Bitcoin Armory Review
It's not the simplest, but if you want to run a DIY full node, multisig, cold storage solution, and you want to run it on an old disconnected laptop, well have I got some welcome news for you...
- Desktop, Hardware
- Multisig, Cold Storage
- Full Node
- M of N multisig cold storage
- Full node!
- Set it up with an old, unused computer!
- Desktop only
- Set up, signing transactions is not the easiest (but that sort of is the point)
Bitcoin Armory has arguably the most comprehensive set of wallet functionalities in the market. The online wallet is HD and has a flexible multiple-signature feature, meaning armory is among the top online wallets out there. But armory is perhaps best known for it’s cold storage solution. Great online solution, great offline solution, one wallet.
Indeed, Bitcoin Armory provides enterprise cold storage solutions to some of the biggest names in the exchange marketplace, notably Bitfinex. If Bitfinex, the industry’s largest USD/BTC exchange, has chosen Bitcoin Armory to protect it’s bitcoin reserves, it is a good indication of the robustness of the solution.
There are two issues with Bitcoin Armory. The client is “thick” meaning that it requires the downloading and running of the entire blockchain, about 40gb and 2gb of ram to run. There is also, at time of writing, no mobile solution, which is very inconvenient for making transactions on the go.
The Bitcoin Armory Wallet
Bitcoin Armory cold storage
Cold storage eliminates the risk of client-side online storage, susceptible to malware, or server-side storage, with the threat of hacks, insider scams or insolvent operations. The only threat to cold storage wallets is physical theft, but securing against physical theft is much simpler than securing against viruses, keystrokes, trojan horses, and the threat of server-side meltdowns!
The armory cold storage system requires a private key to be held in a computer kept entirely offline. The corresponding public address is stored in the armory online wallet. The public address is called a “watching only wallet”, as it has no corresponding private key online to sign transactions. While this type of address can receive bitcoin, outbound transactions may only be sent if digitally signed offline, with the signed transaction uploaded with a usb cable. Sounds complicated, but only takes a minute or two once you get the hang of it. Please see below a step-by-step guide to setting up the armory cold storage solution.
1. Download armory on your regular PC.
2. Copy the wallet to a usb drive.
3. Install the wallet on the non-connected computer.
4. Optional: encrypt the offline computer. Make sure you remember the passphrase!
5. Make a paper or digital backup of the offline system, which should be stored safely.
6. Create a Watching Only Wallet copy of the wallet in ” wallet properties”. Copy the wallet back to the USB drive.
7. Transfer the wallet to the online computer. In wallet properties click on “belong to” and check “this wallet is mine.
8. To sign transactions, create unsigned transactions in the online wallet, copy it to your usb, load it into the offline wallet, and sign offline. Then bring the transaction back to the online wallet, load it, and you’ve just signed with an entirely offline private key.
You’ve just created your cold storage system, and your private key is hermetically sealed from all the horrible malwares, trojan horses and other terrible things lurking on the internet!
Bitcoin Armory online wallet
The wallet is Hierarchical Deterministic (HD), meaning that multiple wallets can be set from the same private key, easily done through the armory interface. The multiple wallet function is very convenient, as you may organize different types of transactions according to wallet, which can help with auditing or accounting later. Within each wallet, multiple receiving addresses can be set, and descriptions added.
An additional value to the HD wallet feature is that a single paper or digital backup of bitcoin armory can restore all of the wallets and addresses that ever were or will be generated. Once the initial paper backup is made (and securely stored), a user will never need to make another backup.
Armory wallet encryption is meant to be tough against potential encryption-cracking techniques, and thus a passphrase is needed to un-encrypt the wallet. The user is the only one with access to the passphrase. If the passphrase is forgotten and no paper backup has been made, the wallet is lost forever!
There is a unique lockbox feature with flexible multiple-signature configurations, allowing from 1-2 to 7-7 signatures required. This flexibility is meant to allow scaling to suit families who would like husband and wife to cosign transactions, to large corporations requiring a certain number of executive signatures.
Bitcoin Armory is a very complex product for a new bitcoin user. Anyone can use it as a simple wallet, but to take advantage of its unique host of features and gain maximum security for your coin, you’ll need to invest a bit of time in learning the system. If you want a good cold storage solution and you don’t want to pony up $89 for the trezor and/or you want it to double as a full node, bitcoin armory is your solution.