- 03.31.14 |
- 6:25 AM |
- (updated by Endah)
The PiperWallet is a small black box that does little more than generate numbers and spit out paper. But if you invest in bitcoin — the popular digital currency — it could be a lifesaver.
When you own bitcoins, they’re stored at a particular address on the internet, and if you want to spend them or move them, you’ll need a cryptographic private key associated with that address. Many people store their keys in “wallets” that sit on their personal computer or on a website somewhere. Some companies, such as Coinbase or Blockchain, now offer free online wallets that are pretty convenient. But those who hold a large number of bitcoins don’t like to use conventional wallet services. They’re worried these services will be hacked.
In fact, it’s good to be a little paranoid when it comes to storing bitcoins. There’s a lot of malicious software out there that sniffs around on computers for ways to steal the digital currency. That’s why PiperWallet takes a different tack. Based on the popular Raspberry Pi hardware kit, this $200 device makes bitcoin wallets out of paper. That way, no one can hack them.
In the online world, stealing bitcoins is pretty darned simple. Just ask Bloomberg TV’s Adam Johnson. A few months back he quickly had $20 worth of bitcoin stolen when he briefly flashed a private key on television. It’s one of the big security problems with bitcoin — the internet’s version of cash. If someone steals your coins, they’re gone forever.
So, when they own serious amounts of bitcoin, investors go to some pretty extreme lengths to protect their private keys. Charlie Shrem, the now-indicted CEO of the Bitinstant bitcoin exchange, saves his on a ring that he wears on his finger. Others generate their private keys on brand new computers that they never connect to the internet. PiperWallet wants to help anyone store their keys in a similarly secure way — but with dead trees as the medium.
That tactic could have helped Mt. Gox, the first major bitcoin exchange, which kept its bitcoins in what’s known as a “cold wallet”. That means that Gox’s private key was supposedly stored in a way that it couldn’t be accessed by hackers, or by any systems connected to the internet. Except that many of Gox’s bitcoins “vanished” — somehow — and Gox was forced to declare bankruptcy, a mess that looks like it will take years to sort out.
Nobody but CEO Mark Karpelles seems to know what happened to Gox, but there may be a lesson here. If the company had simply used a secure paper wallet, perhaps it would still have its bitcoins. That goes double for Gox customers who had stored their bitcoins with the troubled exchange rather than on their own. “If people had stored their coins in PiperWallet, then they wouldn’t have lost them on Mt. Gox,” says PiperWallet’s creator, Chris Cassano.
He has sold about 300 of his PiperWallets to date, mostly to paranoid bitcoin types, or to bitcoin ATM operators who want to give customers a quick and easy way to print out a secure bitcoin wallet. The device is easy to use. You plug it in, push a button, and out comes your wallet complete with digital keys and phone-scannable QR codes. You can print a wallet, use your phone fund it with bitcoins, and then hand it over to a friend or family member or just like cash. It’s the perfect gift for your favorite Bloomberg TV reporter