A Spendable Cold Wallet from QR Video

Hot/cold wallet refers to a widely used paradigm to enhance the security level of cryptocurrency applications that was proposed on Bitcoin Improvement Proposal 32. In a nutshell, after performing an initial setup in which the hot wallet receives partial information of the cold wallet in order to hierarchically generate (transaction receiving) addresses, the cold wallet stays offline, whereas the hot wallet is kept online. The initial transferred information enables the hot wallet to generate receiving addresses for both wallets, but it can only spend its own funds, i.e., it cannot spend the funds in the cold wallet. This design conveniently mimics money storage in daily life: pocket money is kept in a less safe location, e.g., a regular wallet, while life savings are kept in a more safe environment, e.g., banking account. Note that the funds that land in offline addresses cannot be spent if the cold wallet is kept permanently offline. We propose a protocol and a technical solution to spend funds from a cold wallet without physically connecting it to any network. We designed and implemented a prototype for a system based on Optical Camera Communication (OCC) in a screen to camera setting, which can receive messages from a computer screen at the rate of over 150kB per second. Our system consists of a sequence of QR codes – a QR video. Our solution minimizes the possible attack vectors, including malware, by relying on optical communication yet providing a larger bandwidth than regular QR code based solutions.