BitMEX Research On How Not To Use Brain Wallets – Bitcoin Magazine

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BitMEX has been dominating the cryptocurrency news cycle lately, for reasons that it would rather avoid. On October 1, the U.S. Commodity Futures Trading Commission (CFTC) charged the exchange with facilitating unregistered trading, and the District of New York filed criminal actions against its founders, Arthur Hayes, Ben Delo and Samuel Reed. Reed, BitMEX’s CTO, was arrested and subsequently released on a $5 million bond. The three co-founders stepped down from their positions on October 8.

But amid this flurry of action emerged a bright spot worth highlighting, and worth an invitation into some fascinating Bitcoin Rabbit Holes. Yesterday, BitMEX Research, the exchange’s renowned technical analysis arm, released a fascinating, novel and thoroughly Bitcoiny report entitled “Call Me Ishmael.”

Creating A Brain Wallet

The report involved a hands-on test of brain wallets, a type of Bitcoin wallet that sees the user memorize a seed phrase associated with an address and delete the digital version (thus storing it in their brain only, potentially reducing a point of failure and creating a special kind of fund security). The concept of brain wallets dates back to the early days of Bitcoin, and they present a Rabbit Hole worthy of your exploration. Check out this Bitcoin Magazine article on the topic from 2012, by none other than Vitalik Buterin, for what’s probably the first comprehensive explanation of the topic.

“We have QR code wallets, paper wallets, coins with private keys hidden behind a hologram, etc.,” Buterin wrote. “However, the most interesting of all alternatives is the place where humans have been storing most of our information for the past 100,000 years: in our brains.”

Back in 2012, Buterin explained that, thanks to public online tools from that era like firstbits.com, Grondilu’s…

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