Towards New Self-Custody Best Practices

The technical community is urged to develop protocols that ensure both security and user-friendliness. A key recommendation includes adopting multi-vendor 2-of-2 multisig setups, to avoid the risks associated with relying on a single vendor. This setup prevents systemic failures if one vendor’s device is compromised. It has also been suggested that users should be involved in generating and verifying entropy to enhance security. A practical approach is for users to choose most of their seed words from a complete set of BIP39 words, using methods like physical mixing or shuffled card decks to ensure randomness. Additionally, robust materials such as steel or titanium plates are recommended for creating durable backups of seed words, which should be tested by wiping and restoring the wallet to verify accuracy.

Further discussions emphasize the importance of manual seed generation to eliminate dependencies on potentially compromised hardware or software. Utilizing physical objects like dice or cards can keep the seed generation process offline, reducing exposure to security threats. Tools such as Seedsigner can assist in calculating checksums accurately, ensuring the integrity of manually generated seeds. Moreover, it is proposed that hardware wallets should include functionalities to verify and correct checksums, enhancing security by alerting users to any discrepancies in seed phrases.

In scenarios where trust in a single device is questionable, employing two devices can significantly decrease the risk of simultaneous compromise, offering a stronger security framework. Advanced users might opt for more complex multi-signature schemes, such as 2-of-3 or 3-of-5 configurations, tailored to their understanding and management capabilities of digital assets. For substantial investments, a multi-vendor 2-of-2 configuration is advised, which requires multiple keys for access but also necessitates careful backup and recovery procedures to mitigate risks associated with user error.

Regarding software wallets, there is a push for enhancements that support multisignature setups more robustly. One innovative suggestion is to encode master extended public keys directly on the blockchain, securing these keys while simplifying access and recovery processes. This would be especially beneficial in configurations like 2-of-3 or 3-of-5 schemes, where the loss of one key does not compromise asset access, provided the remaining keys are secure. Such advancements could foster wider adoption and trust in software wallets as reliable tools for managing digital assets securely.

Overall, the community's focus is on making secure practices more accessible and user-friendly, ensuring that individuals can maintain control over their digital assets with minimized risks. These efforts are crucial in building trust and encouraging the adoption of technologies that protect user interests effectively.