Blockstream Green uses timelocks to ensure that you can eventually recover your funds in your 2-of-2 wallets even in the unlikely event that the Blockstream service becomes unavailable.
Blockstream Green uses a multisig model that requires transactions to be signed by two private keys; one held on your device and another held on Blockstream's servers. The key on your device is protected by your PIN code (with your mnemonic backup), while the key on the Blockstream servers is protected by your selected two-factor authentication (2FA) method.
There are two scenarios in which the key held on the Blockstream servers would become inaccessible to you:
- You lose access to all of your 2FA methods.
- The Blockstream Green service is shut down or made unavailable in your region.
In both cases, Blockstream Green's timelock feature can be used to regain access to your funds.
How Blockstream Green's Timelock Works
Note: On Monday, January 25th, 2021, Blockstream Green switched its timelock script from nLocktime to CheckSequenceVerify (CSV) for the timelocks used in the multisig security for Bitcoin 2-of-2 accounts. This article describes the new CSV timelock behavior. If you used Blockstream Green before January 25th, some funds in your wallet might still be secured by nLockTime. Read this article for more information on how nLockTime timelocks work.
If you are using the following versions of Blockstream Green, timelocks are activated by default for your Bitcoin 2-of-2 and Liquid wallets:
- iOS and Android: 3.4.3 or higher
- Desktop: 0.0.6 or higher
Timelocks secure your funds at the input level by enforcing a certain time period after which funds received in your wallet can be spent with only one signature instead of two. By default, this time period is set to 51,840 Bitcoin blocks, or around 360 days.
This means that during the first 360 days after you receive a transaction, you will need two signatures to spend the funds received. After 360 days have passed (or more specifically, after 51,840 blocks have been mined), if you haven't moved the funds, you can spend them using only the key on your device.
To ensure that your wallet is always secured by 2FA, the app will request a redeposit for any funds that haven’t moved for the duration of the timelock period.
Warning: Anybody with access to your mnemonic (recovery phrase) can spend the funds in your wallet after the timelock period has passed. To keep your funds secure from this threat, make sure you store your mnemonic backup in a safe location and promptly follow any redeposit notifications from your wallet.
Bitcoin 2-of-3 wallets do not require a timelock as you can always combine your third backup key with the key on your device to recover your funds.