How to store Bitcoins correctly?

It’s the most straightforward to give my disclosure of this topic while introducing myself as author. So without any unnecessary digressions, I will simply inform you, dear reader, that my name is Anton Katin and I am the R&D and founder of Simba.Storage Bitcoin cold storage, and I am an active holder of Bitcoin.

Without diving too deep into my life story, I have been in the cryptocurrency industry for more than 4 years. It all started with the founding of the cryptocurrency community, making it possible to provide financial independence for the team working in it and likewise all investors and partners. An ecosystem was simultaneously formed, in which each participant became a professional in the cryptocurrency industry.

High-quality and in-depth analysis of the cryptocurrency market, diligence, hard work, and enthusiasm, all supported by admiration from this industry, is what has been allowing us to study all promising cryptocurrency projects and extract the maximum profit from the huge number of ongoing ICO variations (initial offer / placement of project tokens in order to attract investment at the start), happening on the market. The accuracy of my trading recommendations, which has been more than 80%, has helped increase capital for many active traders.

Having gained a large amount of diverse experience in various areas of the industry, particularly in trading, analytics, smart contract creation, international law, and accounting, among others, and having tried everything on my own experience and taken my lumps on various occasions, I decided to fill the most important niche in the cryptocurrency market and open one of the most reliable Bitcoin storage facilities in the world, which is called Simba.Storage.

Hardware wallets for storing cryptocurrencies

At the moment, it is customary to subdivide cryptocurrency storage into hot and cold storage. Hot storage is less secure because it is always connected to the network.

The safest option for storing cryptocurrencies is the accordingly named cold storage. This means that digital assets are stored on a physical medium that does not have access to the network, therefore cannot be robbed by hackers like if the funds were being stored on a permanently connected wallet.

In the public domain, you can find a huge amount of evidence that only cold storage can provide the maximum level of protection for your funds, what remains is only to understand which hardware wallet is the most reliable.

Of course, it is naive to think that just a single Trezor wallet, assembled in China for one dollar, can satisfy all the needs for high-quality storage of digital assets. Perhaps this is an acceptable option for individuals without a large enough volume of cryptocurrencies to be very concerned about its safety, but this is unacceptable for a large investor.

In order to briefly demonstrate what hardware wallets are used in Simba.Storage, we must take a small detour into the history of their creation.

The field of activity of my brother, who worked at the Center at the Lomonosov Moscow State University for many years, was closely related to microelectronics, among other things. After disassembling and examining one of the Trezor wallets, he realized that this option is not acceptable for reliable storage of large funds in the long term. Upon my request to build a reliable wallet for storing Bitcoins, he provided twelve devices assembled from the most modern and technologically advanced hardware. He then used a secure computer to set up a Bitcoin wallet and implemented encryption on each drive to maintain a high level of security.

All devices contain multiple hard drives from different manufacturers to provide diversification. All devices were never connected to the network, a multikey was created on each of them, and the secret key used to restore access to the wallet has never left the devices.

Public keys were used to create a multi-signature storage algorithm. To complete a transaction from such a wallet, a signature with several secret keys is required, which guarantees an extremely reliable process for storing digital assets. In addition, it is possible to create a wallet with an excess of secret keys. For example, there are six signatures in total, but any four are enough to complete a transaction. This allows you to maintain access to the wallet in the event of the loss of one or two keystores, for example, as a result of a fire.

At Simba.Storage, the custodians of such keys are located in different parts of the world, namely in Switzerland, Liechtenstein, New Zealand, and the United Arab Emirates, which makes it near impossible for a stranger to simultaneously access all the keys. Any unauthorized actions when using multisignature will automatically lead to the cancellation of the transaction and the detection of violators with further blocking of any of their actions within the system. It should be noted that multisig also provides additional redundancy should a force majeure situation occur within one of the storage facilities.

Do hardware wallets guarantee security?

The unequivocal answer to this question is no, nothing is guaranteed. Storage of the proper level needs to be considered as a set of security measures.

If the funds are in a Trezor wallet for example, they are more susceptible to loss if the microcontroller fails.

If a hardware wallet is not combined with others into a single multisignature system, it also does not guarantee the safety of funds. At the same time, for an ordinary user, this is a more optimal option than storing funds on an exchange or in an online wallet. Of course, everything a matter of comparison.

Attackers are always looking for and finding ways to circumvent the security measures that individual users take to store their cryptocurrencies. In recent years, hackers have succeeded in stealing great volumes of digital assets, estimated at several billion dollars. Almost two billion dollars were stolen in 2020 in cryptocurrencies and it would be incorrect to assume that these numbers refer only to hot wallets. Even though it is difficult to steal funds from cold wallets, the devices themselves can be stolen, and ill-wishers can also take possession of your wallet and render it unusable just out of malice, and there are many more such options.

On the other hand, by trusting a cold storage repository, you can save yourself from unnecessary worries, among other things, by putting them on the shoulders of professionals. Let’s return to Simba.Storage and take a closer look at how the whole process of storing Bitcoins works.

So, all the advanced devices that are distributed in different locations in Switzerland, Liechtenstein, Dubai, and New Zealand contain multisignature technology. In addition, 24-hour security is installed on the premises where the wallets are physically located. It is impossible to enter the building without an appointment and a thorough background check. The devices themselves are kept in special safes with electromagnetic shielding.

The withdrawal process is accompanied by the creation of an account for payment on a special secure computer with a preinstalled Bitcoin wallet. Further on, this account in the form of a QR code is transmitted to an employee who has access to one of the keys. To enter the vault, an employee must first register.

Already inside the storage, the employee takes out the device itself, connects it to the electrical network and logs in. Because the device is encrypted, the employee then opens a wallet with Bitcoins, and using a wired HD camera and an existing QR code, sends the invoice for payment. The account is signed within the wallet and a new transaction ID is generated, which is converted into a new QR code.

This code is photographed, then the device is returned to its place in the safe, and the employee leaves the vault. After that, the QR code is sent to an employee of another storehouse, who goes through a similar path, and this happens until the required number of signatures is completed. At the final stage, the transaction is entered into the Bitcoin blockchain.

This mechanism looks quite complicated, but it is what allows you to count on maximum protection of funds. It might seem like there are some inconveniences if a client may need to quickly access their funds. Since such a storage method is incompatible with instant outputs, Simba.Storage has its own solution for such cases.

All customers of the storage are issued SIMBA stablecoins, which have the ERC-20 standard, and therefore are located in the most popular Ethereum blockchain. SIMBA are backed by Bitcoin with a rate of 1 SIMBA = 1 satoshi.

All this means that if a Simba.Storage client needs to carry out an urgent transaction of any kind, they will not have to wait for the Bitcoins to be withdrawn from their account in the storage facility, because they will be able to use SIMBA tokens already stored in their account.

In this vein, I would like to end my story with one main message:

Remember, it is extremely dangerous and very easy to lose your access, and the Bitcoins themselves as a result. Entrust them to Simba.Storage and we will take care of this. As professionals with many years of experience in the storage and preservation of assets in the cryptocurrency market, we see this as our greatest vocation and value, primarily for you, and otherwise for ourselves, and furthermore for the growth of the industry and the healthy development of the cryptocurrency market.