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6 million bitcoins are protected by shared custody

June 7, 2020

Almost six million bitcoins (BTC) are stored in multi-signature wallets, almost a third of the total supply.

Prevents “stop fraud”

Bitcoin is generally secured using a combination of public and private keysto perform transactions on the Bitcoin network, a user You must sign every transaction with your private keyThis works well in most use cases, but there are situations where this setting is not ideal.

For example, Assume that the founder of a cryptocurrency exchange secures all of the company’s assets with his private keyThis can lead to several problematic situations: What happens if a founder suddenly dies, is hacked, or chooses to participate in an “exit scam”?in all of these situations The exchange would collapse and users would lose their money.

6 million bitcoins are protected by shared custody6 million bitcoins are protected by shared custody

To alleviate these problems, a the soft fork in 2012, that allowed the use of wallets with multiple signatures, Bitcoin can now be secured with multiple signatures, Where X of N signatures are required to output it, It means that Wallets can now be controlled by multiple users without one user being able to dispense all of the coins on their own.

Number and percentage of bitcoins stored in multi-signature wallets

Number and percentage of bitcoins stored in multi-signature wallets, source txstats.

Gox spurred adoption

The same founder of the exchange could insure all deposits with five signatures and require at least three signatures for a transaction.these five companies could belong to the different executives of the company, You could even delegate one or more of the signatures to a trusted third party.

We have observed this The mass acceptance of this function only started in 2015There is a simple explanation for this: Gox, After an obvious hack, the community realized that a decentralized system shouldn’t depend on a single point of failure.

Since most individual headings still don’t use this feature, The number of bitcoins stored in wallets with multiple signatures can also serve as a good indicator of how exactly the share of bitcoin is in the hands of companies.

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