Multilayered Defense-in-Depth Architecture for Cryptocurrency Wallet

Abstract

A significant challenge in blockchain and cryptocurrencies is protecting private keys from potential hackers because nobody can rollback a transaction made with a stolen key once the blockchain network confirms the transaction. The technical solution to protect private keys is cryptocurrency wallets, a piece of software, hardware, or a combination of them to manage the keys. In this paper, we propose a multilayered architecture for cryptocurrency wallets based on a Defense-in-Depth strategy to protect private keys with a balance between convenience and security. The user protects the private keys in three restricted layers with different protection mechanisms. So, a single breach cannot threaten the entire fund, and it saves time for the user to respond. We implement a proof-of-concept of our proposed architecture on both a smart card hardware wallet and an Android smartphone wallet with no performance penalty. Furthermore, we analyze the security of our proposed architecture with two adversary models.