The Finney phone should begin shipping next month. It aims to stand out from the rest with a built-in cold storage wallet.
In Comes Swiss Crypto Vault, Amidst The Growing Need For Cold Storage
Niklas Nikolajsen, the founder of the cryptocurrency infrastructure firm Bitcoin Suisse, has announced the creation of Swiss Crypto Vault. Nikolajsen, along with Phillip Vonmoos, his business partner, hopes to attract the cryptocurrency holdings of institutional investors and wealthy individuals.
SCV plans on securing crypto assets through the use of encryption, multi-sig authorization, and most importantly, the use of a ‘military-grade’ bunker that can stand the worst of conditions. It is reported that PricewaterhouseCoopers will review the security of the vault, ensuring that the most effective practices are set in place.
The fact that Bitcoin Suisse has access to such a secure site is its biggest claim to fame, sporting the extreme levels of security a Swiss Alps bunker, established in the Cold War, accommodates.
This startup fills a growing gap in the industry, with institutional investors piling into the space looking for secure ways to store millions of dollars worth of cryptocurrencies.
Nikolajsen’s business partner, Vonmoos acknowledged the need for such a service, stating:
The next level for the crypto community is for additional institutions to enter the space. They will only do so if there is a super secure way of storing the assets or the private key.
The founder of Bitcoin Suisse, Niklas Nikolajsen also said:
It’s not millions anymore we’ve been moving to the bunker — it’s the next level.
Institutional investors, like banks or high net worth individuals, often lack the capability and knowledge to secure cryptocurrencies. However, SCV offers the expertise to institutional investors, charging fees for its indispensable service.
Nikolajsen has so much faith in the startup, that he moved all assets from Bitcoin Suisse to the bunker, attesting to his belief in the security of the service. SCV opens to the public today, offering a variety of secure storage services for a multitude of cryptocurrencies, like Ethereum and Bitcoin.
It is likely that SCV, along with Swiss-based Xapo, will become mainstays in this growing sub-industry, as cryptocurrency fortunes look to settle down for decades to come.
Cold Wallets V.S. Hot Wallets, The Debate Continues
Last week saw BitHumb, popular Asian-based exchange, get hacked for over $30 million worth of cryptocurrencies. It became clear the hack occurred on some of the hot wallets Bithumb has held. Although it is a common practice for exchanges to keep cryptocurrencies on hand, in hot wallets, it still doesn’t take away from the extreme levels of security cold storage offers.
Cold storage, A.K.A cold wallets, is a method of keeping cryptocurrencies away from an online environment, often generating and assessing your funds through offline services. The use of cold wallet storage mitigates most of the risk associated with online wallets, removing the fears of hackers remotely accessing your wallet.
Many cryptocurrency experts, along with cryptocurrency companies, advise users to keep all personal funds in cold wallets. Pieces of hardware, like the Ledger Nano S, offer affordable and easy-to-use cold storage options for normal consumers.
As the cryptocurrency space expands, it will make sense for consumers, along with established firms coming from outside the industry, to keep their cryptocurrency funds secure in cold storage.
Title Image Courtesy of Artur Staszewski
The recent sudden death of Crypto Billionaire, Mathew Mellon, has raised questions about what happens to our crypto-assets when we die. Most of these assets are locked away in mobile apps, online exchanges and wallets and the occasional hardware wallet. Our wallet passwords, pass-codes, mnemonic phrases and digital keys are only known to ourselves. Perhaps we can live with the thought of only around $2,000 being lost when we die, but what if this amount is approximately $500 Million worth of Ripple (XRP)?
Well, this amount in XRP was the estimated value of the XRP held by Mathew Mellon before his death back in mid April. The circumstances leading to his death have not been announced, but he was en route to Mexico to seek assistance in overcoming substance abuse. Anyone who has first hand experience in addiction knows that it takes a lot of ‘guts’ to admit you need help and seek it. Mr. Mellon can be lauded for trying to make his life better during his last days.
Mr. Mellon had initially invested $2 Million in XRP when everyone was still skeptical about the industry. He was an early believer and had this to say about Crypto:
Crypto is scary and dark. It’s anti-America. I am pro-America, pro-business and pro-bank. That’s why I went with Ripple.
His XRP would later be worth $1 Billion when XRP peaked early this year. Mr. Mellon would later comment the following about the XRP he held:
It’s $1 billion virtually for free. I actually have earned it because I was the only person who was willing to raise his hand. My family thought I was insane, when I knew it was a home run.
The XRP is now estimated to be worth $500 Million with other estimates saying it is around $250 Million. It is said that Mellon had kept the digital keys to his XRP locked in cold storage across different locations in the US and in other people’s names. His idea of distributing access to his fortune across the US was an ingenious one but speculation is high if he had redundancy measures that included a procedure of recovering the assets when he passed on.
Until there are further developments, it can be assumed that all of his XRP is currently inaccessible indefinitely.
[Photo source, forbes.com]
SBI Holdings, the financial services arm of Japan’s SBI Group, has added a cryptocurrency hardware wallet maker to its existing portfolio of cryptocurrency businesses.
In an announcement on March 2, the financial giant said it has purchased a 40 percent stake in CoolBitX, a Taiwan-based manufacturer of “cold” wallets – hardware devices used to store private keys to cryptocurrency assets in an offline environment.
CoolBitX has previously received $500,000 in funding that it said at the time it would use to develop its hardware as part of its push into the broader blockchain security industry.
While the announcement did not disclose the exact amount of the investment, the news marks the latest move by the Japanese financial firm in expanding its investment in the blockchain ecosystem, including both hardware and software.
As reported by CoinDesk, SBI Holdings expressed plans in October last year that it would move to acquire cryptocurrencies directly through activities that include mining.
As early as in 2016, the firm also said it would launch Japan’s first bank-backed cryptocurrency exchange, which had later gained registration with the country’s financial regulator. However, as reported recently, the plan for the official launch of trading has been delayed due to security issues.
In addition, through a partnership with the blockchain remittance startup Ripple in 2016, SBI Holdings c0-established a new firm dubbed SBI Ripple Asia in an effort to bring domestic banks on board to pilot blockchain technology in cross-border remittance.
Bitcoin and wallet image via Shutterstock
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The company, which already provides a cold storage service for Bitcoin (BTC), announced it is now adding “Anti-Money Laundering (“AML”)-Compliant” Ethereum (ETH) storage, with Bitcoin Cash (BCH) storage to follow soon after. According to their press release, Goldmoney Inc. safeguards nearly $2 billion in assets for clients located in more than 150 countries.
“Goldmoney clients can now directly purchase Anti-Money Laundering (“AML”)-Compliant Ethereum and sell their Ethereum holdings back to Goldmoney in the same way they buy or sell Bitcoin and precious metals,” Goldmoney reports.
As the company explains, client-held cryptocurrencies are stored and secured in an offline cold storage, “with private keys stored in a password-protected hardware wallet”.
Traditional finance responds to growing demand
As mainstream interest grows, the cryptocurrency is attracting more attention from more traditional, conservative investors. A similar cold storage service to Goldmoney’s is now also offered by a Liechtenstein-based Bank Frick, which provides storage for five major cryptocurrencies.
Last month, Dubai-based gold trading company Regal RA DMCC received a cryptocurrency trading license that allowed the company to open “world’s first” cold storage vault for cryptocurrencies.
“Grumpynitis,” as he’s known on Reddit, figured he had taken every precaution he needed to protect his crypto assets.
After all, he worked as a security consultant to banks, governments and multinationals. He knew how to thwart hackers.
Then he read about the armed robbery.
And the kidnapping. And the swatting.
And he grew, in his words, “quite paranoid,” as he continued to perform his day job and realized the magnitude of the new threats the community was facing.
“It makes you think about what could happen one day,” Grumpy told CoinDesk in an email. Shaken, he started taking measures he previously didn’t think necessary.
This should set off alarm bells for non-experts. As cryptocurrency values have climbed, many users have suddenly become very wealthy – and consequently turned into prospective targets for offline criminals as much as online ones.
A number of investors are on high alert and trying to keep low profiles, realizing that not only their money may be at risk, but also their personal safety.
Like Grumpy (who, for obvious reasons, did not want to give his real name or other identifying details), they’re taking extra steps to protect their coins – and themselves.
But there’s growing concern that not enough users are being so cautious in light of the heightened hazards.
“People, time to change the dialogue,” cryptographer Ian Grigg recently tweeted. “Never ever ask someone how much crypto they have, or what crypto they have. Lives are now in danger.”
Illustrating the perils facing market participants, in December, Pavel Lerner, CEO of cryptocurrency exchange Exmo Finance, was released from the custody of kidnappers after a $1 million bitcoin ransom was paid.
This followed an incident last fall in which New York authorities reported the armed robbery of someone in possession of $1.8 million-worth of ether.
And while it was probably motivated by malice more than greed, a swatting attack on BitGo engineer Jameson Lopp by “angry crypto fans” highlighted how security concerns have spilled over from cyberspace into meatspace. A battalion of local law enforcement cordoned off Lopp’s North Carolina neighborhood in response to a false report of hostage incident.
It’s against that backdrop that users like Grumpy are adjusting their threat models.
A thorough inspection
But he’s switched to the Ledger Nano S, a pocket-sized hardware wallet.
“Storing the private keys in a vault is good for cold storage, but when you want to use the wallet, you’ll have to expose your key to your PC,” Grumpy said.
A device like the Ledger, on the other hand, keeps the keys unexposed even when plugged into a computer that’s connected to the internet. Instead, the hardware wallet sends a signed message.
Still, Grumpy wasn’t taking any chances. After receiving the Ledger in the mail, Grumpy took the thing apart to verify the chips. He also double-checked the signatures that are generated by the device.
“This to be 99.99 percent sure that the device itself is genuine and that it hasn’t been tampered with,” he said.
This level of care underscores the added level of personal responsibility the crypto world now faces in a new security environment.
“It’s like moving from an apartment where building security is already provided, to a private home where you are responsible for your own security,” William Mougayar, the author and investor, told CoinDesk.
Most consumers, he said, have yet to make the mental jump to this new reality, which requires not only new skills and know-how but, critically, self-discipline.
“An eight-letter password in your head is no longer sufficient,” Mougayar said.
Multi-factor authentication, multi-signature arrangements, paper wallets (best kept in a safe), hardware devices like the Ledger, PIN codes and recovery phrases are now all baseline measures.
Yet, much of this is too complicated for the average consumer, Mougayar said.
“It is my hope that we will see more user-friendly ways to manage security and privacy in this new crypto-world,” he said. “Security usability is an industry challenge, that, once improved, will help to increase adoption by orders of magnitude. Security and usability can, and should be able to coexist.”
But beyond all these measures, users will have to learn to importance of discretion.
Asked why someone would ever admit how much crypto they own, Grigg tweeted in response that, “people in the bitcoin world are still too proud to realize that answering is a bad idea.”
Spreading the seeds
After inspecting his Ledger, Grumpy generated a seed phrase, or backup recovery text, on the ledger.
This phrase itself would have never seen a PC, he noted. The seed was 24 words, and he divided them over 3 pieces of paper. Each piece of paper contained 16 words.
Grumpy stored the three papers in safe places outside his home in tamper-evident envelopes (he recommends Tyveks) that are stored securely. Any two of these three papers can be used to reconstruct the seed. A few people know about these and know where they are stored, he said.
“Since one paper is worthless, I don’t have to worry about theft,” he said.
All this may make the Ledger sound like a high-maintenance device, but it’s been a hot seller of late.
Eric Larcheveque, CEO of Ledger, said his company had seen a 300-times year-on-year uptick in sales, thanks to the massive growth of the cryptocurrency market. The French company’s Nano S hardware wallet devices have proved the most popular, with about 1 million sold in 2017.
“With the increase of advanced exploits on general computing devices and secure enclaves (Meltdown, Spectre, Rowhammer, Clkscrew) the need for hardware wallets and external security devices that can be fully validated by the user has been more and more important and will continue to grow in 2018,” he predicted.
‘Rubber hose’ attacks
Much like Grumpy was shocked out of complacency by the grisly news reports, Jameson Lopp said his eyes were opened by the swatting attack on his home, as well as the armed robbery in which the victim was lured into a van and held at gunpoint.
Lopp calls the latter incident a “rubber hose” attack. Though they may not involve actually being beaten with one, the effect is the same.
While he has been a constant target online since rising to prominence several years ago as a passionate voice in the crypto community, “bringing it into the physical world made me realize that I’m at a new level where I have to worry about the random crackpot threatening me in real life,” Lopp told CoinDesk.
The engineer said he has now “reviewed some of his physical security practices and invested some time and resources in a few changes that will give me even more peace of mind.”
He declined to specify what those other changes were, but suggested anyone interested in beefing up their personal security read up on home defense.
If you get taken hostage, Lopp said, the only way to make it out without losing money is to not have direct access to your funds. In a post on Medium in 2014, Lopp suggested that at the level of investment-tier asset holdings, you’d want to have cold storage that requires multiple individuals to access. He recommended paper wallets with split keys via Shamir’s Secret Sharing algorithm or storage of assets in multi-signature addresses.
Lopp made for an ironic target – as he tells CoinDesk, he already had “pretty good physical security practices.”
“Over the years I’ve educated myself in hand-to-hand, knife and firearm combat,” he said, adding that he’s received tactical training from a variety of experts and has applied “a great number of best practices to my home to fortify it against various types of intrusions.”
“These things aren’t specific to the crypto space; physical security is a well-understood problem that any prominent people have to worry about,” he said.
But he said that a select number of even higher profile individuals could even someday be forced to hire bodyguards for true peace of mind.
Grumpynitis isn’t going that far – but he is is thinking ahead.
If one of the envelopes holding the three pieces of paper gets damaged or stolen, he said, it should give him enough time to transfer the funds. But if he dies, trustworthy acquaintances can reconstruct the seed to recover the funds.
If he loses the funds one day and the secured envelopes are still intact, he won’t have to blame the persons he gave an envelope to.
“If something happens to the seed and one envelope has been opened, you know where it went wrong,” he said.
Safe image via Shutterstock
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