet.
  3. Select import wallet configuration and open the JSON file. You can also simply copy and paste the extended public keys from the file you saved directly into Caravan.
  4. Select which bitcoin client to gather wallet balances from, either publicly from Blockstream.info or privately from your full node. Confirm. Caravan will load your wallet details.
  5. If you’d like to move your bitcoin out of an address you control, select send and paste a receive address. Ensure that the receive address is correct by verifying at least the first and last 6 digits.  
  6. Adjust the fee rate down if you’d like to pay less for the transaction and wait longer for a confirmation, or adjust the fee higher if you’d like the transaction to be settled sooner.
  7. Enter the amount you’d like to send.
  8. Select preview transaction and review all transaction details.
  9. Select sign transaction. 
  10. Select the key you’d like to sign from first. 
  11. Select the hardware device you are using to sign for the key and connect and unlock your device.
  12. Confirm the transaction details on your device and ensure that the send address is correct.
  13. Repeat steps 11-14 for any additional signatures needed.
  14. Once the transaction has been signed, select “broadcast transaction” from Caravan. This cannot be undone so ensure that all details are correct before broadcasting.

Please reach out at hello@unchained-capital.com if you have any questions about the workflow or would like to see a live demo of Unchained Capital vaults.

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