Quote from: etotheipi on December 01, 2013, 03:36:52 AM

Quote from: oakpacific on December 01, 2013, 03:12:51 AM

What's the difference between creating entire transactions offline/online? The chain code could be input manually into the offline computer, along with a number determining the indexes of the deterministic addresses to be created, the online Armory will simply check if the transaction is valid and no private key will ever get onto the online computer.

I'm not sure I understand your question. The online computer already never touches the private key data. It is created on the offline computer and stays on the offline computer. Only the root public key is transferred to the online computer. Even all the data moving back and forth between the two systems is totally security-insensitive -- no private key data ever touches the USB key, only signed transactions that will end up in the blockchain anyway.

When people talk about "paper wallets", I believe they're talking about something similar to what you are describing: the private keys are not held on the offline computer, but instead re-typed every time the offline computer is booted.

Also, when Armory upgrades to BIP 32, it will be possible to compute private key X directly. But the current deterministic algorithm in Armory uses a real chain: i.e. private key X depends on private key X-1. Therefore, if you need address 132, you have to compute the first 131. Instead, I don't even pass indices between the systems. Armory just precomputes the first 100-1000 addresses and identifies what it is capable of signing in the supplied transaction.

Sorry, I was talking about the scenario when a malware taking over the online computer and trying to sneak itself into a USB disk to steal the private keys on the offline computer.

Anyway what would be the obstacles for creating entire transactions offline?

Along with a write-switch protected USB drive it would be possible to make sure the offline computer is never infected, as the online Armory would only validate and broadcast the transactions supplied to it.