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A fun fact when learning the history of Bitcoin is the ‘pre-release’ of the whitepaper, the text below is from this link.

Prior to the release of the Bitcoin whitepaper on October 31, 2008, Satoshi sent out a draft to Wei Dai. The emails they exchanged are archived here :

Title: Electronic Cash Without a Trusted Third Party Abstract: A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without the burdens of going through a financial institution. Digital signatures offer part of the solution, but the main benefits are lost if a trusted party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as honest nodes control the most CPU power on the network, they can generate the longest chain and outpace any attackers. The network itself requires minimal structure. Messages are broadcasted on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.

The Bitcoin whitepaper is the specification for Bitcoin. It gives a high level description of the core concepts that make up Bitcoin, you can download the 9 page paper or read the transcription below:

Download from The Bitcoin Whitepaper

Bitcoin: A Peer-to-Peer Electronic Cash System
Satoshi Nakamoto
Abstract. A purely peer-to-peer version of electronic cash would allow online
payments to be sent directly from one party to another without going through a
financial institution. Digital signatures provide part of the solution, but the main
benefits are lost if a trusted third party is still required to prevent double-spending.
We propose a solution to the double-spending problem using a peer-to-peer network.
The network timestamps transactions by hashing them into an ongoing chain of
hash-based proof-of-work, forming a record that cannot be changed without redoing
the proof-of-work. The longest chain not only serves as proof of the sequence of
events witnessed, but proof that it came from the largest pool of CPU power. As
long as a majority of CPU power is controlled by nodes that are not cooperating to
attack the network, they’ll generate the longest chain and outpace attackers. The
network itself requires minimal structure. Messages are broadcast on a best effort
basis, and nodes can leave and rejoin the network at will, accepting the longest
proof-of-work chain as proof of what happened while they were gone.
1. Introduction
Commerce on the Internet has come to rely almost exclusively on financial institutions serving as
trusted third parties to process electronic payments. While the system works well enough for
most transactions, it still suffers from the inherent weaknesses of the trust based model.
Completely non-reversible transactions are not really possible, since financial institutions cannot
avoid mediating disputes. The cost of mediation increases transaction costs, limiting the
minimum practical transaction size and cutting off the possibility for small casual transactions,
and there is a broader cost in the loss of ability to make non-reversible payments for non-
reversible services. With the possibility of reversal, the need for trust spreads. Merchants must
be wary of their customers, hassling them for more information than they would otherwise need.
A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties
can be avoided in person by using physical currency, but no mechanism exists to make payments
over a communications channel without a trusted party.
What is needed is an electronic payment system based on cryptographic proof instead of trust,
allowing any two willing parties to transact directly with each other without the need for a trusted
third party. Transactions that are computationally impractical to reverse would protect sellers
from fraud, and routine escrow mechanisms could easily be implemented to protect buyers. In
this paper, we propose a solution to the double-spending problem using a peer-to-peer distributed
timestamp server to generate computational proof of the chronological order of transactions. The
system is secure as long as honest nodes collectively control more CPU power than any
cooperating group of attacker nodes.

Page 2
2. Transactions
We define an electronic coin as a chain of digital signatures. Each owner transfers the coin to the
next by digitally signing a hash of the previous transaction and the public key of the next owner
and adding these to the end of the coin. A payee can verify the signatures to verify the chain of
The problem of course is the payee can’t verify that one of the owners did not double-spend
the coin. A common solution is to introduce a trusted central authority, or mint, that checks every
transaction for double spending. After each transaction, the coin must be returned to the mint to
issue a new coin, and only coins issued directly from the mint are trusted not to be double-spent.
The problem with this solution is that the fate of the entire money system depends on the
company running the mint, with every transaction having to go through them, just like a bank.
We need a way for the payee to know that the previous owners did not sign any earlier
transactions. For our purposes, the earliest transaction is the one that counts, so we don’t care
about later attempts to double-spend. The only way to confirm the absence of a transaction is to
be aware of all transactions. In the mint based model, the mint was aware of all transactions and
decided which arrived first. To accomplish this without a trusted party, transactions must be
publicly announced [1], and we need a system for participants to agree on a single history of the
order in which they were received. The payee needs proof that at the time of each transaction, the
majority of nodes agreed it was the first received.
3. Timestamp Server
The solution we propose begins with a timestamp server. A timestamp server works by taking a
hash of a block of items to be timestamped and widely publishing the hash, such as in a
newspaper or Usenet post [2-5]. The timestamp proves that the data must have existed at the
time, obviously, in order to get into the hash. Each timestamp includes the previous timestamp in
its hash, forming a chain, with each additional timestamp reinforcing the ones before it.
Owner 1’s
Public Key
Owner 0’s
Owner 2’s
Public Key
Owner 1’s
Owner 3’s
Public Key
Owner 2’s
Owner 2’s
Private Key
Owner 1’s
Private Key
Owner 3’s
Private Key

Page 3
4. Proof-of-Work
To implement a distributed timestamp server on a peer-to-peer basis, we will need to use a proof-
of-work system similar to Adam Back’s Hashcash [6], rather than newspaper or Usenet posts.
The proof-of-work involves scanning for a value that when hashed, such as with SHA-256, the
hash begins with a number of zero bits. The average work required is exponential in the number
of zero bits required and can be verified by executing a single hash.
For our timestamp network, we implement the proof-of-work by incrementing a nonce in the
block until a value is found that gives the block’s hash the required zero bits. Once the CPU
effort has been expended to make it satisfy the proof-of-work, the block cannot be changed
without redoing the work. As later blocks are chained after it, the work to change the block
would include redoing all the blocks after it.
The proof-of-work also solves the problem of determining representation in majority decision
making. If the majority were based on one-IP-address-one-vote, it could be subverted by anyone
able to allocate many IPs. Proof-of-work is essentially one-CPU-one-vote. The majority
decision is represented by the longest chain, which has the greatest proof-of-work effort invested
in it. If a majority of CPU power is controlled by honest nodes, the honest chain will grow the
fastest and outpace any competing chains. To modify a past block, an attacker would have to
redo the proof-of-work of the block and all blocks after it and then catch up with and surpass the
work of the honest nodes. We will show later that the probability of a slower attacker catching up
diminishes exponentially as subsequent blocks are added.
To compensate for increasing hardware speed and varying interest in running nodes over time,
the proof-of-work difficulty is determined by a moving average targeting an average number of
blocks per hour. If they’re generated too fast, the difficulty increases.
5. Network
The steps to run the network are as follows:
1) New transactions are broadcast to all nodes.
2) Each node collects new transactions into a block.
3) Each node works on finding a difficult proof-of-work for its block.
4) When a node finds a proof-of-work, it broadcasts the block to all nodes.
5) Nodes accept the block only if all transactions in it are valid and not already spent.
6) Nodes express their acceptance of the block by working on creating the next block in the
chain, using the hash of the accepted block as the previous hash.
Nodes always consider the longest chain to be the correct one and will keep working on
extending it. If two nodes broadcast different versions of the next block simultaneously, some
nodes may receive one or the other first. In that case, they work on the first one they received,
but save the other branch in case it becomes longer. The tie will be broken when the next proof-
of-work is found and one branch becomes longer; the nodes that were working on the other
branch will then switch to the longer one.
Prev Hash
Prev Hash

Page 4
New transaction broadcasts do not necessarily need to reach all nodes. As long as they reach
many nodes, they will get into a block before long. Block broadcasts are also tolerant of dropped
messages. If a node does not receive a block, it will request it when it receives the next block and
realizes it missed one.
6. Incentive
By convention, the first transaction in a block is a special transaction that starts a new coin owned
by the creator of the block. This adds an incentive for nodes to support the network, and provides
a way to initially distribute coins into circulation, since there is no central authority to issue them.
The steady addition of a constant of amount of new coins is analogous to gold miners expending
resources to add gold to circulation. In our case, it is CPU time and electricity that is expended.
The incentive can also be funded with transaction fees. If the output value of a transaction is
less than its input value, the difference is a transaction fee that is added to the incentive value of
the block containing the transaction. Once a predetermined number of coins have entered
circulation, the incentive can transition entirely to transaction fees and be completely inflation
The incentive may help encourage nodes to stay honest. If a greedy attacker is able to
assemble more CPU power than all the honest nodes, he would have to choose between using it
to defraud people by stealing back his payments, or using it to generate new coins. He ought to
find it more profitable to play by the rules, such rules that favour him with more new coins than
everyone else combined, than to undermine the system and the validity of his own wealth.
7. Reclaiming Disk Space
Once the latest transaction in a coin is buried under enough blocks, the spent transactions before
it can be discarded to save disk space. To facilitate this without breaking the block’s hash,
transactions are hashed in a Merkle Tree [7][2][5], with only the root included in the block’s hash.
Old blocks can then be compacted by stubbing off branches of the tree. The interior hashes do
not need to be stored.
A block header with no transactions would be about 80 bytes. If we suppose blocks are
generated every 10 minutes, 80 bytes * 6 * 24 * 365 = 4.2MB per year. With computer systems
typically selling with 2GB of RAM as of 2008, and Moore’s Law predicting current growth of
1.2GB per year, storage should not be a problem even if the block headers must be kept in
Block Header (Block Hash)
Prev Hash
Root Hash
Block Header (Block Hash)
Root Hash
Transactions Hashed in a Merkle Tree
After Pruning Tx0-2 from the Block
Prev Hash

Page 5
8. Simplified Payment Verification
It is possible to verify payments without running a full network node. A user only needs to keep
a copy of the block headers of the longest proof-of-work chain, which he can get by querying
network nodes until he’s convinced he has the longest chain, and obtain the Merkle branch
linking the transaction to the block it’s timestamped in. He can’t check the transaction for
himself, but by linking it to a place in the chain, he can see that a network node has accepted it,
and blocks added after it further confirm the network has accepted it.
As such, the verification is reliable as long as honest nodes control the network, but is more
vulnerable if the network is overpowered by an attacker. While network nodes can verify
transactions for themselves, the simplified method can be fooled by an attacker’s fabricated
transactions for as long as the attacker can continue to overpower the network. One strategy to
protect against this would be to accept alerts from network nodes when they detect an invalid
block, prompting the user’s software to download the full block and alerted transactions to
confirm the inconsistency. Businesses that receive frequent payments will probably still want to
run their own nodes for more independent security and quicker verification.
9. Combining and Splitting Value
Although it would be possible to handle coins individually, it would be unwieldy to make a
separate transaction for every cent in a transfer. To allow value to be split and combined,
transactions contain multiple inputs and outputs. Normally there will be either a single input
from a larger previous transaction or multiple inputs combining smaller amounts, and at most two
outputs: one for the payment, and one returning the change, if any, back to the sender.
It should be noted that fan-out, where a transaction depends on several transactions, and those
transactions depend on many more, is not a problem here. There is never the need to extract a
complete standalone copy of a transaction’s history.
Block Header
Merkle Root
Prev Hash
Block Header
Merkle Root
Prev Hash
Block Header
Merkle Root
Prev Hash
Merkle Branch for Tx3
Longest Proof-of-Work Chain

Page 6
10. Privacy
The traditional banking model achieves a level of privacy by limiting access to information to the
parties involved and the trusted third party. The necessity to announce all transactions publicly
precludes this method, but privacy can still be maintained by breaking the flow of information in
another place: by keeping public keys anonymous. The public can see that someone is sending
an amount to someone else, but without information linking the transaction to anyone. This is
similar to the level of information released by stock exchanges, where the time and size of
individual trades, the “tape”, is made public, but without telling who the parties were.
As an additional firewall, a new key pair should be used for each transaction to keep them
from being linked to a common owner. Some linking is still unavoidable with multi-input
transactions, which necessarily reveal that their inputs were owned by the same owner. The risk
is that if the owner of a key is revealed, linking could reveal other transactions that belonged to
the same owner.
11. Calculations
We consider the scenario of an attacker trying to generate an alternate chain faster than the honest
chain. Even if this is accomplished, it does not throw the system open to arbitrary changes, such
as creating value out of thin air or taking money that never belonged to the attacker. Nodes are
not going to accept an invalid transaction as payment, and honest nodes will never accept a block
containing them. An attacker can only try to change one of his own transactions to take back
money he recently spent.
The race between the honest chain and an attacker chain can be characterized as a Binomial
Random Walk. The success event is the honest chain being extended by one block, increasing its
lead by +1, and the failure event is the attacker’s chain being extended by one block, reducing the
gap by -1.
The probability of an attacker catching up from a given deficit is analogous to a Gambler’s
Ruin problem. Suppose a gambler with unlimited credit starts at a deficit and plays potentially an
infinite number of trials to try to reach breakeven. We can calculate the probability he ever
reaches breakeven, or that an attacker ever catches up with the honest chain, as follows [8]:
p = probability an honest node finds the next block
q = probability the attacker finds the next block
qz = probability the attacker will ever catch up from z blocks behind
qz={ 1
if pq
q/ p
if pq}
Third Party
New Privacy Model
Traditional Privacy Model

Page 7
Given our assumption that p > q, the probability drops exponentially as the number of blocks the
attacker has to catch up with increases. With the odds against him, if he doesn’t make a lucky
lunge forward early on, his chances become vanishingly small as he falls further behind.
We now consider how long the recipient of a new transaction needs to wait before being
sufficiently certain the sender can’t change the transaction. We assume the sender is an attacker
who wants to make the recipient believe he paid him for a while, then switch it to pay back to
himself after some time has passed. The receiver will be alerted when that happens, but the
sender hopes it will be too late.
The receiver generates a new key pair and gives the public key to the sender shortly before
signing. This prevents the sender from preparing a chain of blocks ahead of time by working on
it continuously until he is lucky enough to get far enough ahead, then executing the transaction at
that moment. Once the transaction is sent, the dishonest sender starts working in secret on a
parallel chain containing an alternate version of his transaction.
The recipient waits until the transaction has been added to a block and z blocks have been
linked after it. He doesn’t know the exact amount of progress the attacker has made, but
assuming the honest blocks took the average expected time per block, the attacker’s potential
progress will be a Poisson distribution with expected value:
To get the probability the attacker could still catch up now, we multiply the Poisson density for
each amount of progress he could have made by the probability he could catch up from that point:
k e−
⋅{q/ p zk
if kz
if kz}
Rearranging to avoid summing the infinite tail of the distribution…
k e−
1−q/ p zk
Converting to C code…
#include <math.h>
double AttackerSuccessProbability(double q, int z)
double p = 1.0 – q;
double lambda = z * (q / p);
double sum = 1.0;
int i, k;
for (k = 0; k <= z; k++)
double poisson = exp(-lambda);
for (i = 1; i <= k; i++)
poisson *= lambda / i;
sum -= poisson * (1 – pow(q / p, z – k));
return sum;

Page 8
Running some results, we can see the probability drop off exponentially with z.
z=0 P=1.0000000
z=1 P=0.2045873
z=2 P=0.0509779
z=3 P=0.0131722
z=4 P=0.0034552
z=5 P=0.0009137
z=6 P=0.0002428
z=7 P=0.0000647
z=8 P=0.0000173
z=9 P=0.0000046
z=10 P=0.0000012
z=0 P=1.0000000
z=5 P=0.1773523
z=10 P=0.0416605
z=15 P=0.0101008
z=20 P=0.0024804
z=25 P=0.0006132
z=30 P=0.0001522
z=35 P=0.0000379
z=40 P=0.0000095
z=45 P=0.0000024
z=50 P=0.0000006
Solving for P less than 0.1%…
P < 0.001
q=0.10 z=5
q=0.15 z=8
q=0.20 z=11
q=0.25 z=15
q=0.30 z=24
q=0.35 z=41
q=0.40 z=89
q=0.45 z=340
12. Conclusion
We have proposed a system for electronic transactions without relying on trust. We started with
the usual framework of coins made from digital signatures, which provides strong control of
ownership, but is incomplete without a way to prevent double-spending. To solve this, we
proposed a peer-to-peer network using proof-of-work to record a public history of transactions
that quickly becomes computationally impractical for an attacker to change if honest nodes
control a majority of CPU power. The network is robust in its unstructured simplicity. Nodes
work all at once with little coordination. They do not need to be identified, since messages are
not routed to any particular place and only need to be delivered on a best effort basis. Nodes can
leave and rejoin the network at will, accepting the proof-of-work chain as proof of what
happened while they were gone. They vote with their CPU power, expressing their acceptance of
valid blocks by working on extending them and rejecting invalid blocks by refusing to work on
them. Any needed rules and incentives can be enforced with this consensus mechanism.

Page 9
[1] W. Dai, “b-money,”, 1998.
[2] H. Massias, X.S. Avila, and J.-J. Quisquater, “Design of a secure timestamping service with minimal
trust requirements,” In 20th Symposium on Information Theory in the Benelux, May 1999.
[3] S. Haber, W.S. Stornetta, “How to time-stamp a digital document,” In Journal of Cryptology, vol 3, no
2, pages 99-111, 1991.
[4] D. Bayer, S. Haber, W.S. Stornetta, “Improving the efficiency and reliability of digital time-stamping,”
In Sequences II: Methods in Communication, Security and Computer Science, pages 329-334, 1993.
[5] S. Haber, W.S. Stornetta, “Secure names for bit-strings,” In Proceedings of the 4th ACM Conference
on Computer and Communications Security, pages 28-35, April 1997.
[6] A. Back, “Hashcash – a denial of service counter-measure,”, 2002.
[7] R.C. Merkle, “Protocols for public key cryptosystems,” In Proc. 1980 Symposium on Security and
Privacy, IEEE Computer Society, pages 122-133, April 1980.
[8] W. Feller, “An introduction to probability theory and its applications,” 1957.

See the document from below:


A Cypherpunk’s Manifesto

by Eric Hughes

Privacy is necessary for an open society in the electronic age. Privacy is not secrecy. A private matter is something one doesn’t want the whole world to know, but a secret matter is something one doesn’t want anybody to know. Privacy is the power to selectively reveal oneself to the world.

If two parties have some sort of dealings, then each has a memory of their interaction. Each party can speak about their own memory of this; how could anyone prevent it? One could pass laws against it, but the freedom of speech, even more than privacy, is fundamental to an open society; we seek not to restrict any speech at all. If many parties speak together in the same forum, each can speak to all the others and aggregate together knowledge about individuals and other parties. The power of electronic communications has enabled such group speech, and it will not go away merely because we might want it to.

Since we desire privacy, we must ensure that each party to a transaction have knowledge only of that which is directly necessary for that transaction. Since any information can be spoken of, we must ensure that we reveal as little as possible. In most cases personal identity is not salient. When I purchase a magazine at a store and hand cash to the clerk, there is no need to know who I am. When I ask my electronic mail provider to send and receive messages, my provider need not know to whom I am speaking or what I am saying or what others are saying to me; my provider only need know how to get the message there and how much I owe them in fees. When my identity is revealed by the underlying mechanism of the transaction, I have no privacy. I cannot here selectively reveal myself; I must always reveal myself.

Therefore, privacy in an open society requires anonymous transaction systems. Until now, cash has been the primary such system. An anonymous transaction system is not a secret transaction system. An anonymous system empowers individuals to reveal their identity when desired and only when desired; this is the essence of privacy.

Privacy in an open society also requires cryptography. If I say something, I want it heard only by those for whom I intend it. If the content of my speech is available to the world, I have no privacy. To encrypt is to indicate the desire for privacy, and to encrypt with weak cryptography is to indicate not too much desire for privacy. Furthermore, to reveal one’s identity with assurance when the default is anonymity requires the cryptographic signature.

We cannot expect governments, corporations, or other large, faceless organizations to grant us privacy out of their beneficence. It is to their advantage to speak of us, and we should expect that they will speak. To try to prevent their speech is to fight against the realities of information. Information does not just want to be free, it longs to be free. Information expands to fill the available storage space. Information is Rumor’s younger, stronger cousin; Information is fleeter of foot, has more eyes, knows more, and understands less than Rumor.

We must defend our own privacy if we expect to have any. We must come together and create systems which allow anonymous transactions to take place. People have been defending their own privacy for centuries with whispers, darkness, envelopes, closed doors, secret handshakes, and couriers. The technologies of the past did not allow for strong privacy, but electronic technologies do.

We the Cypherpunks are dedicated to building anonymous systems. We are defending our privacy with cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money.

Cypherpunks write code. We know that someone has to write software to defend privacy, and since we can’t get privacy unless we all do, we’re going to write it. We publish our code so that our fellow Cypherpunks may practice and play with it. Our code is free for all to use, worldwide. We don’t much care if you don’t approve of the software we write. We know that software can’t be destroyed and that a widely dispersed system can’t be shut down.

Cypherpunks deplore regulations on cryptography, for encryption is fundamentally a private act. The act of encryption, in fact, removes information from the public realm. Even laws against cryptography reach only so far as a nation’s border and the arm of its violence. Cryptography will ineluctably spread over the whole globe, and with it the anonymous transactions systems that it makes possible.

For privacy to be widespread it must be part of a social contract. People must come and together deploy these systems for the common good. Privacy only extends so far as the cooperation of one’s fellows in society. We the Cypherpunks seek your questions and your concerns and hope we may engage you so that we do not deceive ourselves. We will not, however, be moved out of our course because some may disagree with our goals.

The Cypherpunks are actively engaged in making the networks safer for privacy. Let us proceed together apace.


Eric Hughes <>

9 March 1993

Bitcoin Information

To help other more easily understand the complex world of cryptocurrencies I wrote to the local community college and suggested they teach a course on it.
To teach that class at my local community college on bitcoin and cryptocurrency, I wrote down all the info I thought I knew about the subject then looked up every point.
The end result is a large collection of information on and about Bitcoin and cryptocurrencies that I want to share with others. The information is divided into subjects below, feel free to use or share. This information was relevant in early 2016 and many things have happened since then.

Welcome, thank you for visiting, if this is your first time hearing about Bitcoin you are probably very confused.

Bitcoin is a system of trustless bookkeeping, it lets people transact between each other with no other middleman. Things are verified in a decentralized way such that the users never need to fear their funds will be frozen or restricted. Beyond that, things get a little bit more complicated.

If the way that money is created and distributed by central or commercial banking institutions seems unjust to you then you may enjoy the possibilities that Bitcoin enables.

The Origin of Bitcoin

Bitcoin was released on a ‘cypherpunk’ mailing list and thus we consider the cypherpunk manifesto as influencing the origin of Bitcoin.

The Bitcoin whitepaper is often taken as the ‘specification’ of the Bitcoin concept. Some people want to better understand what Satoshi had in mind when ‘he’ created and designed Bitcoin, for those people I recommend: the pre-release of the bitcoin whitepaper which was sent out five months before the official whitepaper release; and a collection of all public e-mail, forum posts, and code from Satoshi, at

“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”,
was encoded in the first ‘block’ of the blockchain. It was hexadecimal within the coinbase-data of the ‘Genesis Block’ of Bitcoin. Mined by Satoshi on January 3rd in 2009 this could have simply been a proof of existence but it might have been a hint regarding the motives to create Bitcoin.

Your funds may be in jeopardy

Bitcoin is a system where a decentralized ledger keeps track of transactions, this system uses tokens called bitcoins. (Note that the system is capitalized while the token is not.)

The security of bitcoin is related to its storage. What is in essence an astronomically large number is normally kept on a computer or paper hard copy. There is always a chance disaster will strike these copies, and without good backup procedures that data may be lost. Bitcoin being kept in cold storage is no different than other data and in order to best protect your data you should know the limitations of your storage media.

Security weak point

Backup seeds and secret keys are only good if they can be retrieved. That depends mainly on how they are stored and that is why good backup procedures are critical to long term survival of information.

What Bitcoin data is most at risk? Many HD wallets require the user to write down their backup seed, this is often held only on a piece of paper or an encrypted digital medium. A key-pair where the secret key (or private key) is data no different and should be kept stored away from prying eyes.

The best way to keep you seed/secret key safe is to have multiple copies in multiple locations perhaps with multiple formats AND where the keys are split or encrypted. However not everyone has access to multiple locations, access to land long term, or more than one place to store their things. Some people are afraid they might get hit in the head and forget their decryption key. How do they stay safe?

There are many good options, but we’re just here to point out some potential weaknesses out there. We will focus on mediums relating to cold storage and not ones designed for more everyday use such as hardware wallets or HD wallets on a cellphone or computer. Online storage is far from secure so just don’t store funds online please. Where is your backup seed and how is it stored?

Secure generation of keys and endpoint physical security are out of the scope of this article. If you practice good user security then the storage of your seed or secret key may be your main security weakpoint.

Potential problems with common methods of cold storage

 Written on a piece of paper
  • Anyone who can see it, can steal it
  • Handwriting can be hard to read or completely illegible
  • Human error in transcription can cause errors on end product
  • Paper can rot, be torn, burn, or be smoke damaged
Printed on a piece of paper
  • Anyone who can see it, can steal it
  • Printing method – with non laser-printers the ink can run if paper gets wet
  • Printer model – some have internet connections, wifi, and memory
  • Paper can rot, be torn, burn, or be smoke damaged
On laminated paper
  • Anyone who can see it, can steal it
  • Lamination is prone to degradation over time and punctures or cuts that could allow moisture to get trapped in the paper could cause deterioration or rotting in some circumstances – store in cool dry place
  • Can burn or be smoke damaged
  • ‘Fireproof’ & ‘Fire-resistant’ boxes can help protect paper in a small house fire but be warned that they can sometimes fall apart in the fire and can get wet if the fire is put out with water. Remember a burglar can carry a small safe out of the house with them
Engraved /etched /ablated /stamped on a piece of metal
  • Anyone who can see it, can steal it
  • Some metals can deteriorate or corrode, choose a good metal and storage location. Avoid direct contact with other types of metal. Some metals that are corrosion resistant have low melting points, are extremely expensive, or hard to machine. The Keyois Capsule was originally designed with 316 marine-grade Stainless Steel (the best type of steel we could find for this purpose) but titanium was used instead for the first edition capsules.
  • Some metals can still deform or melt from heat, especially under pressure.
    “Most house fires do not burn hotter than 1,200 degrees Fahrenheit. This temperature is typically associated with the hottest portion of a home, which is in the roof area. Homes that burn for longer than 30 minutes or consist of multiple levels sometimes burn at higher temperatures.”
    You want to pick a metal that won’t be destroyed by a fire. So tin, lead, and magnesium (ha) are all out as engraving materials. Metals with melting points above the temperature of a housefire include: silver, gold, copper, brass, bronze, nickel, cobalt, some aluminium alloys, steel, nickel, titanium (which is what the Keyois Capsule has the Secret Key engraved on, with a melting point of over 1600° C / 3000°F) and tungsten (with a melting point double titanium but can be brittle if hit hard).
  • The Cryptosteel product made of 304 Stainless Steel is in this category. It is a very practical backup idea. It is an assemble-at-home secret key/ seed backup however it does not have tamper evident properties (but I bet this can be easily fixed). So anyone who can see it, can steal it.
  • There are multiple companies that sell laser-engraved metal key-pairs about the size of a calling-card; often there are color, material, and design options. Remember not all metals are created equal. This is a great option for BIP38 addresses, although anyone who can see it can see it, they would then still have to crack your BIP38 pass phrase. However it is our opinion that the Keyois capsule is the prettiest of them all.
Stored digitally on a computer
  • Computers can crash, making data recovery expensive
  • Data can still technically be recovered after a system is abandoned by the user. In some cases data can be recovered after multiple overwriting attempts and physical destruction (as long as the attacker can get all or most the pieces) so if you copy files to a new computer and ditch the old one, be careful
  • Can burn or be smoke damaged
  • A traditional hard disc drive can have data corrupted by powerful magnetic fields and can physically shatter
  • A non-negligible amount of HDDs suffer from factory defects that will cause them to fail unexpectedly during their lifetime
  • Accidents can happen that could result in loss of data
  • Solid state drives (SSDs) will lose data if unpowered, they may last years before this becomes a problem but it is unwise to store long-term data in unpowered SSDs
  • Internet connection is another attack vector and the safety is only as good as the encryption used. Someone could be trying to break into the computer at all times
  • There are a lot of ongoing threats with computers, from zero-day exploits to firmware exploits and malicious USB cords
  • External hdds are good for storage for a few years at least if stored properly
  • For computers that are not connected to the internet, safety is only as good as the physical protection and encryption used; could someone mosy into the location and copy the data without anyone noticing?
Stored digitally on CD, floppy disk, laserdisc, or mini-disc
  • Plastics break down over time and with exposure to heat, humidity, regular light, all sorts of chemicals, even the oxygen in the air. This can lead to the loss of your data when stored on a medium made of plastic or written/printed on plastic.
  • Can burn or be smoke damaged
  • Can be physically damaged, making data recovery expensive or even impossible
  • Magnetic media (tapes, floppy disc) can be damaged by magnets
  • Data can become difficult to recover if the software and/or hardware to decode is old, don’t use proprietary formats
Stored digitally on a flash drive
  • Can break and have to be physically repaired before use
  • Rapidly changing magnetic fields can damage the data stored on flash drives
  • Can burn or be smoke damaged
  • Can become corroded from salt water or some atmospheric conditions
  • If they break apart, some lighting conditions can cause data corruption (someone can also put them back together and often still get the data)
  • There are some fake flash drives that look like they saved the data but you can’t get it back later
  • Flash drives are not advised for long term storage; they can be used as one part of a multi-medium-location-format plan.
 A pre-funded physical bitcoin coin
  • The medium that the key is on is often paper/plastic which can burn or be smoke damaged
  • Trust in the manufacturer themselves, someone could have copied the key
  • Trust in their key generation procedure
  • Trust in the operational security of the manufacturer, they could be generating the keys on their everyday computer
  • Trust no one is successfully spying on them. What are their security procedures?Could someone be looking through their documents while they are out of town, or with tiny tin foil hat cameras or long range ones
  • Trust that the object was not tampered with in delivery
  • Trust that no one has tampered with the object in a way you could hardly notice

    How to solve these problems? A combination of good backup procedures and encryption

  • Using some form of multi-signature method and storing the parts in different locations you have permanent access to
  • Consider the Keyois Capsule as a stylish luxury model of a BIP38 wallet. Like a piggy bank it can be funded from the outside and must be destroyed to access the funds
  • Engraving, embossing, or stamping on a sheet of metal is cheaper but far more time consuming. – This puts you back at *anyone who can see it can steal it* so dip in plastic, wrap in duct tape, bury in drywall, encase in concrete, whatever just don’t leave unencrypted keys visible!
  • Have the words etched onto glass at home with off the shelf products; but this has it’s own dangers
  • Anodize the words yourself on a pieces of metal, there used to be a service to help use your home printer to print the words with some chemicals you can buy
  • Use a combination of techniques to split the seed so that it is safe(because it is split and separated) and redundant (because it is backed up)
  • The most cost effective way for a ‘normal’ person (without their own land, without more than one location, and who cannot trust anyone else with their funds) to keep their backup seed/ secret key safe from damage from the elements would probably to buy a stamping kit and hammer and some stainless steel sheet or bar

 Backups are essential for digital data

As we have learned, Bitcoin is a decentralized ledger and system of value transfer which uses a token called bitcoins. Note that the system is capitalized while the token is not.
1 dollar has 100 cents just like 1 bitcoin has 100,000,000 ‘satoshis’.

The security of bitcoin is related to its storage. What is in essence a very long or big number is normally kept on a computer or paper hard copy. There is always a low chance disaster will strike these copies, and without good bad up procedures the data may be lost. Here we try to show some of those problems with common methods of cold storage .

What is a paper wallet?

A paper wallet is the Secret Key by itself, most often written or printed on paper and sometimes with QR codes for easy transfer.

Although the Public Key and Address can be derived from the secret key alone, a paper wallet will often have the address printed with it so that more funds can be sent to that address.

A paper wallet should only be used if it was securely generated. Paper wallets must be kept safe, as elsewhere discussed a piece of paper can be destroyed in many ways.

About making an encrypted wallet.

Creating an encrypted wallet of your own is a safe way to store your Cryptos without having to trust anyone. When you generate your own encrypted secret keys securely you can share the secret key without worry.

Use long, random pass phrases and generate from a secure and always offline machine. Use websites like for ETH or for BTC

Generating securely isn’t that easy though. A computer needs to be used that is either dedicated offline and airgapped, or a RAM-only Operating System needs to be used offline. This is to ensure that no ‘computer viruses’ can watch you and steal your keys. The ladder option can be obtained by using a plug-and-play operating system such as Tails.

In addition to using a secure system the pass phrase needs to be long and random. At least 10 words is recommended minimum, more is better. Never use anything from any published work no matter how obscure. Always use random words, use Diceware or dice and wordlist to obtain random words. This pass phrase, and the website or method used to encrypt the wallet are crucial to spending it, you cannot lose them. You can save a website for using in the future or even for online use. To do this rightclick and hit save. Practice before the game.

Are they numbered? How many are/were made?

The first edition capsules have no numbers nor markings on the end pieces. The second edition capsules have a number laser engraved in the inside of the inner ring which you can read with a flashlight.

Enough material was created for 50 of each the 1st and 2nd edition capsules; but less were available to be made due to errors, accidents, and testing.

Of the sapphire blue and ruby red centerpieces only 25 of each were custom made for the Keyois Capsule.

The simulated alexandrite was also custom for the second edition.

Why no capsules with tritium centerpieces?

Although the Keyois Capsule was designed with these vials in mind it turns out there are rules in the US against repackaging tritium into toys without an expensive license.

What is Cold-Storage?

Cold storage is a term for an address or wallet which was: securely generated, has never been exposed to the internet, has never been spent from, and is often used as a long-term storage. It has been equated to a savings account at a bank.

Compare this to a ‘hot wallet’ which has either been used in the past and spent from or is being used regularly (such as a hardware wallet).

Where is the data? Can you deposit digital currency via the piggy bank?

A secret key or seed (usually encrypted) is engraved within the tamper evident capsule. The capsule contains a visibly engraved address that can be funded from the outside. Like a piggy bank you have to break the bit-capsule open to get access to the funds.

How do I open the package?

After you order and receive your package you may wonder how to open it. After taking out the unique sealed container just tap it with a hammer once or twice to reveal the goods inside.

Do the ruby, etc, centerpieces actually do anything for the storage mechanism?

They serve no functional benefit aside from being pretty, but did you know the first laser was made with synthetic ruby?

How do you pronounce ‘Keyois’?


How do you spend from it/ open it?

It’s a cryptocurrency piggy bank, you’ve got to destroy it to spend it. There are lots of ways to break it apart.

For example crushing it with a back-hoe works to expose the rings by opening the capsule.
A hammer and some props should suffice to get the titanium rings apart after freeing them.

Always wear gloves, eye, and ear protection when cutting glass and metal and be safe!

Can I buy an unassembled capsule?

Yes however tools and work are required to assemble the item.
Simply add a capsule like normal to your cart and in the checkout screen under the ‘special instructions area’ make a note to please ship the capsule unassembled.

All the capsule hardware is included, including centerpiece of choice and custom engraved ring-pair.

The following are recommend items for assembly: high-strength epoxy to seal the rings and optionally reinforce the endpieces to the supports; high-strength threadlocker for the screws; a screwdriver and torque driver / screw gun to tighten the screws; a drill with a metal cutting drill bit between sizes 11/64 and 13/64″ to drill out the screw heads.

A number of custom parts

Can the capsule be used for cryptos other than bitcoin?

Yes! If there is a public address and a secret set of information.

As length goes up legibility goes down. To fit the secret key or seed on the smaller metal ring the font size must be smaller than the address ring. About 65 characters can fit one one line of the secret key.

Are they numbered? How many are/were made?

The first edition capsules have no numbers nor markings on the end pieces. The second edition capsules have a number laser engraved in the inside of the inner ring which you can read with a flashlight.

Enough material was created for 50 of each the 1st and 2nd edition capsules; but less were available to be made due to errors, accidents, and testing.

Of the sapphire blue and ruby red centerpieces only 25 of each were custom made for the Keyois Capsule.

The simulated alexandrite was also custom for the second edition.

Why no capsules with tritium centerpieces?

Although the Keyois Capsule was designed with these vials in mind it turns out there are rules in the US against repackaging tritium into toys without an expensive license.

I want one. But I’m not familiar with BIP38.

Google is your friend!

BIP38 can seem daunting but there are many very helpful guides across the internet.
Create a secure pass phrase in a random way, then use a site like bitaddress or bip32 on a secure computer to generate a wallet. Once this is done you shouldn’t fear showing anyone your encrypted secret key if your pass phrase is secure.
If your only copy of the encrypted secret key is inside a keyois capsule you can keep your capsule safe while making copies or splitting your decryption key.

These are just a few of the many guides available online:


The Keyois Capsule is a type of ‘physical bitcoin’

A physical bitcoin is a cryptographic key pair (or often just the secret key and address) put onto a physical medium. Before the Keyois Capsule a physical bitcoin was mostly a  secret key printed on plastic and affixed to what has always before been a physical coin. The first physical-bitcoin-coin was the Casascius coin, since then the world of physical bitcoin coins has blossomed as a fun part of the Bitcoin world.

Early physical bitcoins were made and assembled by the creator, which included them generating and affixing the secret key. In these cases the buyer has to trust the maker and their practices. To avoid the security risks inherent in this, BIP38 was created as a way to encrypt the secret key with a pass phrase.

Wallets can be made with BIP38 encryption and already existing wallets can be converted to BIP38. Here is a video explaining how to do it. But in essence use a secure computer and strong pass phrase with a site like or to create a BIP38 wallet. Dice and diceware can help you make a strong and random pass phrase.

Original postings:

The motivation to build the Keyois Capsule:
What’s wrong with my current cold storage method?

The original sales post about Keyois Capsule on

Who would want this?

Those with limited abilities for proper backup procedures. Good backups should always be in multiple locations and renters, those without trustworthy family, or those that live in a city might not have that option. Backups should be in multiple formats however if they are all in the same spot when disaster strikes then they may all be ruined.

Someone who doesn’t trust others or have places to leave their cryptocurrencies might have to keep their all stored data nearby.  These people might also want their funds to be able to survive a housefire or flood.

About the creation of the Keyois Capsule

For pictures please see this imgur album.

Inspired by other physical bitcoins but unsatisfied with their designs we reached out to others to make something new but didn’t hear back. So we decided to do it ourselves.  The project was started with only a vague idea and no experience in what would be needed to complete it.

The basic concept was centered around: being tamper evident, being fireproof, and the desire to use a tritium vial that was lying around. Tritium vials glow for years, even in total darkness, but fade away eventually. They still make an excellent decoration for the Keyois Capsule though.
The capsules were designed to last many decades but the tritium lasts two decades at most. Lab-created corundum was chosen as a second option. Chemically identical to the rubies and sapphires found in the ground, these gem centerpieces are a 9 on the Mohs hardness scale, almost as hard as diamond, and will keep their beauty forever.

It also remains that within the USA it’s illegal to repackage tritium into toys etc and sell them without rigorous and expensive testing.

The creator of the Keyois Capsule has created some amount of bad art previously but is not a professional artist. Subjects researched or encountered during the planning and execution of this project were mostly new and included:

CAD programs; 3D printing; metals & minerals; melting temperatures; hardnesses; metal plating; corrosion including galvanic corrosion (don’t keep the capsule in saltwater {or almost anything really} for long periods of time); powder coating; reflective coatings; temperature/liquid/gas indicating paint; Lichtenberg figures; RFID tags; glow in the dark paint; working with glass/concrete/clay; btctalkorg; laser cutting and engraving; sheet metal stamping; gimp photo-editing software; vector graphics; bad photography; fabrication; machine shops; screws; glues; customs and tritium rules in the usa; O-ring materials; X-rays; building a website ‘store’; and even some trigonometry.

Hope you enjoyed learning about the creation of the Keyois capsule, have a great day!

This is the WPForms preview page. All your form previews will be handled on this page.

The page is set to private, so it is not publically accessible. Please do not delete this page 🙂 .

If you got an encrypted capsule a public address and encrypted secret key/seed are needed for every capsule. Please use this form to submit that information or use the contact button.

A bitcoin or other cryptocurrency address
Please provide an email in case there are any typos or if you want to communicate the information in a different way.

For Bitcoin-Cash payments please use the GoUrl option
For Legacy-bitcoin payments have been disabled for the time being
For Ether payments please use the Pay-with-ETH option


Cold Storage Photos – Prototype Photos – Glamourshots

See a list of all photo albums below

List of all photo albums:  and more Centerpieces


The Keyois Capsule is a cryptocurrency piggybank. Designed for Bitcoin storage it can be used with almost any blockchain token.

The idea was to take the concept of a paper wallet and make it tamper evident and resistant to a wide range of damages.


The two main problems with regular cold storage are:

  • A backup seed or secret key which is simply written down is at risk, someone can take a picture and steal that information without you ever knowing.
  • Many methods of cold storage can be affected and ruined by disaster or damage from: smoke, fire, heat, water, rot, rust, corrosion, and being smashed.

The Keyois Capsule aims to solve these issues in a fun and elegant way.


Two laser-engraved metal rings hold the information inside a water-tight capsule.

On the outer ring the public address is carved into the rings so that anyone can read it from the outside and fund it.

The inner ring contains the secret information and is fixed inside the larger ring with high strength epoxy.

To access the encrypted secret key/seed one would need to destroy the capsule and forcibly separate the rings, thus achieving a tamper-evident quality.

In the middle of the capsule is a small centerpiece for decoration. There are a number of options for these centerpieces that you can see in the photos tab.

The screw threads are secured with a high temperature and high strength threadlocker and the screw heads are drilled out.

More Information

These rings are glazed with a holographic paint so that they glitter in sunlight.

We encourage you to create and submit your own BIP38 encrypted secret key and address for engraving.

The capsule is flooded with CO2 prior to being sealed in an attempt to displace the oxygen in the atmosphere.


First Edition Keyois Capsules

The first edition Keyois Capsules have:

  • Two different sized rings each made of grade five titanium;
  • Mirror polished aircraft-grade aluminium ‘end pieces’ with a 60 micron chromium plating;
  • Deeper recesses for the screws;
  • Borosilicate glass (aka pyrex) surrounding it;
  • O-rings of silicone and nitrile

Second Edition Keyois Capsules

The second edition Keyois Capsules have:

  • Tungsten carbide rings;
  • Aluminium-6061 alloy end pieces with mirror polish and chrome plating;
  • Slightly longer screws;
  • Borosilicate viewing glass;
  • All silicone o-rings;
  • Product numbers which are laser-engraved in the inside of the inner ring

Centerpiece Information

The center pieces are a fun decoration for the Keyois Capsule and there are a variety of them. Here is a list of the stock options with a short blurb of information.

  • Ruby Red Lab-Created Corundum – Cylinderical centerpieces made of Aluminium Oxide or Al2O3. They are chemically identical to gems found in the ground however they lacks occlusions and imperfections. On the Mohs hardness scale corundum is a 9, just below diamond and well above steel, titanium, topaz, and glass. The ruby red centerpieces glow brightly under UV light.
  • Sapphire Blue Lab-Created Corundum – Custom created along with the ruby cylinders for the 1st edition keyois capsules, there were only 25 of each type made. The stones are fairly dark without lighting, don’t be fooled by my glorious photographs.
  • Simulated Alexandrite – Semi-Color changing lab-created corundum laced with vanadium. Made specialy for the 2nd edition keyois capsules these centerpieces appear clear with a light tint of violet or lavender in sunlight despite how they appear highly colored in the photographs. They lightly glow a bright red under UV light.
  • Green Tourmaline – Dark green tourmaline crystals can appear blue or black at times and are translucent with directly opposing light but for the most part remain dark and opaque.
  • Natural Quartz – These small natural quartz crystals come in any size that fits securely in the centerpiece area and are all different. See some example photos if interested.
  • 9k Yellow Gold Tube – weight: 0.95g, 0.45mm wall thickness, available for a small extra charge.
  • 14k Yellow Gold Tube – weight: 0.61g, 0.25mm wall thickness, with an outer diameter of 2.79 mm, available for a small extra charge.
  • 18k Yellow Gold Tube – weight: 1.31g, is 23.5mm in length with an outer diameter of 3mm. Available for an extra charge .
  • 92.5% Silver AKA Sterling Silver Tube – weight: 0.56g available in both smooth and rough appearance.
  • 99.9% Fine Silver Tube – Looks pretty much the same as the sterling silver tube, but we got it!
  • Platinum Tube – Currently out of stock, weighing in at around 1.66g

Turn around time is around 3-5 weeks.
Please contact us if you have any questions.