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Author Topic: How can funds like GBTC prove they own bitcoin without sharing private key?  (Read 17 times)
ktabb
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January 19, 2018, 10:21:19 PM
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Does anyone know how any fund or institution can prove to their investors that they hold a certain amount of bitcoin? It seems like the only way to prove it definitively would be with the private key, but obviously that is not an option. The SEC brought this up as a reason for holding back on approving some crypto funds. To me it seems like a major problem.

The only solution I can think of would be to generate a random number (say between like 1 and 10,000 or something) and have they send that specific number of satoshis to a particular bitcoin address, and then send it back. That seems like a kind of "hacky" way of doing it though.

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January 19, 2018, 10:36:23 PM
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Does anyone know how any fund or institution can prove to their investors that they hold a certain amount of bitcoin? It seems like the only way to prove it definitively would be with the private key, but obviously that is not an option. The SEC brought this up as a reason for holding back on approving some crypto funds. To me it seems like a major problem.

The only solution I can think of would be to generate a random number (say between like 1 and 10,000 or something) and have they send that specific number of satoshis to a particular bitcoin address, and then send it back. That seems like a kind of "hacky" way of doing it though.

They technically can't. For most of the time, it's just a trust thing. If someone says that they've put that much money into bitcoin, and it seems plausible, the media would likely just assume it and write about it anyway. It's likely that this can be exploited in order to move the markets so that other whales can buy cheaper too. I guess one way to confirm is to show someone the application or whatever they store their bitcoins in. Would require some in-person meeting but even that can be faked.

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January 20, 2018, 09:23:24 AM
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The only solution I can think of would be to generate a random number (say between like 1 and 10,000 or something) and have they send that specific number of satoshis to a particular bitcoin address, and then send it back. That seems like a kind of "hacky" way of doing it though.

Why that and not a signed message from the address holding the coins?
In both cases you must have access to that address.
Indeed, sending a few satoshi to another address is not just "hacky" but lame.

Of course, it might also be possible that they are in cahoots with the actual owner of the address with the BTC and that guy is just signing messages for a share of the loot:).

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