The exchange Phemex, founded by 8 former Morgan Stanley programmers, has announced the new bitcoin puzzle in which 2.1 BTC, equivalent to about $18,000, have been hidden.
The SatoshiPuzzle.png file, which apparently shows a computer-generated portrait of Satoshi, hides a private key of a bitcoin address on which 1.1 BTC has been deposited.
To decipher the code participants will have to use a combination of algorithms, mathematics and encryption and when they find the private key they can use it to transfer the BTC to their own address.
The remaining 1 BTC will be deposited to the user’s Phemex account, upon proof of possession of the private key.
Phemex co-founder Max Wong said:
“If no one can crack it in a week we will publish some hints to help people out”.
The team’s goal, in addition to mere publicity, is to highlight the importance of safe custody of the private key, showing how easy it can be to get hold of bitcoin once the private key of an address where they are stored has been discovered.
In fact, the exchange team has created its own innovative deterministic cold wallet hierarchical system that assigns an independent custody address to each user so that all resources are stored in cold wallets.
Phemex co-founder and CEO Jack Tao said:
“Overall “hot” online wallets tend to be much more vulnerable than “cold” offline wallets. Managing thousands of private keys is inoperable and risky for an exchange, which is why we built our own Hierarchical Deterministic Cold Wallet System. From a “seed” our system can generate millions of private keys, each of which will be linked to their public keys, basically BTC addresses. All keys are independent of each other but can be easily recovered by the Phemex seed key if any private key goes missing. The seed key and all private keys are stored offline, hence in “cold” storage, to ensure maximum security for users”.