Crypto News
Bitcoin Vaults and the Future of Bitcoin Custody
Bitcoin, the original cryptocurrency, has come a long way from its informal past. From an experimental digital currency that occupied cypherpunk niches on the internet, it has grown to a trillion-dollar market cap asset valued at over $66,900 per coin as of this writing.
While investing in Bitcoin is still considered a wild ride, the asset is quickly maturing. Financial institutions are closing in and creating hybrid vehicles to invest in cryptocurrency. The ecosystem reached a new milestone with the advent of Bitcoin ETFs, making people realize the immensity of Bitcoin’s potential in traditional markets and spurring new demand.
As more people and institutions invest in Bitcoin, Bitcoin vaults become more crucial. Here, we examine the features and importance of Bitcoin vaults and how they contribute to ensuring a reliable infrastructure that promotes sustained value and investability.
We explore their role in professionalized and institutional custody. Secure custodians are vital to protecting digital assets from theft and loss. This article also tracks the fast-advancing technology of Bitcoin vaults and how it relates to future developments in the custody space.
What are Bitcoin vaults, and how do they work?
Bitcoin vaults are offline digital asset storage solutions offering enhanced protection against online threats. This protection is created through multiple security layers.
As the Bitcoin investment sphere grows, new products are being created. Bitcoin vaults are a critical component of these new financial products. While hot wallets and exchange accounts offer easy transaction access, they are vulnerable to hacks.
Bitcoin vaults are fortified digital safes. They protect your Bitcoin by taking it offline and shielding it from the constant openness to online attacks. Their multiple layers of security include withdrawal delays, multi-signature or multisig authentication, and cold storage solutions.
One highly secure approach to Bitcoin or crypto vaults is called air-gapping. Air-gapped storage offers robust protection against malware attacks, phishing scams, and unauthorized access.
Many Bitcoin vaults integrate advanced encryption techniques. They typically require multiple authorizations for transactions to proceed. Advanced encryption and the need for layered authorization steps bolster security posture.
As a Bitcoin investor, ensuring that your coins are kept in air-gapped and layered security vaults protects your investment and helps you hold it long-term.
Vaults: Vital Components of Bitcoin Custody
Bitcoin vaults are a component of Bitcoin custody solutions. Bitcoin custody is the entire process of holding and securing BTC.
Because Bitcoin is a digital asset, it requires unique storage solutions to protect it from theft and loss. As BTC’s value rises, so does the interest from cybercriminals and hackers. Therefore, secure custody solutions are essential for protecting these digital assets.
The Advanced Technology Behind Bitcoin Vaults
The following advanced technologies combine to create the security behind Bitcoin vaults. Understanding them helps you understand, evaluate, and appreciate their robustness.
Cold Storage
Cold storage is a security method that keeps Bitcoin offline or away from internet-connected devices. Being offline reduces the risk of cyberattacks. Bitcoin cold storage is often used with multi-sig technology to provide maximum security.
Multi-Signature Technology
Multi-signature or multisig technology requires multiple private keys to authorize a Bitcoin transaction. This method implies that even as one key is compromised, the Bitcoin in the wallet cannot be transferred. The transaction still requires the other keys to be approved.
Multisig technology enhances security by distributing ownership and control over Bitcoin. It makes it very challenging for a single entity to access or steal the assets.
Hardware Security Modules (HSMs)
Hardware Security Modules (HSMs) are tamper-resistant and hardened devices that secure cryptographic processes. They generate, protect, and manage keys used for data encryption and decryption, as well as digital certificates and signatures.
These specialized devices, in other words, are designed to protect and manage your digital keys. They provide a secure environment for cryptographic key generation, storage, and usage, ensuring that the private keys are never exposed to potential threats. HSMs are often used in Bitcoin vaults to enhance the security of the stored assets.
HSMs are recommended for those with significant BTC holdings. They are also ideal for businesses handling Bitcoin and other crypto. While integration can be complex and require continued maintenance, the security benefits far outweigh the cost for those with high-value holdings.
Furthermore, HSMS are tested, validated, and certified to the highest standards. They enable organizations to meet and exceed emerging and established regulatory requirements for cybersecurity.
Companies Offering BTC Custody Solutions
As Bitcoin and its related financial products gain popularity, so does the need for reliable custody. Companies that offer this service are called Bitcoin or crypto custodians and are a critical component of the digital asset industry.
These companies or platforms offer secure BTC and crypto storage and provide services such as private key management, online security solutions, and transaction processing.
Crypto custodians are gaining prominence as the cryptocurrency market grows. They are essential in ensuring that assets are stored and managed securely. Moreover, they protect investors’ funds by providing layers of security beyond what public wallets or exchanges offer.
However, it must be noted that exchanges, trading desks, and investment platforms run their own custody solutions. In addition, some exchanges are also the most noted custody providers. Examples of top custody providers, most of which offer investment access, include Swan Bitcoin, BitGo, Coinbase Custody, Anchorage, Gemini Custody, Bakkt, and Bitcoin Suisse.
How To Choose Among BTC Custody Providers
Several companies are competing in the crypto custody market. If you are a regular BTC trader or investor, you might be curious about how to choose what works for you.
Platforms should enable users to buy and store Bitcoin easily. While popular exchanges like Binance and Kraken offer a wide range of services, including retail buying and selling of crypto, they have downsides. They may not provide the best storage options for your crypto, and they may be more vulnerable and open to various hacks.
Long-term BTC investors usually shun day trading and prefer the buy-and-hold strategy. Swan Bitcoin is a low-fee platform specializing in BTC-specific investments. It offers a full suite of BTC financial services, including Swan Vault, simplifying BTC storage for users. If you’re curious how it compares to large global exchanges, check out the Kraken review on Swan Bitcoin’s site.
The best Bitcoin vaults give you complete control over your coins, with user-friendly and straightforward features for setup, deposits, and withdrawals. They use the most reliable hardware to provide users with the most robust security. An example of such hardware is the Blockstream Jade signing device, a hardware wallet used by Swan Bitcoin to ensure BTC owners’ full access to keys offline.
You need signing devices that store two private keys to unlock a Swan Vault. Swan manages a third key called the Cloud Key, which is recommended for use as a second key to prevent bringing both hardware signing devices to the same location.
Bitcoin vaults must have sound recovery strategies for BTC theft or loss, as 72-hour holds for Cloud Key withdrawals. Moreover, these vaults need to offer comprehensive support services, including secure storage of spare keys to assist you in moving funds and customer support manned by trained specialists.
When Investing in BTC, Choose a Reliable Custodian
Bitcoin vaults are becoming increasingly important as more people and institutions invest in Bitcoin. As digital assets gain legitimacy through legalized financial products, security custody solutions become increasingly vital to protect them from theft and loss.
By leveraging advanced technologies such as multi-signature authentication, cold storage, and Hardware Security Modules, Bitcoin vaults provide a robust security solution for digital assets. In addition, multi-layered features ensure secure storage of private keys and means of recovery in case keys are lost or stolen.
Bitcoin vaults are not just meant to store BTC securely. They form the bedrock of the asset’s long-term viability as an investment vehicle.
It is not enough to leave the knowledge to technical experts or institutions. By understanding the importance of secure Bitcoin storage and the advancements in custody solutions, investors can make better-informed decisions about safeguarding their digital assets.
This is a guest post by Ivan Serrano. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
As Bitcoin grows in value and popularity, custody solutions become more critical. Learn about Bitcoin vaults and their importance in the custody space.
Crypto News
A Trump Presidency Is The Best Outcome For Bitcoin: NIKOLAUS
The other week, I made my opinion clear that I believe Donald Trump is the best candidate for Bitcoin in the upcoming 2024 presidential election. Aaron responded, and after reading it, I feel he’s still missing the bigger picture. Aaron’s main points seem to be that Trump is just using Bitcoiners for their votes, and that he won’t follow through on his promises.
While I partly agree with the former point, I disagree with the latter. Contrary to what I’ve seen some Bitcoiners online say, I do not think Trump has to be a hardcore Bitcoin maximalist and cypherpunk to be a great Bitcoin president. Here’s why.
Trump needs all the votes he can get. Of course he is going to try and appeal to our voters, especially when most of us already have right-leaning political views. It makes sense for the Republican party to adopt freedom money, given they lean more towards the principles of freedom now, while the Democrats have become more authoritarian.
Voting for Trump, then, is a win-win. He gets more votes (some in critical swing states), and we get a better environment for our industry. Sounds like a good trade to me.
And that leads me into what I disagree with Aaron on. I believe that Trump will keep most, if not all of his promises he’s made when it’s come to Bitcoin. Because, well, most of the promises he has made seem like relatively easy things to implement. It’s not like he’s alone on the issue – there are now many pro-Bitcoin senators and congresspeople to hold him accountable.
There’s Senator Cynthis Lummis, who wants to create a strategic Bitcoin reserve (using BTC already owned by the government). There is Congressman Tom Emmer, who already wants to fire SEC Chair Gary Gensler and appoint someone better for the industry. You can go to StandWithCrypto.com to see the rest.
If elected, Trump would have loads of other, arguably more important issues on his plate to deal with. The fact that his policies would give Bitcoiners a friendly regulatory environment to build in, stop anti-Bitcoin politicians from continuing to attack this industry, all without Trump meddling in it, sounds like the perfect storm for innovation.
The fact that he’s done things like bring Bitcoin miners to Mar-a-Lago to better understand the industry is enough evidence to make this point.
I think many are overly critical of Trump because he said he wasn’t a fan of Bitcoin in 2019. But that was ages ago, and everything has changed since then. It doesn’t make sense to hate on people for coming around to Bitcoin after not being a fan of it. (I do, however, think it is ok to be critical of the non-Bitcoin initiatives Trump has promoted, like World Liberty Financial, but even that isn’t worth losing all the benefits of his presidency.)
So, why would Trump free Ross now when he already had the chance to last term?
In politics, as in Bitcoin, it’s all about incentives, and the incentives here are aligned.
This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Trump would allow a friendly regulatory environment for Bitcoiners to thrive in.
Crypto News
Uncle Jack’s Chili is Good for Bitcoin
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This interview on the Danny Jones Podcast episode 263 both felt like it was being channeled from my own brain while also hitting me with an overload of new information. It hit the spot, as someone who has long held the opinion that all modern wars and psychological operations are symptoms of easy fiat money, and that the government is simply the biggest criminal cartel that grows large enough to self-legitimize its racket and assumes the role of moral authority. Kruse postulates that the goal of globalist transhumanists is to replace the U.S. Constitution, a document that is designed to protect individuals from government, with the U.N. Charter, a document designed to usurp it and provide tyrannical power to proxies of the industrial military complex.
“I would sit down with, probably, Adolf Hitler before I would sit down with Sergey Brin.”
I wasn’t expecting to hear about Bitcoin when I started listening, but I was pleasantly surprised to hear him bring it up early and often, framed as a kryptonite to the transhumanists he portrays as his “mortal enemy”.
“The reason why Bitcoin content gets removed is because DARPA is not interested in Bitcoin. Their energy to fuel their whole process is cheap fiat money.”
Uncle Jack hits on topics like Kleiber’s law, allodial wealth, DARPA, MK-ULTRA (and it’s subsequent versions), the Stanford marshmallow experiment, JFK’s assassination, sunlight medicine, SV40, cancer, COVID and the jabs, and even invisibility, somehow connecting it all subtly to Bitcoin, with a ‘fix the money, fix the world’ subtext.
“There’s a pattern with the Industrial Military Complex. When they want to do something, they don’t ask for forgiveness, they don’t ask for permission either, they just do it.”
The main ingredient was essentially that the Federal fiat system is a big Ponzi scheme, citing Roth IRAs and retirement funds specifically. And that there is a mortal war waged on us by The State to make sure enough of us die through cancers, wars or otherwise so that we aren’t all performing a bank run.
The Industrial Military Complex is a machine that is powered by cheap money: fiat money. Kruse aligns Bitcoin as a solution to the fiat war machine, which is preaching to the choir for me, but exciting to hear on a non-Bitcoin show with a large audience like the Danny Jones Podcast.
This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
A self-proclaimed Bitcoin pleb and actual brain surgeon, Dr. Jack Kruse, has the sauce and I want everyone to try it.
Crypto News
CORVA: Want Greater Adoption Of Bitcoin? Use It To Fix Problems.
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Bitcoin will not become more widely adopted as a result of intellectual curiosity or because it’s theoretically the best form of money ever. Instead, people will begin to use it because it solves pressing problems in their lives.
So, if you’re looking to foster greater Bitcoin adoption, show someone how they can use Bitcoin to solve an issue their facing.
Hermann Vivier, co-founder of Bitcoin Ekasi, a Bitcoin circular economy in South Africa was given this advice from Mike Peterson, Director of Bitcoin Beach, the world’s first Bitcoin circular economy, and it continues to inform his work.
The broader problem that Bitcoin solves for underserved South Africans is that it provides them with a means to save in an environment in which many don’t trust banks or have much access to other investments. Part of the reason they don’t trust banks is because they’re often charged hidden fees from both the banks themselves as well as local merchants.
Vivier told Bitcoin Magazine that many in the community often purchase goods via layaway programs (buy now, pay later) and are often duped by stipulations in the fine print of the deals.
“You can go in and buy something today, not pay for it at all, take it home and then the merchant starts charging you after the second or the third month,” explained Vivier.
“These credit schemes are quite exploitative. The fees would go up over time as interest accumulates and the residents give the company the right to just draw the money from their bank accounts, but the buyers don’t understand what they’re signing away,” he added.
“After a year, they see there’s still money going out of their account, but in their mind, they’ve already finished paying for this thing, yet they’re still paying for it and they don’t know why.”
Vivier went on to explain that the simple fact that money cannot be automatically withdrawn from a Bitcoin wallet like it can from a bank account provides Bitcoin Ekasi community members with more of a sense of control over their funds.
Rich Swisher, founder of Motiv, an NGO that develops Bitcoin circular economies and helps members of unbanked communities in Perú become more financially independent, also uses Bitcoin to help the financially disadvantaged have more control over their money.
Swisher told Bitcoin Magazine that residents of the communities with whom Motiv works can’t save cash in their homes because of the high likelihood that they’ll be robbed. And many don’t use banks because they charge fees that these residents can’t afford to pay (That’s if banking services are available at all.) Bitcoin provides them with a way to bank themselves, which serves as a financial base for them to start their own enterprises.
“With Bitcoin, they can start a small business that they can run out of their home and run off of their phone,” Swisher told Bitcoin Magazine.
“Over time they see that they can be financially independent. Then, they start seeing that not only do I have a good path going right now, but if it was all taken away from me tomorrow, I have the know-how to redo it,” he added.
“None of this happens without Bitcoin.”
So, does that mean you have to run out and start a full-on Bitcoin circular economy in an underserved community if you want to see more Bitcoin adoption? Absolutely not.
But how hard would it be to show your friend who runs a non-profit how to accept bitcoin for international donations so to save on wire transfer fees or to show a family member how to send an international remittance using Bitcoin instead of Western Union, which charges high fees for its service? Not that hard.
If you want to see more people using Bitcoin, quit the habit of explaining to those around you how great it is, and start showing them what problems it solves.
This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Follow the lead of Bitcoin Ekasi’s Hermann Vivier and Motiv’s Rich Swisher.
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