Summary
The article explores the different options for securing Bitcoin holdings through self-custody. It discusses singlesig wallets, which require only one private key to sign off on spending Bitcoin. While singlesig is easy to use, it has a single point of failure and can lead to lost funds if the key is lost or stolen. The article also covers improvised strategies to enhance singlesig security, such as making copies of the seed phrase, splitting the seed phrase into separate pieces, and encoding the seed phrase. However, these approaches come with their own trade-offs and potential risks. Standardized tools like BIP 39 passphrases, Seed XOR, and Shamir’s secret sharing are also discussed as methods to modify singlesig arrangements. Finally, multisig wallets are introduced as a more secure alternative to singlesig, eliminating single points of failure. The article compares the different options and recommends considering a combination of singlesig and multisig wallets based
Key Points
1. Bitcoin custody is determined by whoever has the keys to control the bitcoin—if you aren’t holding the keys to your bitcoin, then someone else is. Not your keys, not your coins.
2. Hardware wallets are the most secure way to use bitcoin keys, offering better protection against loss or theft compared to singlesig arrangements.
3. Multisig wallets eliminate single points of failure, providing better security for your bitcoin holdings compared to singlesig wallets.