I would hope the Bitcoin client uses a different method to receive your password like an on screen keyboard but this will open the client to a screen capture on mouse event.  Still it is better then what we have now.




If we make the client more resistant to fly by the night attacks this would cut down on the successful thefts on the Bitcoin wallets.  There will be intelligent viruses and trojans that overcome all security methods but these would be more specialized.  We need to make it more difficult for hackers to even want to steal the bitcoins and find some other low hanging fruit like the real banks.  

I like your polymorphic moving target memory idea.  Can you send the code to the developers.  


I understand what your are talking about but what do we do?  Put our head in the sand and let Bitcoin go away or centralize and put our Bitcoins back in a digital bank that is insured by the FDIC and end back where we are now.  I doubt I will lose my Bitcoins on my secure Linux box but everyone I work with that is not technical would not be able to run their own secure Linux box.  They can not even secure Windows.  I gave up supporting Windows for my family and friends.   I only run Linux Systems at my home and I only support Linux for family and friends that are willing to go in a different direction and not use Windows.

Maybe we need a hardware device that is not on the Internet that holds our wallet private keys and uses an API over the local LAN to request that you send money.  Then you have to walk over to this secure hardware widget and put in your password there.  Of course this would put Bitcoin out of the hands of everyday users who would not want to spend any additional money to send and receive Bitcoins.  

-Dukejer

It'd probably be a good idea for everyone to use something like LittleSnitch to add to security.  It won't make you bulletproof but with something like LittleSnitch (or ZoneAlarm's solution) you can be alerted to any ingoing or outgoing activity from your computer and you have to either deny it or approve it.

Someone else is working on a script that generates a Bitcoin address from a Live CD.  Although I'd love to sell lots of Paper Bitcoin Wallets, when this script is tested and finished and assured to work properly, the Live CD (for someone who can manage it) is in theory a very airtight method to generate a safe address that requires minimal trust.

If you generate a bitcoin address from a Live CD with no network connection, you can be assured it's safe, and there's nobody to trust.  It's also simple enough that most people could manage it, the worst case is their computer is set to not boot CD's and has to have a setting changed.

Of course, you must trust the maker of the script - however, the script is fairly simple - it merely calls OpenSSL to generate a keypair and reformats it into a Bitcoin address - so even if you don't know the nuances of the scripting language, it's not too hard for the conscientious observer to tell there's no shenanigans in it.

Oh come on. While I absolutely agree that Linux is more secure and generally a better idea to use it, this could not have been prevented by using Linux.
Your wallet.dat is in your home directory, in the .bitcoin folder. That means it is freely accessible by any binary you run. All it has to do is grab that file, and ftp/email/something else it to someone. That is all perfectly possible, even from a severely limited Linux user account.
Supporting Linux for its features is all fine, but don't go run around like a blind fanboy, saying the entire world could be saved by running Linux.

Bullshit. A wallet.dat with a password (and said wallet.dat never touching the disk in unencrypted form) prevents outright stealing of a wallet.dat file, as you would need the password and/or keyfile to unlock it. That means that simple hit-and-run wallet.dat stealers are practically useless.
This is also why third-party encryption is practically useless. Either your virtual disk with wallet is mounted (and it can be read off said disk as if it was never encrypted, doing a simple filesystem search) or it's not, in which case you can't use Bitcoin. Having to decrypt the wallet every time you want to use it (and thus leaving an unencrypted copy on your hard drive) is not an option either. This is why the client ITSELF should provide encryption that only happens when the wallet is actually needed, and that doesn't let the unencrypted wallet touch the drive, ever.

And what if your server is compromised? Exactly.

Screen flickering and/or hiding the numbers/letters when mousing over them (funnily enough Runescape uses a system like this for their bank PINs).

There have been proper free antivirus solutions for years. The problem is that the antivirus solution offered by Microsoft is really only a patch to something that should have been prevented before. They should have made a properly secured architecture for Windows from the very beginning. Look at it like this: Linux uses a condom, Microsoft relies on the morning-after pill.

So, create a new user for bitcoin, use it just for bitcoin and it won't be accessible from your normal user login.  I haven't actually done this but it seems like an easy way to get extra protection.

I am just afraid that Android is as big as a target as Windows for exploits in the future.  I would think a more custom OS that runs on the old cheap Android hardware would be a little more secure.  I understand now why you want to keep the private keys on the PC and download them to the Android device temporarily.  Unfortunately if someone has enough physical access to the cell phone and PC you could easily just take the hard drive or copy the keys to a bootable USB stick.  Once a site is physically compromised there are no safe bets.  A stolen cell phone that has a password protected wallet in it would not be worth much to a thief without already knowing the pin/password or monitoring the phone with screen capture or some other monitoring method like a webcam from the PC.

-Dukejer

Is there any third party software that makes use of permissions in Windows like this effectively?  Is there a way to handle this type of usage case, even for versions of Windows without user configurable permissions (i.e. versions below Pro)?

Yes, windows itself. Teach users to log on to that account ONLY if they want to use bitcoin, and make sure the user does not have malware running system-wide (because then the wallet.dat could still be nabbed when logging in to the bitcoin user).

Having software to do this without having to log on to another user would be defeating the purpose - because malware could just emulate and/or control that software.

You can only use a password to protect (= encrypt) the private keys. Once someone has those keys he can do what he wants.

It's what is happening right now... and your password is in the wallet.dat file.