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It's worth learning about how the wealthiest Bitcoin holders handle this task if you want to hold large amounts of Bitcoin safely. While it's not a guarantee against all risks, those who have made the biggest mistakes tend to be more proactive in thinking deeply about and researching Bitcoin security.
Finding the wealthiest Bitcoin holders can be challenging, and requesting them to disclose all details of their security is unlikely. However, the Bitcoin blockchain provides us with some valuable information, as the transaction history and balances of all Bitcoin addresses are publicly available.
What information can we gather?
If an entity (individual or group) holds a significant amount of Bitcoin, they may distribute it across multiple different addresses, resulting in smaller balances at each address that may not necessarily attract attention. In some cases, it may be impossible to associate different addresses with the same wallet or owner. In other cases, associating addresses requires blockchain analysis, often relying on advanced techniques and assumptions that may not guarantee accurate information.
While it's difficult to determine the wealthiest Bitcoin entities and the amount of Bitcoin they own, identifying the wealthiest Bitcoin addresses is relatively easy. Several websites track these addresses in real-time, and the characteristics of these addresses can provide many clues about Bitcoin security.
For example, if you're familiar with address types, you'll know that any address starting with "1" is a P2PKH address and must be a single-signature address. Similarly, any address starting with "bc1q" and with a length of 42 characters is a P2WPKH address, also requiring a single signature. One of these address types holds Bitcoin without using multi-signature protection. The only way to achieve institutional-level security would be to use SSS or MPC, as discussed in our article on thresholds.
Similarly, any address starting with "3" is a P2SH address, and any address starting with "bc1q" and with a length of 62 characters is a P2WSH address. These address types may use multi-signature schemes. However, the signature structure only becomes visible after Bitcoin has been spent from these addresses. Some P2SH addresses are actually single-signature, which was a temporary structure popular during the initial adoption of SegWit. Therefore, if one of these address types has never been spent from, the custody structure is unknown.
Conclusion
There is no consensus among the owners of the wealthiest Bitcoin addresses (including the largest cryptocurrency exchanges and even the U.S. Department of Justice) on the best way to protect Bitcoin.
Some of these entities use multi-signature addresses with typical statutory multisig structures, such as 2/3 and 3/5, but there are also several unusual statutory multisigs. Many entities use single-signature addresses, which may be using SSS or MPC. Detailed information on the threshold statutory multisig of SSS or MPC has never been publicly recorded on the blockchain, limiting the scope of this investigation. Some of these single-signature addresses may not be using any threshold security at all, meaning that certain Bitcoin reserves currently worth over $400 million lack security.
The security ceiling of multi-signature is always higher than single-signature. When using single-signature addresses (where at least 70% of addresses hold over 10,000 BTC), there is a missed opportunity to gain additional security. While single-signature does offer some benefits in terms of spending convenience and transaction fees, these benefits are less important than security for entities holding values in the millions or even billions of dollars in Bitcoin.
It's currently unclear why single-signature addresses are so prevalent among the top Bitcoin holders. This may be due to a lack of education or historically, a lack of products and services utilizing SSS and MPC combined with multi-signature. |
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Post time 29-3-2024 20:39:57