Casa helps people store bitcoin and other digital assets by empowering them to own, secure, and manage their private keys safely and easily. Founded in 2016, the company helps its members take self-custody of their assets with multi-key vaults for greater protection against single points of failure, such as hacks, theft, and accidents. Nick Neuman […]
Bitcoin News
Bitcoin.org Owner Cobra Warns About Illegalization of Bitcoin Self-Custody in the US
Cobra, the pseudonymous owner of the Bitcoin.org domain, has voiced concerns about future actions from the U.S. government regarding bitcoin ownership. He anticipates a possible ban on the self-custody of bitcoin even when its application and enforcement might be impractical. Bitcoin.org Owner Cobra: Bitcoin’s Self-Custody Might Be in Danger in the U.S. Cobra, the pseudonymous […]
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Judge Denies Coinbase Dismissal Request; CEO Hails Win for Self-Custody Wallets
New York Judge Katherine Polk Failla has ruled that the U.S. Securities and Exchange Commission (SEC) has “sufficiently pleaded” its case and the lawsuit will move forward. Legal Battle Ahead: Coinbase Dismissal Motion Rejected by Judge On Wednesday, the most recent legal filings revealed that Judge Katherine Polk Failla has declined Coinbase’s request to dismiss […]
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Peter Schiff Highlights Problem With Owning Bitcoin ETF — BTC Investors Respond Self-Custody Is Key
Gold bug Peter Schiff has highlighted a problem with owning spot bitcoin exchange-traded funds (ETFs). However, the issue Schiff pinpointed isn’t unique to bitcoin ETFs. This discussion has reignited calls for self-custody among crypto proponents. Peter Schiff’s Warning Prompts Self-Custody Push Gold advocate and economist Peter Schiff has highlighted a problem with owning spot bitcoin […]
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Coinbase Commerce Ditches Support for Bitcoin Payments Using Self-Custody Wallets
Coinbase Commerce, the cryptocurrency payments solution of U.S.-based exchange Coinbase, has removed support for bitcoin payments using self-custody wallets. Brian Armstrong, CEO of the exchange, clarified it maintains support for payments from UTXO-based chains from Coinbase accounts. However, Commerce will focus on supporting ERC-20 tokens on layer 2 protocols, like Base and Polygon. Coinbase Commerce […]
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Kraken Starts Requiring Info on Self-Custody Crypto Wallet Ownership in the UK
Kraken, a U.S.-based cryptocurrency exchange, has started requiring additional information in the U.K. regarding transactions of self-custody wallets made to and from its accounts. Kraken sent an email to some of its U.K. customers, stating that if the information required was not provided, it could result in an account lock until the required data is […]
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Jack Dorsey’s Block Launches Bitkey: A New Self-Custody Bitcoin Wallet With No Seed Phrases
Block, Inc. has recently introduced Bitkey, its innovative self-custody bitcoin wallet, offering a unique approach to bitcoin management. Unlike traditional wallets which rely on passwords or seed phrases, Bitkey utilizes a distinctive 2-of-3 multi-signature mechanism for recovery.
Bitkey Wallet Approach Ditches Traditional Seed Phrases
Bitkey, conceived and built by Block, Inc. (formerly Square, Inc.), is a new bitcoin (BTC) wallet that encompasses a mobile app, a hardware device, and a suite of recovery tools. The non-custodial aspect of Bitkey’s design is different as it eliminates the traditional reliance on seed phrases. Instead, the wallet employs a 2-of-3 multi-signature scheme where the user is provided with two keys: one integrated within the mobile app for everyday transactions and another stored in a separate hardware device for additional security. The third key, held by Bitkey, serves as a recovery mechanism.
“People holding bitcoin on exchanges and custodial platforms today are often hesitant to move to self-custody wallets because they are nervous about making mistakes, especially with the historical requirement that you must safely guard 12 or 24-word long passwords called ‘seed phrases,’” Lindsey Grossman, the Business Lead for Bitkey said. “People have often felt stuck: worried about the lack of control they might experience on a custodial platform or exchange, yet also anxious about the unforgiving product experiences that exist in other self-custody wallets historically available.”
Grossman added:
With Bitkey, we wanted to build a product that helps bring everyone to self-custody, combining robust security and recovery options, with a simple customer experience that puts them in control of their money.
Block and Bitkey are not alone in shifting from the conventional seed phrase approach. Binance recently unveiled a self-custody Web3 wallet that utilizes a shared key system. Similarly, Ledger, a prominent hardware wallet maker, has rolled out a shared key shard system for recovery. Although Bitkey retains the third key for the cryptocurrency owner, the company emphasizes its inability to access the funds without the other two keys.
“A third key is on Bitkey’s server and is used for only two things: to help customers move bitcoin with just their phone for the transactions they choose to make on the go without their hardware device, and to help customers recover their wallet if they lose their phone or hardware – or even both,” Bitkey’s announcement details. “Importantly, because Bitkey only has access to one, not two or three keys in this 2-of-3 multi-signature wallet, Bitkey cannot access or move a customer’s bitcoin without them.”
What do you think about the Bitkey wallet? What do you think about wallets moving away from traditional seed phrase methods? Share your thoughts and opinions about this subject in the comments section below.
Time For Self-Custody? Crypto Exchange Reveals Hackers Tried To Gain Access 159,000 Times
Reports from South Korea-based Yonhap News Agency have revealed that Upbit, one of the largest crypto exchanges in South Korea experienced over 159,000 hacking attempts in the first half of 2023 alone.
Upbit’s Hacking Attempts
According to the data from Upbit’s parent company Dunamu shared with the local news agency, the hacking attempts of the first half of 2023 indicate a 117% increase compared to the first half of 2022, and a 1,800% increase in hacking attempts compared to the second half of 2020.
The crypto exchange recorded 8,356 hack attempts in the second half of 2020, 34,687 in the first half of 2021, 63,912 in the second half of 2021, 73,249 in the first half of 2022, and 73,249 in the second half of 2022.
These hack attempts have increased over the years after the crypto exchange suffered a hack of 58 billion won ( million) in 2019. The exchange has since successfully fortified its security measures to prevent these hacks, and the exchange has not experienced any exploit since 2019.
“After the hacking incident in 2019, we took various measures to prevent a recurrence, such as distributing hot wallets and operating them, and to date, not a single cyber breach has occurred,” a Dunamu Official stated.
Some of these measures included an increased percentage of money retained in cold wallets by 70%. Hot wallets, which keep keys online and are more susceptible to breaches, are thought to be less secure than cold wallets, which store private keys offline.
This is because the majority of known cryptocurrency exchange hacking instances have occurred in hot wallets, especially the crypto hacks that occurred in September. One such example is Hong Kong-based CoinEx which suffered a million hack in September 2023, and Mixin Network which suffered a 0 million hack, among others.
Due to the significant increase in cryptocurrency hack attempts in South Korea, the country’s Representative Park Seong-jung has called upon the South Korean government to take considerable measures to handle the issue.
“The Ministry of Science and Technology must conduct large-scale whitewashing mock tests and investigate information security conditions in preparation for cyber attacks against virtual asset exchanges where hacking attempts are frequent,” Representative Park said.
Upbit recently experienced an issue in late September 2023, where the crypto exchange was unable to identify a fake token, “ClaimAPTGift.com, present in 400,000 Aptos wallets. This led to the suspension of Aptos token services.
Compilation Of Crypto Funds Stolen In September
September 2023, was a nightmare for certain crypto exchanges as about 2 million in crypto assets were stolen from certain crypto exchanges in September alone.
Blockchain security firm Certik took to their official X handle in late September to share the compilation of the crypto hacks that occurred in the month alone and how much was stolen from these incidents.
The stolen funds accounted for exploits, exit scams, and flash attacks. However, exploits accounted for the most, with over 98% (9.8 million) of the total amount stolen in that month, while exit scams and flash attacks accounted for the rest.
The Great Shift to Self-Custody: 800,000 BTC Worth Over $20 Billion Pulled From Exchanges in 3 Years
Over the past three years, there’s been a notable movement in bitcoin holdings. Since September 1, 2020, a whopping 804,000 bitcoin, equivalent to .79 billion, has been pulled from centralized exchanges. Notably, 184,000 BTC of that sum, valued at .75 billion, was withdrawn in just the last three months.
Billions in Bitcoin Withdrawn from Centralized Exchanges Amid Rising Self-Custody Trend
Centralized exchanges are holding significantly fewer bitcoins (BTC) than they did three years ago. Cryptoquant.com data reveals that on September 1, 2020, trading platforms had a reserve of 2.828 million BTC. Fast forward roughly three years, and that number has dwindled to 2.024 million, marking a decrease of 804,000 BTC. Although BTC holdings on exchanges have consistently decreased over these years, the FTX debacle triggered a substantial decline.
Just before the firm declared bankruptcy in November 2022, exchanges had 2.511 million BTC, indicating a withdrawal of 487,000 BTC since then. In just three months since May 23, 2023, around 184,000 BTC has been withdrawn from centralized crypto exchanges. By August 28, the BTC holdings on these platforms nearly dipped below the 2 million mark, with cryptoquant.com data indicating a balance of 2,007,427 BTC. Over the past few days, there’s been a modest increase, pushing bitcoin holdings to 2.024 million.
Data archived September 2, 2023, shows that from August 2, Binance, the top centralized trading platform in bitcoin holdings, experienced a withdrawal of 892.09 BTC over 30 days. During the same period, Coinbase saw 5,718.86 BTC leave, based on coinglass.com metrics. Bitfinex lost 429.02 BTC, while Okx had 1,778.97 BTC withdrawn. Among the top five, Gemini witnessed a significant outflow of 22,313.24 BTC from its reserves. Bybit also recorded a sizable withdrawal of 30,673.34 BTC over the past month.
The trend of BTC withdrawals from centralized exchanges underscores the growing preference for self-custodial bitcoin (BTC) holdings. Such an approach offers users full control over their assets, eliminating the risks associated with exchange vulnerabilities like hacks, potential insolvencies, or regulatory crackdowns. The FTX collapse served as a stark reminder of these risks, pushing the self-custodial ideology further into the limelight. While the exact reasons for these massive withdrawals remain uncertain, the advantages of self-custody are undeniable.
What do you think about the number of bitcoin removed from centralized exchanges over the past three years? Share your thoughts and opinions about this subject in the comments section below.
Crypto Assets Held in Self-Custody Wallets Have ‘a Non-Zero Chance’ of Getting Stolen — Fairside Network CEO
According to Brandon Brown, the co-founder and CEO of Fairside Network, self-custody crypto wallets generally lack inbuilt insurance coverage to protect against theft or loss. Brown attributes this to the challenges encountered when assessing digital asset risks as well as “the absence of historical loss data, and evolving threats.”
Insurance Coverage for Assets Held in Self-Custody Wallets
The Fairside Network CEO told Bitcoin.com News that it is still possible to provide insurance coverage for not one but several assets held in a self-custody wallet. When asked about users’ preference for privacy and anonymity which may go against the requirements of a typical risk mitigation product, the CEO suggested limiting the number of times users are required to submit to know-your-customer (KYC) procedures as an option insurance providers can use to overcome this challenge.
Brown also acknowledged the shortcomings and flaws in most crypto insurance offerings. He nevertheless argued that by “drawing from the proven effectiveness of traditional insurance models” crypto insurers can still come up with better offerings.
Below are Brown’s written answers to questions sent to him via Telegram.
Bitcoin.com News (BCN): What does the self-custody of tokens, NFTs, and real-world assets (RWAs) mean and why personal wallet theft protection is vital for self-custody assets?
Brandon Brown (BB): Self-custody of digital assets like tokens, NFTs, and real-world assets means individuals or entities hold their own private keys, giving them full control over their assets. This is where a crypto insurance alternative for theft of self-custodial assets becomes crucial. Unlike traditional banking systems, blockchain transactions are irreversible. If a cybercriminal gains access to your private keys and transfers your tokens, or you accidentally click on a phishing scam link and suffer an NFT theft, recovery is nearly impossible without the perpetrator’s cooperation. This is why Fairside offers comprehensive personal wallet theft protection for self-custody, providing a much-needed layer of consumer protection for self-custody assets – which already exists in most traditional markets.
BCN: In the crypto space, users who self-custody their assets do often fall victim to social engineering, phishing, and other scams. Despite this most self-custodial wallets seem not to have built-in insurance coverage for users’ assets in the event of a loss. In your opinion, what could be the reason for this and what do you see as some of the challenges to bringing personal wallet protection to Web3 wallets and assets?
BB: The lack of built-in insurance for self-custodial wallets stems from the challenges of assessing digital asset risks, the absence of historical loss data, and evolving threats. Misaligned incentives in some protocols also lead to unfair outcomes for consumers. At Fairside, we’ve addressed these issues by developing advanced risk assessment techniques and focusing on isolated risk, targeting personal wallets over smart contract risk. This approach allows us to spread risk across various wallets and asset types. Our unique model allows us to better align our incentives with our community, ensuring that we’re all working towards the same goal: a safer and more secure digital asset ecosystem, and the risk mitigation strategies that afford us the ability to offer real payouts to those who suffer losses.
BCN: Most of the existing crypto-insurance offerings are reportedly plagued with capital inefficiency, instability, and unreasonable premiums that discourage users from insuring their investments. How does an entity like yours propose to make crypto asset insurance coverage more convenient and affordable for the masses?
BB: The assessment of current crypto insurance products is mostly accurate.
At Fairside, we’ve taken a different approach. Drawing from the proven effectiveness of traditional insurance models, we’ve brought these principles on-chain to create a more efficient and stable system. In doing so we can offer greater coverage at affordable premiums, unlike current options. Our process is streamlined and user-friendly, making it easy to secure protection for self-custodial assets. In essence, Fairside is bridging the gap between traditional insurance and the crypto world, providing a reliable and affordable crypto insurance alternative for theft.
BCN: Users may have their tokens, NFTs, and RWAs spread across multiple blockchains. Is it possible to have an insurance product that ensures the protection of assets across chains?
BB: Yes, it’s absolutely possible to have an insurance product that ensures cross-chain protection of assets. At Fairside, we’re developing solutions that can protect assets across multiple blockchains. We understand that users may have a diverse portfolio of tokens, NFTs, and RWAs spread across various blockchains. That’s why we’ve designed our coverage to be comprehensive and inclusive, providing protection for all assets in a user’s wallet, regardless of the type of token or the blockchain it resides on. Whether it’s an NFT, altcoin, ETH/BTC/ADA, if it’s in your wallet, it’s covered by Fairside. We believe in providing a one-stop solution for digital asset protection, without the need for users to individually approve each asset for coverage. This approach sets us apart in the crypto insurance space, making asset protection more convenient and user-friendly.
BCN: Typically, a risk mitigation product requires users to give up their know-your-customer (KYC) details, which may not go down well with users who prioritize privacy and anonymity. Is it possible to respect users’ privacy and anonymity while offering personal wallet protection?
BB: At Fairside, we deeply respect the privacy and anonymity of our users. We’ve harnessed the power of blockchain technology to create a permissionless sign-up process. The only time we request KYC details is when a user files a claim. This is a necessary step to verify the legitimacy of the claim and to protect all our users from potential fraud. However, we strictly limit data collection during this process and employ advanced encryption techniques to safeguard your information. Any collected data is shared solely with our trusted, industry-leading security partners and is used exclusively for claim processing. Upholding the highest standards of privacy and data security is a cornerstone of our operations at Fairside, and we have robust measures in place to protect your personal information.
BCN: Multiple independent surveys have suggested that institutional investors are more interested than ever before to explore opportunities in defi and Web3. Decentralized insurance could strengthen their confidence in defi. However, smaller investors or individual traders might not be as inclined to protect their assets as their institutional counterparts. They may see their investment amounts as too insignificant to warrant their protection. What would be your advice to such investors?
BB: The reality is, if you’re holding crypto, there’s a non-zero chance that it can get stolen. Countless users have their assets stolen every year, and it’s easier than ever for this to happen – it’s the nature of the decentralized aspects of blockchain. It seems like every day, another crypto influencer – who has an extreme amount of technical knowledge of the space – sends out the tweet, admitting “It finally happened to me: my wallet was drained.” At Fairside, we understand this risk, and that’s why we’ve structured our coverage to be accessible to all. Our coverage doesn’t require a minimum or include a flat fee, but rather, it’s 1.95% of the total amount you want covered. This means it scales with the size of your wallet, making it affordable regardless of how much you’re holding. The phrase ‘only put in what you can afford to lose’ is often heard in the crypto space, but the real impact of a wallet drain isn’t felt until it’s too late. With Fairside, you can protect your investments, no matter how big or small they may be.
What are your thoughts on this interview? Let us know what you think in the comments section below.