Recommendations for implementing a Bitcoin wallet using smart card

Abstract

Bitcoin is a decentralized peer-to-peer electronic cash system that allows any two willing parties to transact directly without the need for a trusted third party. The user's funds are protected by private keys that must be kept safe, preferably not on third party wallet services, but on hardware wallets, which are the best balance between very high security and ease of use. In this work we made a review on cryptography, the Bitcoin protocol and secure elements, then we dived into the project of hardware wallets, discussing different requirements and ways to construct one. Our proposed device uses an anti tamper Java Card to store the private keys. We considered variations of the device, one with a dedicated touchscreen and another with NFC to integrate with a mobile phone. We analyzed security aspects of the project, made recommendations and described some challenges. Finally, we implemented our own open source prototype, showing the architecture of the project, its components, the requirements, the APDU communication protocol and the results.