Blockchain tutorial 28: Bitcoin Improvement Proposal 39 (BIP-39) mnemonic words Video Lecture | Blockchain Tutorial: A Fundamental Guide - Cryptocurrency

in this video I will explain what the
wallet is what the difference is between
a non-deterministic wallet and a
deterministic wallet
what minimum ik words are and what
Bitcoin improvement proposal 39 is
what is a wallet a wallet stores private
keys the public addresses are
automatically derived from the private
keys a wallet does not store coins such
as Bitcoin litecoin either etc if you
open your Bitcoin wallet and one of your
Bitcoin addresses shows that it has a
balance of five bitcoins then these
bitcoins are not actually stored in your
wallet it means that these five bitcoins
were transferred to your Bitcoin address
during a transaction this transaction
information is stored on the blockchain
your wallet queries the blockchain and
searches for unspent transaction outputs
for all your Bitcoin addresses to
display their balances the bitcoins on
these unspent transaction outputs can be
unlocked and transferred to another
Bitcoin address using the private keys
stored in the wallet the word wallet is
misleading it just stores private keys
and not the coins if you lose your
wallet you lose your private keys and if
you lose your private keys you cannot
unlock on spend transaction outputs this
means you have lost access to your coins
however if you can restore your private
keys for example you have made a backup
you can always access your coins first I
will explain what a non-deterministic
wallet is wallet stores private keys but
they also create these private keys a
non deterministic wallet does the
following it generates private key u1
which in turn creates a corresponding
public address 1 it generates private
key 2 which in turn creates a
corresponding public address 2 etc the
private keys are randomly generated
numbers which are not related to each
other
you cannot derive these private keys
with an algorithm
hence the words non-deterministic
if you use a non-deterministic wallet
you must make regular backups of these
private keys if you have problems with
your wallet you can restore your wallet
by importing the backup private keys to
explain the inner working of a
non-deterministic wallet see this web
application
this web application please use this web
application for educational purpose only
I've select a Bitcoin over here
each time if I press the generate button
it generates a random number this random
number is used to create a private
address and the corresponding public
address the generated addresses are not
related to each other and this is what
happens inside a non-deterministic
wallet
now I will explain what a deterministic
wallet is a deterministic wallet uses 12
to 24 words to create a 512 bit seed for
example the word choice fatal slab
rookie etc these words are called
mnemonic words because they are more
easily to remember than this long
hexadecimal string
the 512-bit seat is used to create a
master private key
this master private key in turn is used
to create private keys and corresponding
public addresses here in overview what
happens inside the deterministic wallet
it generates 12 to 24 words which is
used to create a 512 bit seed the 5.12
bit seed is used as input to create a
master private key and the master
private key is used to generate private
keys and public addresses
generally speaking using these 12 to 24
words will completely restore your
wallet with exactly the same private
keys and corresponding public addresses
hence the word deterministic it is
imperative that you safely store these
12 to 24 words without it you have no
access to your private keys to see how
an etherium deterministic wallet works
see youtube movie meta mask how to
restore your accounts
this YouTube movie
the acronym BIP means Bitcoin
improvement proposal Rifkin improvement
proposals are design documents for
introducing features or information to
Bitcoin and offer few can be found at
this location
as you can see over here you can see all
Bitcoin improvement proposals
Bitcoin improvement proposal 39
describes the implementation of mnemonic
words for the generation of
deterministic wallets more information
about Bitcoin improvement proposal 39
can be found at this location
Bitcoin improvement proposal 39 is
becoming an industry standard which is
not only used for Bitcoin wallets but
it's also used in aetherium - and other
old coin wards
now I will explain how the mnemonic
words are implemented first you create a
random number this random number must
have a length of 128 bits 160 bits 192
bits 224 bits or 256 bits these lengths
are always a multiple of 32 here's an
example I create a random number which
is 128 bits long and here's a
representation of this random number
I've only displayed the first two bytes
and the last two bytes
please note more bits means better
security what means more mnemonic words
by the way the faribault end means
entropy and entropy means disorder next
you take a random number length in bits
and the fighter by 32 if we look at our
example which is 128 bits long in the
file by 32 and the checksum length is 4
bits next you apply the sha-256
algorithm to the random number and
assign it to the variable hash this is
our random number and we apply the shaft
256 algorithm and assigned to the
variable hash when you apply the sha-256
algorithm you will get this hash value
this hash value is 256 bits long next we
take the first checksum link bits of the
hash and assigned to the variable CS
which stands for checksum in our example
this was our hash value if you convert
this hash value into a binary
representation you will get this i only
displayed the first 8 bits our checksum
length was 4 bits so these four bits is
assigned to the variable CS next we
append the checksum at the end of the
random number so here's the random
number and we append
checksum if this is our random number we
append the checksum at the end we assign
this value to the faribault and
underscore CS next we split the failure
of the variable NCS in groups of 11 bits
so here are 8 bits and we take 3 bits to
form a group of 11 bits we do the same
for all the other bytes to see what
happens at the end here are the 4 bits
plus 7 bits which forms a group of 11
bits next we convert each 11 bits into
integers if we convert this binary value
into an integer it is 1401 and if you
convert this binary value into an
integer it is 1507 in this example I
only convert the first 11 bits and the
last 11 bits this is the first value and
this is last value each integer value is
a word index the number of combinations
you will get with 11 bits is 2 to the
power of 11 which is 2048 the value
range is 0-2 2047 the word list can be
found at this location here you can find
a word list
there are several word lists for
different languages let's look at the
English word list the word list starts
with the word abandoned
and it ends with a word zu as you can
see we have a total 2048 words each word
is assigned a different word index
the word abandoned has word index zero
in computer programming we always start
with the value zero so the word
abandoned is aside the word index zero
the word ability is assigned to word
index value of 1 the word Abel is
assigned the word index value of 2 etc
the word list consists of 2048 words
these words and the order must not be
changed the word list is also available
in other languages use the word list to
find the words for each word index value
in our example word index value 1401 has
the word quality and the word index
value 1507 has the word round you will
get an array of mnemonic words starting
with the word quality and ending with
the word round
let's check this this is the English
word list the word index value 1401 has
the word quality by the way we have to
subtract this value with one to get the
word index value 1401 word index value
1507 has the word round by the way all
this word lists have also 2048 words if
you look at fringe
it has also 2048 words
as you can see over here
the same applies for Chinese
2,048 words
in this column you will see the random
number length in bits and these are the
number of words generated and these are
the combinations you will get for
example if you have a random number
which is 128 bits long
it will generate twelve words with these
twelve words you can create a
combination of 2048 to the power of 12
if you convert this value into a power
of 10 you will get this value if you
increase the random number bit length
the number of combinations will increase
which means better security to give you
an idea how big these numbers are the
number of atoms in the entire observable
universe is estimated to be within the
range of 10 to the power of 78 to 10 to
the power of 82 to be honest I don't
know if these numbers are correct I've
searched the internet and found these
values
next we concatenate these words into a
one long string in our example the
mnemonic words is quality and ending
with around the monomial phrase will be
quality and ending with the word round
optionally for additional security you
can allow users to enter a passphrase
for example the passphrase can be my big
secret the word Manama k-- together with
the pass rate is used assault if no
passphrase is used the passphrase is an
empty string for example salt is the
word mnemonic plus passphrase in our
example the salt will be mono Manik
might be acquitted
use the password-based key derivation
function - together with the banal
mcveigh's and salt to produce a 512 bit
seed the iteration count is set to 2048
and H make sha-512 is used as the absurd
a random function if an ethicist gets
his hands on your demonic words the
passphrase if you have said it will
prevent the attacker to access the
private keys password-based key
derivation function - is purposely made
slow to make brute-force dictionary
attack very difficult
here a schema how the password-based key
derivation function to works it uses the
salt and the mnemonic phrase as input it
uses the H makes sha-512 function and
2048 iterations to generate the 512 bit
seed
the 512-bit seat is used to generate the
terminus t'k wallets how to generate
deterministic Wallace is explained in
bitcoin improvement pros of 32 and
Bitcoin improvement for pros of 44 it is
important to know that each time you
enter a different pass phrase it will
generate a valid 512 bit seed and thus a
valid wallet with valid public and
private key pairs this feature can help
you limit your loss
after $5 range attack you can set up a
second deterministic wallet with some
coins to satisfy the attacker if you do
not know what a $5 range attack is watch
this comic at this location for
copyright reasons I cannot show you this
comic storing your passwords at the same
location as your mnemonic words is not
recommended and beats the purpose but if
you lose your passphrase you have lost
access to your coins a JavaScript
implementation of Bitcoin improvement
proposal 39 can be found at this
location
this is the JavaScript implementation
this javascript library is easy to use
how does javascript library is used see
this location
I've implemented this JavaScript library
if you look in the source code
it's just a few lines of JavaScript code
let's demonstrate how it works let's
select one hunt when to eight bits you
have to select the word list
that's like English and the password is
optional so let's leave this empty and
press this button here are the generated
million monic words there are a total 12
words this is a seed which you are
interested in this seat can be used to
generate the private keys and the
corresponding public addresses but that
will be a subject for another video the
number of words generated is 12 if we
change the entropy length 260 it will
generate 15 words 192 it will generate
18 words 224 it will generate 21 words
256 it will generate 24 words if we
change the word list to chinese
Simplified it will generate chinese mini
monic words let's switch it back to
english if you press the generate button
you can see this seed but if you enter a
password secret you press this button
then the see it will change
by adding a password it will change the
seed so this is the other way around
let's assume you have lost your wallet
and you want to recreate the seed you
pace your words in this text box the
word list is English you press this
button
it will recreate the seed you can see
over here
their seed
matches this seat let's see what happens
if you enter a password the password is
secret
it will generate the seed let's assume
your wallet is corrupt you want to
recreate your wallet again
the same words worthless is English here
past what is secret
and as you can see the seed matches the
seed
Mahna Mahna code converter web
application can be found at this
location
application has implemented the Bitcoin
improvement proposal 39 but it also
implemented the Bitcoin improvement
proposal 30 to 44 and 49 which means it
also generates private keys and the
corresponding public addresses
in my next video about hierarchical
deterministic wallet I will explain how
the 512-bit seat is used to create the
private keys and the corresponding
public addresses thanks for watching
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