Level 7: Protocols + Multisig¶
Protocols to manage the complexity of multi-signature keys.
If you're going to self custody your Bitcoin (because it's yours and you should) then it is highly recommended to adopt a protocol for managing your Bitcoin.
A protocol is step-by-step instructions that you keep on hand; instructions that can be followed by you and your loved ones. This can be as simple as using a coldcard or trezor and following their excellent documentation, or methodically following the electrum coldstorage steps.
You may also want a more holistic view of self custody security, such as,
- 10x Security Bitcoin Guide
- Glacier Protocol (recommended)
Additionally, you can find excellent resources to learn about security and online privacy, such as,
Why a protocol?¶
One of the reasons I recommend the Glacier Protocol is because it is broken down into subprotocols (setup, deposit, withdrawal) each with step-by-step instructions. All individual steps are easy, and yet if you follow all steps you will have one of the most secure self custody solutions on the planet.
While I have minor gripes (address reuse, lack of BIP-39 support, blind trust in casino dice, etc) there is no serious criticism I can find or have found concerning a security weakness in the glacier protocol. However, some may find that this approach is too much and they want something simpler. And still others may find that it is not enough (such as wanting full privacy and verifying every transaction through secured full nodes).
In these cases it is recommended to have a custom protocol.
How much security do you want?¶
The security of your Bitcoin custody can range from trivial to nuclear-launch-code level of security. On the trivial side, a mobile app hot wallet may be perfectly reasonable for someone who isn't too concerned with losing their funds. On the paranoid side you may wish to secure your Bitcoin from hostile nation states such as North Korea or Canada.
If you start with the basics, such as following the excellent coldcard docs, you'll have secured your wealth far better than any bank ever could. This is the baseline for a secure self custody protocol. We will not discuss anything less secure than this.
The following draft protocols incrementally build on this baseline to add additional security and privacy.