*************************************************************************** *** DEMONSTRATION HOW AN ADDRESS GETS COMPROMISED *** *************************************************************************** A. Initial situation: Alice wallet address 0: 1 B. Alice sends 1 IOTA to Charlie. Alice wallet address 0: 0 Note: 1 IOTA is sent from address 0, 50% of address 0 private key (randomly) is revealed. C. A network wide snapshot is applied. D. After the snapshot Alice does not attach any address to the Tangle. Note: Alice makes a mistake here, she should attach the same number of addresses she had before the snaphot. E. Bob wants to pay Alice 10 IOTA. F. Alice creates an address and attach it to the Tangle. Alice gives address 0 to Bob. Alice wallet address 0: 0 Note: Address 0 is attached to the Tangle. G. Bob sends 10 IOTA to Alice using address 0 Alice wallet address 0: 10 H. Alice sends 10 IOTA to Dave Alice wallet address 0: 0 Note: Address 0 is now compromised, it it used twice for outgoing transactions. I. Again a network wide snapshot is applied. J. After the snapshot Alice does not attach any address to the Tangle. K. Karl wants to pay Alice 1000 IOTA. L. Alice creates an address and attach it to the Tangle. Alice gives address 0 to Karl. Alice wallet address 0: 0 Note: Address 0 is attached to the Tangle. M. Karl sends 1000 IOTA to Alice using address 0, while Alice goes on holiday. Alice wallet address 0: 1000 Note: - In step M, address 0 was compromised and now address 0 has a balance. - By brute force computing hackers can try to find the complete private key and thus stealing the tokens from address 0. - There is no 100% guarantee that the hacker will succeed, it all depends on how much of the private key is revealed and the computer power used. - The seed is SAVE. Only address 0 is compromised.