More secure ways of storing bitcoin?

[The Cryptovator]

It's very hard to say where institutional investors are storing funds. I don't believe they will give you the right information. It's due to the privacy and security of their funds. They would have cold storage where they could simply store their cryptocurrency. Also, since they are high-profile, they can store funds with exchanges, and the exchanges may give them an extra layer of security. I mean, often exchanges don't store a lot of funds in their withdrawal hot wallet. However, I still believe they store it in their own wallets. They just ignore it and simply say we store in exchange during surveys. Because those who invest millions in crypto won't be stupid like us.

[_BlackStar]

It's very hard to say where institutional investors are storing funds. I don't believe they will give you the right information. It's due to the privacy and security of their funds. They would have cold storage where they could simply store their cryptocurrency. Also, since they are high-profile, they can store funds with exchanges, and the exchanges may give them an extra layer of security. I mean, often exchanges don't store a lot of funds in their withdrawal hot wallet. However, I still believe they store it in their own wallets. They just ignore it and simply say we store in exchange during surveys. Because those who invest millions in crypto won't be stupid like us.

Surveys and their results are sometimes not completely trustworthy - especially if they are conducted by centralized exchanges. Institutional investors won't tell anyone where they store their coins for privacy reasons - of course that's true and I agree that most of them actually have their own non-custodial wallets.

They could store it on an exchange with more layers of security - but I'm not sure they would do that for the entire asset. Diversification of storage wallets is also necessary and they must be truly responsible for themselves and their investments. Plus, centralized exchanges I think also have cold wallets - so they can move all those big investments there for better security.

[wallet4bitcoin]

How do institutional investors store and protect their Bitcoin assets?
Institutional investors, such as hedge funds and corporations, have different ways of storing and protecting their Bitcoin assets than typical user wallets.

There are many suggested ways of storing bitcoin keys but beyond what people store it as or where I have my own formular. Haven lost some crypto wallets to scammers and exploits, I have decided to split my private keys into two and also scramble the numbers and store the both of the keys in two seperate locations.

So, peradventure you get to find one, you can't have access to the funds, even if you find both, it still doesn't give you access to the funds, you have to know my formular used in scrambling the keys to unlock the wallet and my wallet can never be used to connect to any site for any reason. Thats how best i consider my bitcoin safe.

[headingnorth]

1. Many BIP-39 wallets including Trezor allow you to use hidden wallets/passphrase as a security feature.

A hidden wallet basically adds a 25th word to your private key.
The difference is, this 25th word is something that you make up yourself.

So even if someone finds your 24 word private key, it is useless without knowing the 25th word (called a passphrase).
So if you use this passphrase feature do not store it together with your private key.
Ideally the 25th word is something you should keep only in your head, or at least in a separate place.

2. You can also hide each of your 12 or 24 words as color-coded hex codes or mnemonic codes.

[fokinlipat]

Many here are suggesting that they do not keep anything on exchanges. I doubt this. They must be having good amount on exchanges. They operate with huge amounts and must be involved in trading crypto also. It will not make much difference to their net worth even if they loose funds on one exchange due to hack. They keep the risk versus reward ratio in mind before taking such decisions. Keeping the money idle in hardware wallets or paper wallets will give them no returns at all.

[angrybirdy]

How do institutional investors store and protect their Bitcoin assets?
Institutional investors, such as hedge funds and corporations, have different ways of storing and protecting their Bitcoin assets than typical user wallets.

It is not for us to know  lol , but of course they are using more protection that usual crypto holder(though we are all advised to keep our coins safer in how we need it to put)

They mostly use hardware wallet to keep their bitcoin.

But it is correct that one of the safest is Hardware wallet , actually this is also what I am using now , have just purchased mine months ago and yes now i felt more secure in holding my precious coins.

I agree with you, one of the safest ways to store and keep your Bitcoin holding is by using a hardware wallet because it keeps the private keys offline which gives you an assurance of high-level security from the hackers.
it doesn't just store the Bitcoin or other coins but the private keys that access it which is very important. One of the benefits of using a hardware wallet is its maximum security which is immune to malicious software activities and also as a secured backup option when something happens on your software wallet.

[airbin]

Bureaucracy.
Both institution and bureaucracy are always needed, formalism and exaggerated technicality, the official bitcoin reserve body must be created, if they do not see something physical (HW) they do not understand how bitcoin can hodl in 12 annotated words on a piece of paper, without the letterhead of "United States Federal Reserve."

I think this article would answer that.
Why 92% of Institutional Investors Store Crypto on Exchanges
~

[Plaguedeath]

Many here are suggesting that they do not keep anything on exchanges. I doubt this. They must be having good amount on exchanges. They operate with huge amounts and must be involved in trading crypto also. It will not make much difference to their net worth even if they loose funds on one exchange due to hack. They keep the risk versus reward ratio in mind before taking such decisions. Keeping the money idle in hardware wallets or paper wallets will give them no returns at all.

You forgot if not every people who own Bitcoin will join and post in this forum, there are 48,138,066 funded Bitcoin addresses on October 20, 2023, while there are only 52,001 active users according to BPIP

In my case, I never hold my coins in centralized exchange, it's not worth to risk all of my coins just to earn small amount return e.g. 5% APY. I'm not a trader too because I will need to keep watching the graph and check the price every minute which I'm not used to that.

[Marvell1]

Many here are suggesting that they do not keep anything on exchanges. I doubt this. They must be having good amount on exchanges. They operate with huge amounts and must be involved in trading crypto also. It will not make much difference to their net worth even if they loose funds on one exchange due to hack. They keep the risk versus reward ratio in mind before taking such decisions. Keeping the money idle in hardware wallets or paper wallets will give them no returns at all.

The majority here are maximalists and bitcoin holders, so it is not surprising that they do not like centralized exchanges and never store assets on them. I believe what everyone says because everyone is aware of the risks of storing assets on centralized exchanges. But if someone is a day trader and says so then they are lying because no trader has enough time and money to deposit and withdraw money at the end of the day after trading. 

I'm still using centralized exchanges for my P2P transactions but I'm holding my bitcoins with a hardware wallet and I don't need nor care about the small profits from staking or trading in day. Not everyone is in a hurry to make money as fast as you and take risks when staking your crypto assets on exchanges, don't impose your thoughts on others.

[livingfree]

Many here are suggesting that they do not keep anything on exchanges. I doubt this. They must be having good amount on exchanges. They operate with huge amounts and must be involved in trading crypto also. It will not make much difference to their net worth even if they loose funds on one exchange due to hack. They keep the risk versus reward ratio in mind before taking such decisions. Keeping the money idle in hardware wallets or paper wallets will give them no returns at all.

Well, I also feel like what you've said.

Even if someone says that one shouldn't keep your balances on exchanges, you may see them have some of their stash deposited there for whatever purpose they are doing. Like in interest accounts and earns passively there but they know the risk I guess.

So wherever you're keeping them, you're aware of the risk that you're taking upon keeping it on exchanges. It's not just the newbies that does it and yes also likely the ones that suggests don't keep it there.

[Blitzboy]

Many here are suggesting that they do not keep anything on exchanges. I doubt this. They must be having good amount on exchanges. They operate with huge amounts and must be involved in trading crypto also. It will not make much difference to their net worth even if they loose funds on one exchange due to hack. They keep the risk versus reward ratio in mind before taking such decisions. Keeping the money idle in hardware wallets or paper wallets will give them no returns at all.

The majority here are maximalists and bitcoin holders, so it is not surprising that they do not like centralized exchanges and never store assets on them. I believe what everyone says because everyone is aware of the risks of storing assets on centralized exchanges. But if someone is a day trader and says so then they are lying because no trader has enough time and money to deposit and withdraw money at the end of the day after trading. 

I'm still using centralized exchanges for my P2P transactions but I'm holding my bitcoins with a hardware wallet and I don't need nor care about the small profits from staking or trading in day. Not everyone is in a hurry to make money as fast as you and take risks when staking your crypto assets on exchanges, don't impose your thoughts on others.

The fact that most people say they support a certain mode doesn't mean that they speak for everyone. It's very important for people to fully understand and accept that their financial plans, whether they're dealing with bitcoin or another product, are unique and based on their risk tolerance and circumstances. Day traders are always tied to centralized sites because they make trades so quickly, whether they admit it or not. Is it even possible for them to pay and withdraw money every day?

You bring up an important point with your use of a hardware wallet, and it's important to remember that not everyone is in the crypto space to make quick money. Some people might be interested in trading and staking, but for others, the very idea of bitcoin (decentralized power and financial independence) is more interesting. We need to stop thinking in a one-size-fits-all way and see that different people have different goals and plans.

[Nrcewker]

Many people like to store their coins in different forms. If you ask how a big institution stores the coins, then they might be using their own custodial wallets. But if you are an individual who wants to store these hard earned coins more securely, then hardware wallets are the right option for it. Always avoid online wallets, as here you don’t completely own the coins. If you are holding big amount of coins, then Ledger is the best choice, else Electrum can do the work.

[fuguebtc]

Many here are suggesting that they do not keep anything on exchanges. I doubt this. They must be having good amount on exchanges. They operate with huge amounts and must be involved in trading crypto also. It will not make much difference to their net worth even if they loose funds on one exchange due to hack. They keep the risk versus reward ratio in mind before taking such decisions. Keeping the money idle in hardware wallets or paper wallets will give them no returns at all.

Well, I also feel like what you've said.

Even if someone says that one shouldn't keep your balances on exchanges, you may see them have some of their stash deposited there for whatever purpose they are doing. Like in interest accounts and earns passively there but they know the risk I guess.

So wherever you're keeping them, you're aware of the risk that you're taking upon keeping it on exchanges. It's not just the newbies that does it and yes also likely the ones that suggests don't keep it there.

Many people also say to stay away from centralized exchanges and only use decentralized exchanges and I don't believe what they say either. I have the feeling that many people are trying to lie to please someone to gain merit rather than telling the truth. It is true that people do not store bitcoins on centralized exchanges because everyone is aware of its risks. But those who say they do not use and do not have any accounts on centralized exchanges are blatantly lying. I bet you that people who say so are also secretly using them because they are almost a necessity in the market and that is why CEX still exists in the market.

[_BlackStar]

-snip-

Many people also say to stay away from centralized exchanges and only use decentralized exchanges and I don't believe what they say either. I have the feeling that many people are trying to lie to please someone to gain merit rather than telling the truth.

Of course - some of them are lying, but know that they actually believe that storing your assets on centralized exchanges is never safe. Moreover, it is not worth recommending that other people store assets in centralized exchanges or other online accounts - even if you do. They suggest something that is right for others - so it doesn't matter if they don't do it themselves.

Using a centralized exchange is not a mistake - it doesn't matter as long as they understand what potential risks they will be facing. KYC is a frightening threat to anyone who likes privacy - even though their personal data can be leaked in other ways, including due to weak government web security systems that store the data of all its citizens.

[CryptopreneurBrainboss]

How do institutional investors store and protect their Bitcoin assets?
Institutional investors, such as hedge funds and corporations, have different ways of storing and protecting their Bitcoin assets than typical user wallets.

Without reading any new article and replying from my understanding, I'll say they use more of centralized services and this includes exchange. Before FTX collapse, exchanges were the attraction of most institutional investors but after the collapse some institutional investors will be looking for other means to secure their investment and that'll be introduced to the use of self custodial wallet. Most institutional investors are majorly after the money and not here for the long run. Institutional investors knows the potentially the industry holds. For those only here for the profits, they'll be making use of exchanges to storing their coins but those here for the long term benefits from the market, they'll be using self custodial wallets like hardware wallets.

Many people also say to stay away from centralized exchanges and only use decentralized exchanges and I don't believe what they say either. I have the feeling that many people are trying to lie to please someone to gain merit rather than telling the truth. It is true that people do not store bitcoins on centralized exchanges because everyone is aware of its risks. But those who say they do not use and do not have any accounts on centralized exchanges are blatantly lying. I bet you that people who say so are also secretly using them because they are almost a necessity in the market and that is why CEX still exists in the market.

They're not a necessity in the market, the market isn't built around centralized exchange, they need bitcoin for survival and not Bitcoin needing them for survival, they're actually doing more demange than good because it's the centralized exchanges that has been hurting the reputation of the industry over the years with the most recent been the collapsed of FTX and there'll be more future collapse in the future. Centralized exchange are lying to their customers making them believe their Bitcoin are safe with them but that's a lie. Centralization exchange aren't any different from the banks and when we use them we aren't enjoying the industry like we should be doing in the industry. Centralized exchange are working with the government as they have to do that to gain license to operate in the countries they're operating in. Why do you think all of a sudden all centralized exchange are requesting for KYC verifications?

[jeraldskie11]

A wise investor, in my opinion, would not keep their money in exchanges. Especially long-term investors, because we all know that the exchange is not completely safe due to the possibility to control your account. Even if there are no such instances in the number one exchange, Binance, it is still preferable to move your funds to your personal wallet. Short-term investors and institutional traders should keep their funds in the exchange to avoid complications on their next trade.

[fuguebtc]

-snip-

Many people also say to stay away from centralized exchanges and only use decentralized exchanges and I don't believe what they say either. I have the feeling that many people are trying to lie to please someone to gain merit rather than telling the truth.

Of course - some of them are lying, but know that they actually believe that storing your assets on centralized exchanges is never safe. Moreover, it is not worth recommending that other people store assets in centralized exchanges or other online accounts - even if you do. They suggest something that is right for others - so it doesn't matter if they don't do it themselves.

Using a centralized exchange is not a mistake - it doesn't matter as long as they understand what potential risks they will be facing. KYC is a frightening threat to anyone who likes privacy - even though their personal data can be leaked in other ways, including due to weak government web security systems that store the data of all its citizens.

As I also mentioned above, I believe that people will not store crypto assets on centralized exchanges. I just don't believe people who say they don't have accounts on those exchanges and never use them to trade or buy, sell, or convert cryptocurrencies to fiat and vice versa. If we use them for the purpose for which they were created, it is not as scary as many people are spreading it. CEX is a place to exchange, buy, sell, trade...it is never a place for us to trust and store assets. Many investors are using it the wrong way.

[SquirrelJulietGarden]

As I also mentioned above, I believe that people will not store crypto assets on centralized exchanges. I just don't believe people who say they don't have accounts on those exchanges and never use them to trade or buy, sell, or convert cryptocurrencies to fiat and vice versa. If we use them for the purpose for which they were created, it is not as scary as many people are spreading it. CEX is a place to exchange, buy, sell, trade...it is never a place for us to trust and store assets. Many investors are using it the wrong way.

The fact is opposite than what you say.

Most of Bitcoin users store their bitcoins on centralized exchanges and even in your post, you mentioned the reason. They want to speculate the price of Bitcoin, want to trade and they store their bitcoins on centralized exchanges.

You can not trade on CEX if you don't store your bitcoin there, do you?

Storing bitcoins on centralized exchanges or any type of online account is bad practice. Furthermore, by trading they will mostly lose their bitcoins with failures from trading.

Reminder: do not keep your money in online accounts.

[savetheFORUM]

As we can see, they place trust in major exchanges with the money entrusted to them. I can understand the reasoning behind this; an exchange that operates daily is more susceptible to hacking. The fact that they continue to operate reflects the effectiveness of their security measures. Additionally, I believe exchanges like Binance offer insurance on the funds deposited with them. In the event of a hack, which has occurred to Binance before, the SAFU fund, if I recall correctly, would come to the rescue.

This is a surprising fact for me. I didn't know that institutional investors keep their funds in centralized exchanges. I used to think that they used hardware wallets or crypto custody services to store their assets but this wasn't something I could think of. If it's Binance they use, it's understandable for the fact that the funds are SAFU or insured, and they would get their money back in case something happens with the exchange, but I'm not sure if other exchange platforms have the same feature or not.

Despite that fact, I believe it is much better if institutional investors keep their funds within hardware wallets and keep the seed phrases and private keys secure to save their funds from getting compromised, after all, it's not easy for hackers to brute force a wallet and get access to it.

[Crypt0Gore]

This is where multi-signature wallets comes to the rescue, I believe companies and start up projects are using such wallets to store their funds, this will erase the mess of one CTO or COO running away with the companies fund as it requires all three masters to be present with their private keys.

I read somewhere that such wallets have slower transaction speed, is this because of the multi signature security or what? I have been willing to ask this question for sometime now, or it's because this wallet requires three different private keys at the same time?

Also I don't see much crypto wallets with this same feature today, I can only find multi signature wallet for Bitcoin, but since I am onto more than just Bitcoin I don't see the need, if any company wants to use multi signature I believe it is going to be for Bitcoin only.