The ‘Bitcoin family’ hides Bitcoin, Ethereum and Litecoin in secret vaults
Didi Taihuttu, along with his wife and three children, liquidated all of their assets and bought bitcoin in 2017, when it was trading at around $ 900. Now the Dutch family of five is protecting most of their crypto fortunes in secret vaults on four different continents.
“I have hidden the hardware wallets in several countries so that I never have to steal very far if I need to access my cold wallet in order to exit the market,” explained Taihuttu, Patriarch of the Self. – saying Bitcoin family.
Taihuttu has two hideouts in Europe, two more in Asia, one in South America and a sixth in Australia.
We’re not talking about buried treasure – none of the sites are underground or on a remote island – but the family told CNBC that the crypto stashes are hidden in different ways and in a variety of locations, ranging from rental apartments and homes. guest houses at self-storage sites.
“I prefer to live in a decentralized world where I have the responsibility to protect my capital,” Taihuttu said.
Hot or cold storage
There are many ways to store crypto coins. In line exchanges like Coinbase and PayPal will keep tokens for users, while the more tech-savvy may choose to cut out middlemen and keep their cryptocurrency in personal hardware wallets.
USB drive-sized devices like a Trezor or Ledger provide a way to secure crypto tokens. Square is also being built a hardware wallet and a service “to make bitcoin custody more common”.
People who choose to hold their own cryptocurrency can store it “hot”, “cold”, or a combination of both. A hot wallet is connected to the internet and allows owners to access their coins relatively easily so that they can access and spend their crypto. The trade-off for convenience is potential exposure to bad actors.
“Cold storage often refers to crypto that has been moved to wallets whose private keys – the passwords that allow the crypto to be removed from the wallet – are not stored on computers connected to the Internet, so hackers cannot hack the computer. and steal the private keys, ”explained Philip Gradwell, chief economist at Chainalysis, a blockchain data company.
Gradwell says the exchanges will also often use cold wallets to secure the crypto their clients have deposited.
A recent report by Chainalysis examining wallets containing bitcoin shows that 11.8 million bitcoins are in the hands of long-term investors, 3.7 million are lost, another 3.2 million are circulating among traders and 2, The remaining 4 million have not yet been mined.
“We can guess which wallets are cold storage – because they have particular behaviors, like receiving large amounts of crypto from a single source and not sending any for a long time until they are emptied in one go. – but you can’t say for sure that a wallet is being used as a cold room, ”Gradwell explained.
In the case of the Taihuttu family, 26% of Didi’s crypto holdings are “hot”. He calls this crypto stash his “venture capital”. He uses these cryptocurrencies for day trading and potentially precarious betting, such as when he sold his dogecoin at a profit, then redeemed it when the price of DOGE bottomed out.
The remaining 74% of Taihuttu’s total crypto wallet is in cold storage. These cold hardware wallets, which are spread across the globe, include bitcoin, ethereum, and some litecoin. The family declined to say how much they hold in crypto.
Bitcoin, Ethereum, and Litecoin are all in the midst of a further rise, up 57%, 83%, and 61%, respectively, over the past three weeks.
Moving bitcoin to a cold store is not a new idea. Since there is bitcoin, there is a way to keep it cold. But it requires more maintenance.
“Cold storage requires a lot more permissions to access it, whether it’s in a bank vault or buried in the Andes mountains,” said Van Phu, software engineer at the startup. of crypto fintech Floating Point Group.
And while Taihuttu says it’s easy to top up the addresses of those cold storage wallets with new crypto coins, getting them back is another story. Tapping into your cold crypto requires you to physically fly to its many hiding places.
Taihuttu is trying to put a cold crypto wallet on all continents so that it is easier to access its holdings.
Buried in the Swiss Alps is a safe inside a disused military bunker that is cut off from the internet, guarded by a security team on site, and apparently, according to digital bank Xapo’s website, “Monitored in the sky by satellite”. The precious commodity under lock and key is bitcoin.
Coinbase bought Xapo in 2019, a no-surprise move for a company that stores 98% of customer funds offline, to provide “an important security measure against theft or loss.”
While centralized safes like these offer some security protections, Taihuttu says he feels too centralized for him.
“If you want to store your coins really out of state reach, you can just hold those private keys directly. It’s the equivalent of burying a gold bar in your backyard,” Castle Island Ventures said, general partner and Coin Metrics co. -Founder Nic Carter.
That is why Taihuttu does not use banks or post offices. “I find it too risky,” he said. “What happens when one of these companies goes bankrupt? Where are my bitcoins? Will I have access? You put the trust of your capital back into the hands of a centralized organization.”
But Taihuttu says some centralized cold storage companies offer a major advantage.
“They have nice setups for the legacy,” he said. “When you die, these companies take care of that as well, and I really think they do a great job.”
Phu says that multi-stakeholder computing, or MPC, is also proving essential in the digital asset space. In this custody agreement, several parties must all give their consent for a transaction to be concluded.
This avoids the risk of storing private keys and authentication information in one place, known as a “single point of compromise”. Instead, MPC splits the private key into shares, encrypts it, and then splits it among multiple parts, according to Fireblocks, a digital asset infrastructure provider.
“I think the evolution right now is towards the MPC,” Phu said.