Topic: How do big companies store their bitcoins? (Read 505 times)

Big companies typically store bitcoins using a combination of highly secure methods to ensure safety, accessibility, and regulatory compliance. Here are the common approaches:

1. Cold Storage

Definition: Storing Bitcoin offline, disconnected from the internet, to reduce the risk of hacking.
Methods:
Hardware Wallets: Specialized devices like Ledger or Trezor.
Paper Wallets: Private keys printed on paper and stored securely.
Air-Gapped Computers: Devices never connected to the internet.
Examples: Exchanges like Coinbase and institutional investors often use cold wallets for the bulk of their holdings.

2. Hot Wallets

Definition: Online wallets used for quick access to funds.
Purpose: Primarily for operational needs, like facilitating customer transactions.
Risk Management:
Storing only a small percentage of total holdings.
Using strong encryption, multi-factor authentication (MFA), and firewalls.

3. Multi-Signature (Multi-Sig) Wallets

Definition: Wallets requiring multiple private keys to authorize a transaction.
Benefits:
Reduces the risk of single points of failure.
Increases security by requiring approval from multiple parties.

4. Custodial Services
Providers: Specialized companies like Coinbase Custody, BitGo, or Anchorage offer institutional-grade security.
Features:
Insurance for stored assets.
Regulatory compliance.
Advanced security measures like biometric access and hardware security modules (HSMs).

5. Diversified Storage Strategies
Why: To mitigate risk, companies often spread their holdings across multiple storage solutions.
Examples:
A mix of cold storage for long-term holding and hot wallets for day-to-day operations.
Geographic diversification of storage locations.

6. Insurance and Audits
Many companies insure their Bitcoin holdings against theft or loss and undergo regular security audits to ensure their systems remain robust.
Best Practices
Access Control: Limiting access to private keys to authorized personnel only.
Key Backup: Storing encrypted backups of private keys in secure locations (e.g., bank vaults).
Monitoring and Alerts: Real-time monitoring to detect suspicious activity.

..Or they develop their own thing mixing things up and making it more convenient for themselves.
 

The best method depends on the company's bitcoin volume transaction frequency and security requirements. Generally large companies use a combination of multiple methods big companies use different techniques and technologies to store bitcoins. Considering the volatility of bitcoin and the risk of hacking these storage methods are tried to be very secure and reliable. They are hardware wallets these wallets are used to store the bitcoin private key offline as it is the most secure option from hackers. Cold storage is also an advanced version of bitcoin storage for large companies it has multiple levels of security features and is commonly used to store large amounts of bitcoin.

They wouldn't need to buy wallets per se - just have custodial service to do all the heavy lifting.
About smaller businesses  - I just put my five cents of thoughts into the mix, because it was already said about what big fellas could use to protect their funds, and there were no accidents on my memory from biggies in that regard.
And for me, the future brings much more to the table for smaller companies to shine and try Bitcoin for themselves - and they will need to guard themselves too. That's why I wrote about it in my post.

It is certainly their right to secrecy and probably they will only talk about numbers with percentages that are likely to be known to the public. What kind of business are you talking about and how does it relate to the substance of the discussion we are discussing? There are many who come to bitcoin and it is more than just small companies, large and institutions, maybe the greater adoption will have an impact on the steps of guarding their assets and that is why the substance of the discussion is more about the use of much more secure wallets that will be used.

Spending large amounts of money must definitely think about the level of security and that is in line with what we want to hear. If not there is probably no point for companies to buy wallets especially for storing their bitcoins and if we refer to some of the things that have been explained maybe there we will find the answer.

There is not going to be a specific wallet to hold upon in this margin but the fact is that big institution companies are usually stored their Bitcoins on the cold storage networks which as a hardware wallet, it is highily security offline reserved and are also multisig signatory to be accessed.

That is likely to be a cooperative assessments before gaining access to execute transactions in the wallet.
There in, it is well safe from an single individual in the institution to gain access to the wallet and so also from malwares and online scammers attacks.

There is no special approach that they do. They're the same as us, they can do multisig, use hardware wallets or even paper wallets. Depending on how confident they are with how they store their Bitcoin holdings.

Those that are hired to maintain and keep these company wallets probably have signed their own contracts, the NDAs and they're paid very well to protect it. So someone doing a foul play with their wallets, it's close to impossible if they are keeping it with multisigs and a hardware wallet that's kept on a vault.

Exactly. They wouldn't have to keep all their bitcoin in multisig, for example. Some of it could be in multisig, another part in a hardware wallet, and a third part with a custodian. I am pretty sure that many institutions use custodial services to handle their bitcoin bags. These companies work with third parties for many other reasons, storing bitcoin and private keys is just an additional service. Even Saylor and MicroStrategy keep their coins with custodians. That's just how it is.

I don't know your implication with "Combine multiple setups" but I think complexity is terrible. I guess you implied that they, with big fund, can split their fund to different wallets, and they can use different methods for setup and backup of these wallets. Like 10 wallets with multisig, 10 wallets with cold wallets ...

If combine here means combination of different things in backup, it can lead to diaster when in the end they fail to recover these wallets.

How to backup a seed phrase.

There are multiple ways in which companies and institutions hold their coins and store the necessary private keys. It's also a question of how knowledgeable they are about Bitcoin and features like cold wallets and multisig setups. I am sure there are many that use exactly those options. However, other entities rely on third-parties to help them secure their bitcoin. Finally, they use hardware wallets like regular folk. Combining multiple setups is also an option.

I do think a person in question would be paid much to keep it a secret.
Maybe he would lend us a hint or two, but that would be it.

I don't know how other companies store their Bitcoins but Freebitco.in, which was one of the most popular Bitcoin website (and one of the earliest adopter of Bitcoin) is the only website that has talked about that. As freebitco states, they use a combination of hot wallets, hardware wallets and BIP38 encrypted paper wallets but I assume, big companies like Binance for example, store it in a different way, which I think is a secret. They must be using multisig wallet and their crypto wallets might be generated by a very secure air-gapped computer or they might have their own software and hardware. I doubt these companies use wallets like Trezor and ColdCard but what they exactly do is a secret and I believe, they are extremely careful about it because once Bitcoins are gone or wallet keys are lost, it's impossible to recover Bitcoins.

I'd really love if someone has an experience in big companies and share some info with us. I had the same question a year ago.

As it was said - they probably have custodian services to do so - I mean, to accumulate BTC securely.
And these cost so much it's no wonder they don't worry about much 

It is difficult to answer this question because most companies will not publish where and how these assets are stored. However, referring to these words "Sound Money Deserves Sound Custody" the company will store their assets in an independent wallet that can maintain control over those assets.
Most Companies that hold Bitcoin treat it as digital gold and often hold Bitcoin for long-term investment. Choosing the right wallet is an important step in keeping assets safe and managing investments well. There are different types of Bitcoin wallets available, each with its own unique characteristics. The storage flow is not much different in general, after Converting Fiat to Bitcoin, then ending up in a multisig cold wallet.

Their coins - their right to keep their secrets shut 
In all honesty, big companies know their business, surely.
We can only say about smaller companies that will flock to BTC in the near decade to have (just maybe) some issues or breaches in the future to come, and I am eager to see something like that to be set as an example for others.

Big companies must have a secure wallet to store bitcoins because it is a top priority when they buy bitcoins and maybe it has been answered by previous users on the main page. But if you ask the company, I am sure they will never want to answer what wallet is used in detail because talking about security is impossible to talk about in public. If talking about being afraid or not, it really depends on the company, this is not a small number and they must have prepared definite security measures.

If the company dares to invest a large amount of money in bitcoin, then the level of security they use will certainly be much better. They don't want to risk losing assets and have certainly prepared carefully to use a much safer wallet.

I believe they use an air-gapped hardware wallet as cold storage and track their portfolio somewhere. They may also use multi-sig wallets. I am not sure if one can create a multi-sig wallet using a hardware wallet. But if it is possible, I guess most companies use this technology to store their Bitcoin. I don't know which hardware wallet is better than the others.

However, as a user, if you have thousands of dollars of Bitcoin, you should use a hardware wallet, which may only cost you a few hundred bucks. But it is worth it. So, consider buying a hardware wallet if you have Bitcoin and want to secure it. Most importantly, store your seed phrases offline and securely.

While I do agree with hard wallets, I also think that they almost all have their own servers as well, and backups and so forth. They do not really need to have a hardware wallet, do they? I mean they could just put the wallet somewhere, and they could put backups of it in ten other places, without needing another tool.

I mean they could also get it too, like they may have ten different ledgers and put it all on different ledgers so it would be diversified and all that, but I am not sure if there is a "need" for it, that would be something they do because they want to do it, not because they have to do it. If I was a big company like that, I would put it all on my server, in different wallets, to make sure it's diversified, and would back it up in 10 different places, just in case, even in out of office places too. That way it would look much better and we could have a better approach and could do much better as well, results would show that it's safe and secure enough.

Hardware wallets can be open source or close source, and companies with big funds must use open source hardware wallets. Hardware wallets are not automatic good.

They need to buy it rightly and back up their wallets properly too. It's important for their wallet recovery later and this recovery step is important to secure their fund.
[LIST] Open Source Hardware Wallets
[GUIDE] How to buy a Hardware Wallet the right way
[LIST] Multisig Wallets

Backup
How to back up a seed phrase?

Some of their addresses, active ones, may be known, but most of them, and especially the ones used just to store BTC - of course they would try to make them as much unknown as possible to everybody around.
After all - privacy is key, and big companies try to keep up with that just like ordinary enthusiasts from their side.