Financial Sovereignty with Cryptocurrencies

Bitcoin Core 0.18.0 Release Connects Hardware Wallets and Full Nodes

Before we go too far, it is important to remember that a hardware wallet is the safest place to store your Bitcoin, and other cryptocurrencies. A hardware wallet safely and privately houses your cryptocurrency and your private keys. It is the ultimate offline option for portability and security of your digital assets. Many Bitcoiners and crypto enthusiasts possess at least one hardware wallet, the likes of which require proprietary software and are preferred for their non-custodial appeal. (want to view some hardware wallets? https://lochnesscrypto.com/wallet )

(Left to Right: Trezor, Ledger)

One major issue for the community is that these hardware wallets with their proprietary software often interface with a third party which reveals one’s Bitcoin addresses to that third party server. This is a security risk, obviously, and ever more so since most of these hardware wallets work with your web browser i.e. Google Chrome. Every cryptocurrency investor should be mindful of security beyond two-factor authentication on a portable device, and hold the privacy aspect tightly as if guarding Fort Knox.

A full node connection is set to replace and eventually eliminate the third party exposure and security risk. This is a new milestone for trust in trustless systems and anonymous money exchange. Yet another boost to sovereignty. This core update will require the command line be executed manually. Core version 0.18.0 essentially does away with full node connections requiring experienced programmers and developers to operate. With a GUI, or graphical user interface, feature, this will not be merely reading line after line of code; it is a step forward for the end user.

Programmers develop user applications devoid of any user interface because of their understanding of code.

Raspberry Pi Bitcoin Full  Node
Raspberry Pi Bitcoin Full Node

CODE GUI

A user’s needs and purpose for the application are what determine the need for a graphic user interface. This GUI is typically considered more user friendly since it presents all options simultaneously. This salvages enormous time that would be reserved for deep reading and study. Hence, as Bitcoin adoption speeds up, momentum lies in developments that favor ease of use.

Who benefits from this update? We all do! The new cryptocurrency enthusiast, the advanced programmer developer, the seasoned investor, the crypto trader; the busy small business owner or realtor integrating crypto into their workplace; the overwhelmed parent, teacher, librarian, construction worker, college student, the grocer, the (ahem…) banker, we all stand to gain.

Not only will this advance benefit us all, but it will give more exposure to full nodes. Perhaps, it will even encourage more users to run a full node. Currently, very few individuals run a full Bitcoin node because it is costly and devours approximately 200 Gigabytes (the average PC hard drive supports 40 GB) of data per node.2 Bitcoin full nodes allow users to verify that transactions have actually taken place.

Software systems that this Bitcoin Core upgrade is compatible with are those on which it has been supported and tested. This includes Linux Kernlel, macOS 10.10+ and Windows 7 or more current versions.4 Note: it is not recommended for use on unsupported systems. Bitcoin Core 0.18.0 can be used with CPU platforms and RISC-V as well. Partially Signed Transactions, can interface and utilize a collaboration of many programs to create, sign and broadcast new transactions. This will be useful in offline cold wallet or multi signature wallets.

Hardware wallets are the most secure way to store Bitcoin. When cryptocurrencies are stored on a PC or a phone there are so many vulnerabilities in those devices. They are more easily attacked, even with the frequent updates and a secure VPN. Phones and PCs and tablets are prone to crashes, viruses, malware, spyware and backdoor operator corruption. It is too easy to lose all your digital assets and your private vital information. A hardware wallet does not crash. It can also not be corrupted, and is difficult to lose unless one is careless and leaves it lying around. Even still, the seed required to enter a hardware wallet is another layer of safety. But soon, when the HWI upgrade is available to everyone, users can have Bitcoin in a cold storage offline wallet and use the full node to verify data in the pipeline for their transactions.

As with any time a transaction is performed or a connection is established with your Bitcoin wallet address, be savvy and only use one wallet at a time. It is too easy to send Bitcoin to the wrong wallet and if that happens, there is no guaranteed recovery. That said, this update does have a multi wallet command that allows users to pair more than one wallet with their bitcoin core full node. This is also compatible with the GUI, graphic user interface feature. Still, caution is advised unless this function is used by those seasoned in Bitcoin or development.

Here is another nifty feature of Bitcoin Core’s new release: According to GITHUB; a node can be identified and disconnected for misbehavior but can be allowed to reconnect if the banning occurred due to an automatic misbehavior and there are available connection slots. If those slots fill up, a misbehaving node will be disconnected to make room for those devoid of a history of problems. So essentially nodes will have a “history” and good and bad behavior will present a type of reputation. Previously, Bitcoin Core banned all IP addresses from misbehavers, but banned nodes could simply use new IP address or multiple IP addresses. Now, simply banning that peer in spite of IP address will cause the connections from that peer to be rejected.4 The benefit of this change is very positive and incites more amicable participation between all peers.

This is occurring before Bitcoin halving – will the update cause the Bitcoin blockchain to confirm transactions faster? No, and that is not the point. It will improve security and privacy. There are other projects to improve the speed and transaction agility of Bitcoin, but those do not specifically apply to this update.

For current users of a hardware wallet, once the hardware ledger and wallets are open with a secure seed code on a secure connection, the software update should be run and installed. For new Trezor or Ledger users, there is no need to worry about running an update; the software will have changed when first used if one waits until this update is released.

Currently, the HWI update is still being tested to work out any and all bugs before it is widely used and available. The impetus is a reduction of moving pieces necessary to access and transact with Bitcoin. The GUI is one final piece. It has a ways to go to become fluid and very usable for all. The update should be available within weeks, so late spring (May 2019) or early summer (June 2019) would be a superb time to jump on board.

REFERENCES/RESOURCES:

  1. https://cryptosec.info/cryptocurrency-wallets/
  2. https://www.chepicap.com/en/news/8765/new-bitcoin-core-upgrade-will-allow-hardware-wallets-and-full-nodes-to-connect.html
  3. https://www.coindesk.com/next-bitcoin-core-release-to-finally-let-hardware-wallets-connect-to-full-nodes
  4. https://github.com/bitcoin-core/bitcoin-devwiki/wiki/0.18.0-Release-Notes-Draft