Jack Dorseyfounder and former CEO of Twitter, urged investors purchase your bitcoins from brokers. The post was published on X on Thursday afternoon (7) after his new company Block announced the launch of a Bitcoin wallet, the Bitkey.
In response to Dorsey’s post, Tesla and SpaceX CEO Elon Musk amplified the warning to investors by tweeting: “Not your keys, not your wallet”emphasizing the idea that users without control over private keys do not actually own bitcoins.
“Get your bitcoins from exchanges”, he said Dorsey. “If the keys aren’t yours, the bitcoins aren’t yours”Musk replied.
Not your keys, not your wallet, as they say
— Elon Musk (@elonmusk) December 7, 2023
Jack Dorsey Launches Bitcoin Wallet
Today, Jack Dorsey’s Block announced the pre-sale launch of its new self-custody wallet, Bitkey. According to the project website, it represents portfolio “an important step forward in democratizing access to Bitcoin self-custody”that provides a solution for those concerned about the safety of their exchange assets.
The website also states that Bitkey is designed as a versatile self-management solution, free from the complexity associated with traditional hardware wallets.
The wallet includes a mobile app, a hardware device and backup tools, accessible to both experienced Bitcoin enthusiasts and beginners.
Thomas Templeton, team leader at Block, emphasized the importance of self-control: “Bitcoin’s decentralized payment network can create a more inclusive financial system, especially for those who have been historically marginalized. With Bitkey, we are building a secure and easy way for people around the world, regardless of their experience level with Bitcoin, to take control of their finances.”
Bitkey’s main feature is its 2-of-3 multi-signature design, eliminating the need for long passwords or recovery phrases.
It distributes two keys to users: one in the mobile app for transactions and security management, and another stored offline on a hardware device, which also serves as a recovery tool.
Bitkey also integrates a third key on the company’s server, facilitating mobile transactions and offering wallet recovery if the device is lost.
With established partnerships with platforms like Coinbase and Cash App, Bitkey makes it easy to transfer Bitcoin from exchanges to a user’s self-custodial wallet.
Bitkey is available for pre-order and is expected to ship in early 2024. It promises to be a tool that offers convenience, security and control.
Why remove bitcoin from exchanges?
Holding cryptocurrencies on exchanges, while practical for transactions and trading, comes with several risks, mainly due to the nature of these platforms.
Brokers are centralized entities and are susceptible to a range of vulnerabilities that can impact the security of digital assets.
First, brokers are often the target of cyber attacks. Given the substantial value of the assets they control, hackers often expend significant effort to breach their defenses.
In the event of successful hacks, users may lose access to their funds, or worse, have their cryptocurrencies stolen.
Furthermore, by storing Bitcoin on an exchange, users trust that entity with their private keys. This means that the effective ownership of Bitcoin does not lie with the user, but with the broker.
In practical terms, this can limit the control users have over their own funds, especially in situations where the broker faces legal, financial or technical issues.
In Brazil, for example, a Bitcoin broker even admitted to not having any Bitcoins, raising concerns among some users.
Another point to consider is the possibility of regulation affecting brokers. Changes in legislation or regulatory measures could affect how brokers operate or how users access their assets, which could result in unexpected restrictions for investors.
Finally, brokers can also face internal problems, such as poor management or financial problems, which can lead to insolvency or operational problems, as happened with FTX.
These concerns highlight the importance of self-custody, where users maintain direct control over their private keys and, therefore, their assets.
Self-custody therefore offers greater security and autonomy, although it comes with the responsibility to properly manage the security of these keys.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
