Crypto News
How do the Wealthiest Bitcoin Holders Secure their Bitcoin?

If you want to hold a large amount of bitcoin securely, it makes sense to investigate how the wealthiest bitcoin holders handle this task. While wealth doesn’t cause infallibility, these entities have the most to lose from making a mistake. They should be highly motivated to put substantial thought and research into the security of their bitcoin.
Identifying the wealthiest bitcoin holders can be difficult, and asking them to reveal the full details of their security is unlikely to be successful. However, the bitcoin blockchain provides us with some valuable information. The transaction history and balances of all bitcoin addresses is publicly-available knowledge.
What information can we gather?
If an entity (person or group) owns a lot of bitcoin, it’s possible that they keep their bitcoin spread across many different addresses, each with a smaller-sized balance. Those addresses wouldn’t necessarily stand out from the crowd. In some cases, it’s impossible to associate different addresses with the same wallet or owner. In other cases, association between addresses requires blockchain analysis, often relying on advanced techniques and assumptions which are not guaranteed to provide accurate information.
Although it’s challenging to definitively identify the wealthiest entities in terms of bitcoin, and precisely how much bitcoin they own, it’s trivial to identify the wealthiest bitcoin addresses. There are a few websites that track these addresses in real time. The nature of these addresses can provide a lot of clues about how the bitcoin is secured.
For example, if you are familiar with address types, you’ll know that any address that begins with a “1” is a P2PKH address, and therefore must be a singlesig arrangement. Similarly, any address that begins with “bc1q” and has a length of 42 characters is a P2WPKH address, and must also be a singlesig address. Bitcoin held by one of these address types isn’t utilizing multisig protection. Using SSS or MPC would be the only way to achieve institutional-grade security, as discussed in our article covering thresholds.
Meanwhile, any address that begins with a “3” is a P2SH address. Any address that begins with “bc1q” and has a length of 62 characters is a P2WSH address. These address types have the possibility of utilizing multisig. However, only after bitcoin has been spent out of these addresses will the custody structure be revealed. Some P2SH addresses are actually singlesig, a structure that was temporarily popular while SegWit was being initially adopted. Therefore, if one of these address types has never been spent out of, the custody structure is unknown.
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Looking at the data
Let’s take a look at the 81 addresses which each hold more than 10,000 bitcoin, as of January 30, 2024. Altogether, these addresses hold more than 2.5 million bitcoin.
Bitcoin Balance
Address
Custody Structure
248,597
34xp4vRoCGJym3xR7yCVPFHoCNxv4Twseo
Singlesig
204,010
bc1qgdjqv0av3q56jvd82tkdjpy7gdp9ut8tlqmgrpmv24sq90ecnvqqjwvw97
3-of-5 Multisig
127,136
bc1ql49ydapnjafl5t2cp9zqpjwe6pdgmxy98859v2
Singlesig
115,177
39884E3j6KZj82FK4vcCrkUvWYL5MQaS3v
Unknown
94,643
bc1qazcm763858nkj2dj986etajv6wquslv8uxwczt
Singlesig
94,505
37XuVSEpWW4trkfmvWzegTHQt7BdktSKUs
Singlesig
79,957*
1FeexV6bAHb8ybZjqQMjJrcCrHGW9sb6uF
Singlesig**
73,393
3M219KR5vEneNb47ewrPfWyb5jQ2DjxRP6
Singlesig
69,370
bc1qa5wkgaew2dkv56kfvj49j0av5nml45x9ek9hz6
Singlesig
68,200
3LYJfcfHPXYJreMsASk2jkn69LWEYKzexb
Singlesig
66,465
bc1qjasf9z3h7w3jspkhtgatgpyvvzgpa2wwd2lr0eh5tx44reyn2k7sfc27a4
3-of-5 Multisig
59,300
bc1qd4ysezhmypwty5dnw7c8nqy5h5nxg0xqsvaefd0qn5kq32vwnwqqgv4rzr
3-of-5 Multisig
53,880
1LdRcdxfbSnmCYYNdeYpUnztiYzVfBEQeC
Singlesig**
51,830
1AC4fMwgY8j9onSbXEWeH6Zan8QGMSdmtA
Singlesig
44,000
1LruNZjwamWJXThX2Y8C2d47QqhAkkc5os
Singlesig
43,602
1Ay8vMC7R1UbyCCZRVULMV7iQpHSAbguJP
Singlesig
41,334
3LCGsSmfr24demGvriN4e3ft8wEcDuHFqh
2-of-2 Multisig
37,932
bc1qs5vdqkusz4v7qac8ynx0vt9jrekwuupx2fl5udp9jql3sr03z3gsr2mf0f
3-of-6 Multisig
37,927
3LQUu4v9z6KNch71j7kbj8GPeAGUo1FW6a
Unknown
36,000
bc1q7ydrtdn8z62xhslqyqtyt38mm4e2c4h3mxjkug
Singlesig
32,321
12XqeqZRVkBDgmPLVY4ZC6Y4ruUUEug8Fx
Singlesig
32,019
3MgEAFWu1HKSnZ5ZsC8qf61ZW18xrP5pgd
2-of-3 Multisig
31,643
bc1qx9t2l3pyny2spqpqlye8svce70nppwtaxwdrp4
Singlesig
31,379
bc1qjh0akslml59uuczddqu0y4p3vj64hg5mc94c40
Singlesig
31,275
3FHNBLobJnbCTFTVakh5TXmEneyf5PT61B
Unknown
31,000*
12ib7dApVFvg82TXKycWBNpN8kFyiAN1dr
Singlesig**
30,175
bc1qf2yvj48mzkj7uf8lc2a9sa7w983qe256l5c8fs
Singlesig
28,151*
12tkqA9xSoowkzoERHMWNKsTey55YEBqkv
Singlesig**
26,140
1aXzEKiDJKzkPxTZy9zGc3y1nCDwDPub2
Singlesig**
24,606
19N9sDbJ7MDQcPFSjPNqjNDzyRNbNsQ6Zv
Singlesig
24,495
17MWdxfjPYP2PYhdy885QtihfbW181r1rn
Singlesig
24,067
38UmuUqPCrFmQo4khkomQwZ4VbY2nZMJ67
2-of-6 Multisig
23,969
19D5J8c59P2bAkWKvxSYw8scD3KUNWoZ1C
Singlesig
23,922
3G98jSULfhrES1J9HKfZdDjXx1sTNvHkhN
3-of-8 Multisig
23,789
1m5SViB9XNwsusvnnUqpfL9Q1E5EZxPHs
Singlesig
22,514
15cHRgVrGKz7qp2JL2N5mkB2MCFGLcnHxv
Singlesig
22,221
bc1qr4dl5wa7kl8yu792dceg9z5knl2gkn220lk7a9
Singlesig
20,544
bc1qm34lsc65zpw79lxes69zkqmk6ee3ewf0j77s3h
Singlesig
20,008
17rm2dvb439dZqyMe2d4D6AQJSgg6yeNRn
Singlesig
19,852
39gUvGynQ7Re3i15G3J2gp9DEB9LnLFPMN
Singlesig
19,679
3EMVdMehEq5SFipQ5UfbsfMsH223sSz9A9
4-of-8 Multisig
19,414*
1PeizMg76Cf96nUQrYg8xuoZWLQozU5zGW
Singlesig**
18,500
bc1qkz55x35wlnrkrn5n0nq4wwsme9vszrwavu5qf4
Singlesig
18,320
bc1qlhpkdeaaa345c4dw90hmvm3nn2r32f9jdj2v2p
Singlesig
17,969
bc1qtrxc0use4hlm7fl0j6t37z7qlwl5eppj8lywz6
Singlesig
17,945
bc1qhk0ghcywv0mlmcmz408sdaxudxuk9tvng9xx8g
Singlesig
17,928
bc1qcdqj2smprre85c78d942wx5tauw5n7uw92r7wr
Singlesig
16,858
bc1q5vwscmf85w2vlq0qvr33dgpvu5rlrd42cqw6qn
Singlesig
16,610
3FupZp77ySr7jwoLYEJ9mwzJpvoNBXsBnE
2-of-3 Multisig
16,453
bc1qx2x5cqhymfcnjtg902ky6u5t5htmt7fvqztdsm028hkrvxcl4t2sjtpd9l
2-of-2 Multisig
16,348
34HpHYiyQwg69gFmCq2BGHjF1DZnZnBeBP
Unknown
16,307
1BAuq7Vho2CEkVkUxbfU26LhwQjbCmWQkD
Singlesig
16,227
1N4WQbt63gnThPwHFZ1w9adEnE1xB8ctXk
Singlesig
16,231
bc1qchctnvmdva5z9vrpxkkxck64v7nmzdtyxsrq64
Singlesig
16,224
1932eKraQ3Ad9MeNBHb14WFQbNrLaKeEpT
Singlesig
15,900
32TiohXoCmHr87xVm3E9A3sLiWBJjYn1gf
4-of-6 Multisig
15,746
3JZq4atUahhuA9rLhXLMhhTo133J9rF97j
Singlesig
15,392
1GR9qNz7zgtaW5HwwVpEJWMnGWhsbsieCG
Singlesig
15,251
1KDWnWQNSGZZ8QHcKPgzz3DGRkmgVv9HhJ
Singlesig
14,676
bc1qvhxafz8dqk8c25jsx669yd6qrxhl5dx72dyryp
Singlesig
14,599
35pgGeez3ou6ofrpjt8T7bvC9t6RrUK4p6
2-of-3 Multisig
14,000
1BZaYtmXka1y3Byi2yvXCDG92Tjz7ecwYj
Singlesig
13,805
3NpXph8WN1U9hwXjg1bRtzTff1tPR2Gpw4
Unknown
13,003
bc1q4vxn43l44h30nkluqfxd9eckf45vr2awz38lwa
Singlesig
12,891
1KVpuCfhftkzJ67ZUegaMuaYey7qni7pPj
Singlesig
12,858
1CiAnTJn6eHTU89PeihdMhT7KcQZxVZ4fy
Singlesig
12,840
3BMEXqGpG4FxBA1KWhRFufXfSTRgzfDBhJ
3-of-4 Multisig
12,803
3HfD4pvF43jdu9dzVMEr1b8AnDHooRGc5t
3-of-9 Multisig
12,795
1DNUjpHPNKMoKYBHxJz2Sh1uQQdJkGsXj5
Singlesig
12,267
1PJiGp2yDLvUgqeBsuZVCBADArNsk6XEiw
Singlesig
11,985
1CKVszDdUp4ymGceAZpGzYEFr4RPNHYqaM
Singlesig
11,673
3A9qNS69dngSU2ak8BwZKEExeVnL2RqpYJ
Unknown
11,400
1Cr7EjvS8C7gfarREHCvFhd9gT3r46pfLb
Singlesig
11,115
bc1qgrvchamnmmaancn3vwea6elnvexpylzh30rhjz
Singlesig
10,840
bc1qk7fy6qumtdkjy765ujxqxe0my55ake0zefa2dmt6sjx2sr098d8qf26ufn
3-of-5 Multisig
10,771*
1F34duy2eeMz5mSrvFepVzy7Y1rBsnAyWC
Singlesig**
10,500
bc1qhd0r5kh3u9mhac7de58qd2rdfx4kkv84kpx302
Singlesig
10,486
bc1q93njc4we4s088a2nz6c9e6vthc5h4ake53rxmd
Singlesig
10,217
1Q8QR5k32hexiMQnRgkJ6fmmjn5fMWhdv9
Singlesig
10,009*
1f1miYFQWTzdLiCBxtHHnNiW7WAWPUccr
Singlesig**
10,002
bc1qsxdxm0exqdsmnl9ejrz250xqxrxpxkgf5nhhtq
Singlesig
*Likely lost
**Not using MPC
Out of these 81 addresses, at least six of them are holding bitcoin that is likely to be lost (179,302 BTC). These six addresses were created by their owners in 2010 or 2011, when bitcoin had a much smaller value and was not taken as seriously as it is today. Five of the six have never been spent from, and the other one made its last withdrawal in July of 2010.
The remaining 75 addresses use a variety of custody structures. Let’s break it down:
Address Type
Addresses (%)
Total Bitcoin Balance (%)
Singlesig
53 (70.7%)
1,745,905 (67.6%)
Multisig
16 (21.3%)
608,773 (23.6%)
Unknown
6 (8.0%)
226,205 (8.8%)
As explained in our article discussing institutional-grade threshold security, it’s likely that the 53 singlesig addresses are using either SSS or MPC. Two of the addresses, however, are unlikely to be using MPC, because they were created before 2018, when the first-ever MPC threshold protocols for ECDSA were invented. It’s possible that these addresses are using SSS instead.
The 16 addresses that we know are using multisig have all been spent out of, and in doing so they have revealed their specific quorum structure. There is a wide assortment of quorums:
4 instances of 3-of-53 instances of 2-of-32 instances of 2-of-21 instance of 3-of-91 instance of 4-of-81 instance of 3-of-81 instance of 4-of-61 instance of 3-of-61 instance of 2-of-61 instance of 3-of-4
The 2-of-2 quorums stand out as the only quorums in the list which don’t offer inherent protection from single points of failure. While a distributed 2-of-2 multisig can protect against theft, it requires other methods to protect against loss (such as each key using distributed SSS or MPC shares). You can read more about how different quorums protect from theft and loss to varying degrees, in our broader multisig article.
Visit https://unchained.bitcoinmagazine.com/ to learn more about collaborative custody and access exclusive discounts on Unchained financial services.
Conclusions
After looking at the data, at least one thing is clear. Among the owners of the wealthiest bitcoin addresses—some of whom include the biggest cryptocurrency exchanges and even the U.S. Department of Justice—there is no consensus on the best method to secure bitcoin.
Some of these entities use multisig addresses, with typical quorums like 2-of-3 and 3-of-5, but there are several unusual quorums as well. Many entities use singlesig addresses, which could be utilizing SSS or MPC. The details surrounding SSS or MPC threshold quorums are never publicly recorded on the blockchain, limiting the extent of this investigation. It’s possible that some of these singlesig addresses are not employing any threshold security at all, which would mean that certain stashes of bitcoin currently worth more than $400M are notably under-secured.
As we covered in a recent article, multisig always has a higher security ceiling than singlesig. When a singlesig address is used (as is the case with at least 70% of the addresses holding more than 10,000 BTC) there is a missed opportunity for additional security. While singlesig does provide some benefits for spending convenience and transaction fees, one might expect these benefits to be less important than security, for an entity holding bitcoin worth millions or billions of dollars.
The truth behind why singlesig addresses are so commonly found at the top levels is unclear. It may amount to a lack of education, or a historical lack of products and services leveraging the combination of SSS and MPC alongside multisig. Luckily, Unchained has pioneered a simple path to access these combinations, unlocking the highest levels of security obtainable. For private wealth and enterprise clients, we offer a vault product built with a foundation of multisig, and keys that can be spread amongst institutional key agents. Each of these key agents can deploy their own threshold security using SSS or MPC. Book a free consultation!
Originally published on Unchained.com.
Unchained Capital is the official US Collaborative Custody partner of Bitcoin Magazine and an integral sponsor of related content published through Bitcoin Magazine. For more information on services offered, custody products, and the relationship between Unchained and Bitcoin Magazine, please visit our website.
When it comes to safely holding large amounts of bitcoin, HODLers have different options at their disposal: multisig, SSS, MPC and singelsig. How are the wealthiest securing their stack?
Crypto News
BitVM Just Got A Massive Upgrade

The introduction of BitVM smart contracts has marked a significant milestone in the path for scalability and programmability of Bitcoin. Rooted in the original BitVM protocol, Bitlayer’s Finality Bridge introduces the first version of the protocol live on testnet, which is a good starting point for realizing the promises of the Bitcoin Renaissance or “Season 2”.
Unlike earlier BTC bridges that often required reliance on centralized entities or questionable trust assumptions, the Finality Bridge leverages a blend of BitVM smart contracts, fraud proofs, and zero-knowledge proofs. This combination not only enhances security but also significantly reduces the need for trust in third parties. We’re not at the trustless level that Lightning provides, but this is a million times better than current sidechains designs claiming to be Bitcoin Layers 2s (in addition to significantly increasing the design space for Bitcoin applications).
The system operates on a principle where funds are securely locked in addresses governed by a BitVM smart contract, functioning under the premise that at least one participant in the system will act honestly. This setup inherently reduces the trust requirements but has to introduce additional complexities that Bitlayer aims to manage with this version of the bridge.
The Mechanics of Trust
In practical terms, when Bitcoin is locked into the BitVM smart contract through the Finality Bridge, users are issued YBTC – a token that maintains a strict 1:1 peg with Bitcoin. This peg is not just a promise but is enforced by the underlying smart contract logic, ensuring that each YBTC represents a real, locked Bitcoin on the main chain (no fake “restacked” BTC metrics). This mechanism allows users to participate in DeFi activities like lending, borrowing, and yield farming within the Bitlayer ecosystem without compromising on the security and settlement assurances that Bitcoin provides.
While some in the community might find these activities objectionable, this type of architecture allows users to get some guarantees that they previously could not hope to get with traditional sidechain designs, with the added bonus that we do not need to “change” Bitcoin to make it happen (although covenants would make this bridge design completely “trust-minimized, which would effectively make it a “True” Bitcoin Layer 2). For more details about the different levels of risks associated with sidechains designs, take a look at Bitcoin Layers assessment of Bitlayer here.
However, until such advancements come to fruition, the Bitlayer Finality Bridge serves as the best realization of the BitVM 2 paradigm. It’s a testament to what’s possible after the dev “brain drain” from centralized chains back to Bitcoin. Despite all the challenges that BitVM chains will face, I remain exceptionally excited at the prospect of Bitcoin fulfilling its destiny as the Ultimate Settlement Chain for all economic activity.
This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Guillaume’s articles in particular may discuss topics or companies that are part of his firm’s investment portfolio (UTXO Management). The views expressed are solely his own and do not represent the opinions of his employer or its affiliates. He’s receiving no financial compensation for these Takes. Readers should not consider this content as financial advice or an endorsement of any particular company or investment. Always do your own research before making financial decisions.
The BitLayer Finality Bridge is Delivering On The Promises of BitVM – While still far from a fully trustless system, the progress made over the past year is remarkable
Crypto News
Bitcoin Banks: We Should Build Them Ourselves

Bitcoin banks are going to happen. We already have a few of them. We’re going to have more of them. Existing legacy banks are going to start offering services. New banks are going to be founded around Bitcoin. This is completely unavoidable at this point. Bitcoin doesn’t scale. Even absent that, people value other services that inherently require other parties. Debt being the chief one.
This is an inescapable reality.
Even if we could snap our fingers and roll out every well specified opcode and covenant proposal at once, it would still take a lot of time to begin building out self-custodial layers that could compete with something like credit unions and banks offering bitcoin accounts at scale. That is not a problem that can be trivially solved overnight.
So what can we do? We need to embrace a localist attitude around making interaction with your bitcoin easy. This requires a two pronged approach, one involving technical development and the other involving, I hate to say it, lobbying.
There already exist pieces of software like LNDHub or LNBits that allow people to offer custodial accounts for Lightning. We need a lot more software like this, and we need it to be miles better. It needs to not involve tinkering around on the command line and hooking up independent software, or perusing Github to follow manual installation instructions, or fumbling around trying to fix dependencies mismatches.
It needs to just work.
Click, sync to the network, done. It needs to be something that power users who are still not very tech savvy can run safely, and not lose other people’s money. It needs to support more than basic accounts for Lightning. Ecash offers privacy, which would be something important when it comes to small groups of people who know each other. You don’t want your friend seeing what you spend your money on. It needs to support things like Unchained or Nunchuck style on-chain self custody. People aren’t going to want to hold all their friends and family’s life savings, but holding a recovery key to safeguard them from their own mistakes is another matter.
We need the software that will actually scale this type of user interaction beyond a bunch of activist nerds online.
We also need a regulatory carve out. There needs to be a clear acknowledgement that running this type of software for friends and family with trivial amounts of money, say thousands of dollars, and without charging anything for it, is an unregulated activity. Helping friends and family interact with Bitcoin safely and easily, and for free, does not make you a bank. The idea of a few thousand dollars needing to comply with the regulations banks managing billions of dollars do is frankly absurd.
This is the path forward given the current constraints of Bitcoin, and the reality of growing and accelerating adoption, that leads us away from a system that eventually becomes completely captured and neutered by legacy financial institutions.
Instead of depending on them to deal with the current scaling limitations of Bitcoin, we depend on each other.
This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Bitcoiners shouldn’t sit around and wait for fiat banks and financial companies to offer services built on Bitcoin, we should do it ourselves.
Crypto News
Galoy Launches Bitcoin-Backed Loan Software, Sets Groundwork For Open-Source Banking

Founder: Nicolas Burtey
Date Founded: September 2019
Location of Headquarters: United States
Number of Employees: 11
Website: https://www.galoy.io/
Public or Private? Private
Last week, Galoy launched Lana, software that enables banks to accept bitcoin as collateral for loans.
Lana helps community and challenger banks (the banks with which Galoy is looking to work) to offer bitcoin-backed loans to various types of customers.
“Some banks might want to use it to sell to retail, and some might want to use it to sell commercial customers or high-net-worth individuals,” Burtey told Bitcoin Magazine.
In offering such loans to a wide array of customers, Burtey believes that the high cost of borrowing currently associated with such products will come down.
“Today’s interest rates are 12% to 15% if you want to get a loan using your bitcoin as collateral,” said Burtey.
“The rates are high because there are so few financial institutions offering this type of product. We see an opportunity now that the regulations are allowing banks to do things with bitcoin,” he added.
“We think a lot of banks will want to enter this market.”
If Burtey is correct in his prediction that banks are keen to offer bitcoin-backed loans, this will not only lower rates for such loans, but it will also introduce open-source Bitcoin software into the world of banking, which could initiate a new trend in the industry.
But more on that in just a minute. First, some background on Galoy.
Galoy’s History: From Blink Wallet To Lana
Founded in September 2019, Galoy had intentions to enable banks to use bitcoin from the start, but it had to hold off on doing so due to an unfriendly regulatory environment.
So, instead, it focused its efforts on creating and supporting Blink wallet (which was originally called the Bitcoin Beach wallet and which Galoy recently sold), a custodial Bitcoin and Lightning wallet predominantly used at first in El Salvador and then in Bitcoin circular economies globally.
“Galoy’s mission was to onboard banks to Bitcoin five years ago,” said Burtey.
“But the regulatory environment was so bad during the last five years that we decided to create Blink. The reason we are now focusing on our original mission is because with the end of Choke Point 2.0 and the repeal of SAB 121, we think now is the perfect time to help banks adopt Bitcoin.”
Burtey spoke about his work in creating and growing Blink fondly and shared that he had to stop working on the project only because it would be too difficult to continue managing it while also aiming to serve a new type of clientele.
“Blink is a B2C (Business-To-Customer) play, and it’s hard as an early-stage startup to focus on too many things,” explained Burtey.
“Galoy is a B2B (Business-To-Business)-driven business, and we want to work with banks and financial institutions,” he added.
“It’s good to be focused on just one thing.”
And, as mentioned, that one thing will now be Lana.
How Lana Works
Lana is software that Galoy helps banks integrate and manage for a subscription fee. With this software, banks can issue bitcoin-backed loans under the terms they create.
“We’re not the ones deciding how much interest will be charged or anything like that,” explained Burtey.
“We give banks the platform to do this, and then they can figure out their cost of capital, the duration of the loan, the liquidation price for the bitcoin in the loan and the rate at which they want to lend,” he added.
“We’re giving you software, and helping you run and automate that software.”
Something else that Galoy doesn’t do for banks is custody the bitcoin provided as collateral for the loans they issue. Each of the banks with whom the company works is responsible for selecting their own custodian.
“You can go to BitGo or Fireblocks or each loan can have its own multisig,” said Burtey. “We’re agnostic on custody.”
With that said, Lana helps banks monitor the bitcoin in custody so that banks can be aware of whether or not collateral is nearing liquidation levels.
“A key piece of this product is risk management,” said Burtey.
“Bitcoin is volatile, and the bank will need a tool to show that it’s taking calculated risk. So, we’ll provide banks with a dashboard to monitor this risk,” he added.
Who Will Use Lana?
Galoy is targeting community banks and other smaller financial institutions with this new product mostly because they think these smaller players will benefit most from it — and because the big banks likely won’t need such a product.
“We don’t think JP Morgan will really want to work with us,” said Burtey. “They’re probably building something like this themselves, whereas a smaller bank, a credit union or small company probably isn’t.”
Burtey also understands that smaller lenders’ incorporating Lana as opposed to building something comparable themselves can save these financial institutions a significant amount of time and effort.
“Our goal is to say, ‘Look, you can develop this internally, and it will take you six months, a year or longer depending on how much you know about Bitcoin,’” said Burtey. “‘Or we have a lending product as a service for you, and you can launch it much more quickly.’”
And as Burtey and his team onboard their first round of smaller banks, they’ll not only be making history in enabling more banks to accept bitcoin as collateral for loans, but they’ll potentially be altering the trajectory of banking in general by introducing open-source software to it.
Open-Source Bitcoin Banking
Burtey’s long-term vision for Galoy is to do much more than just help banks issue bitcoin-backed loans. He’s looking to introduce open-source software into banking as more banks begin to embrace Bitcoin.
However, it’s important to note that Lana isn’t open-source just yet. It’s fair-source software, and, under such a license, code becomes open-source after two years.
“It’s a delayed open-source system, but it’s all available on GitHub,” said Burtey. “You can go and try it, test it, and play with it on your own.
Under the fair-source license, no company other than Galoy can sell the product to a bank right now, allowing Galoy to profit while still building with auditable code.
“We sell the deployment, and we help banks to plug in to their custodian,” explained Burtey. “We’re building in the open — but we also want to generate revenue.”
Beyond helping banks implement Lana, Burtey’s wants to develop open-source “core banking software,” as he’s looking to disrupt the “core ledger” oligopoly.
“The core ledger is where banks store the account data, customer information and transaction details,” said Burtey. “It’s the source of truth for banks.”
And only three companies — FIS, Fiserv and Jack Henry — have the core ledger market cornered.
“These are all like hundred billion dollar companies that you’ve probably never heard about because all they do is focus on selling software to banks,” said Burtey.
“Our long-term goal is to disrupt this industry by making something that is open source,” said Burtey. “Today, there is no company that does core banking with the idea of open source, and so we’re working towards this.”
Burtey envisions a world in which open-source software can make it much easier for someone to start a Bitcoin bank. (For those who wince at the words “Bitcoin” and “bank” being used in tandem, might I remind you that it was the legendary Hal Finney himself who wrote that bitcoin-backed banks would serve as a scaling solution.)
“To start a bank today is a very expensive and complicated process,” said Burtey. “You have to pay $100,000 plus just to purchase the core ledger technology.”
Burtey then referenced his own experience in starting Blink wallet, essentially a bitcoin bank run on open-source code, before continuing.
“I just went to El Salvador and started what was effectively my own bank because I wanted to,” said Burtey.
“We need to reinvent how core banking software is being made in the world of Bitcoin, and I think this is where open-source becomes relevant,” he added.
“This is really why I think the world of banking and Bitcoin will be very different from the world of banking with fiat, and I think we’re one of the companies at the forefront of this.”
Galoy founder and CEO Nicolas Burtey wants to help more borrowers use bitcoin as collateral for loans while introducing open-source software into the traditional banking stack.
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