Basics of Crypto Security
A story of genius, betrayal, and redemption by Ben Mezrich
November 15 2021
In the 2010s The Winklevoss brothers, Cameron and Tyler, set about securing their recent purchases of Bitcoin. Realizing that a new security protocol was needed to thwart hackers, they created a systematic way to protect their crypto assets — one that involved safety deposit boxes, regional banks, sledgehammers, and concrete. In Ben Mezrich's book, Bitcoin Billionaires, shortly to be available in paperback, he describes the meticulous detail that went into securing these assets, as well as stepping back and telling the story of how Bitcoin and cryptocurrency became a worldwide phenomenon.
In talking with crypto insiders, the first question is always, when did you come across the Satoshi White Paper? After that there's so many twists and turns that get us to the present day, that's it's difficult to see the key pivotal moments that have defined this movement. Ben puts this story into focus, connecting the dots between the people, the government and the technology. By doing so he shows that cryptocurrency is not just a fad, but a meaningful evolution of money, with most of its history yet to be written.
After Satoshi's white paper, this is the book that everyone needs to read, to understand where Bitcoin came from and where it is going.
Vault12, personal crypto security
So why a review of Bitcoin Billionaires, you may ask? Whilst reading it to understand the people and the chain of events, I was surprised to find that many of the people involved in bringing Vault12, a personal crypto security platform, to fruition are part of this story; from early investors like Tyler and Cameron Winklevoss, to lead investors and advisors, Naval Ravikant and Matt Pauker, co-founder of 21.co.
When I read Chapter 11, however, Ben's account brought to life the very challenge that Vault12 was created to solve.
Security of Money
The great irony of digital money is that to secure it, you have to rely on paper stored in traditional banking institutions. Luckily companies like Gemini and Vault12 are leading the way to give people options to secure their assets.
If we look, historically, at every monetary system we see that each approach had a very specific way for investors and consumers to protect money.
The world has gone from simple bartering, to exchanging shells for goods and services, to Gold-backed currency, in 1792 the US Dollar became the official currency of the US. And in 1971 the switch was made to fiat money,
In the last 10 years we have seen digital money, cryptocurrency added to the mix - from burying treasure, hiding cash in the mattress, to bank safety deposit accounts, FDIC, and regulatory bodies looking out for the interests of retail investors.
Looking forwards — think of all of the products services, jobs, opportunities, profits, regulations that have flourished across all sectors as the very nature of money has evolved over the generations — all because there were suitable ways for protecting money itself.
As Ben tells it, in the early days the story was very different for crypto:
"In the world of virtual currency, paranoia had no bounds — in the end, only the paranoid would survive. And the twins were hell-bent on surviving."
"Cameron and Tyler had set off across the country, creating what they believed was the most secure storage system in the history of Bitcoin. USB sticks and computer hard drives could be stolen or hacked. Private keys on paper in a vault could be photographed or taken. But shards spread out all over the country, in a dozen different safety-deposit boxes — that was different. Only the twins themselves knew where the shards were, or how the shards went back together. Only they could retrieve their private key and get to their bitcoin."
"A total of twelve safety-deposit boxes, held across three different banking institutions, and spread across four distinct regions in the United States, completed their security design. The twelve pieces of paper in these twelve safety-deposit boxes would make up the only four copies of the twins' private key in the world…"
"…Cameron and Tyler's homemade, off-line or "cold" storage system, built of paper and metal lock boxes, was ironically state-of-the-art; it rooted the security of the twin's bitcoin in the physical world, outside the reach of online hackers."
Excerpts From: Ben Mezrich. "Bitcoin Billionaires." Apple Books. https://books.apple.com/us/book/bitcoin-billionaires/id1441117720
A digital future
" In the early day of crypto investing, literally the best way to secure your keys was take them offline. And that's what most of the OGs did. We took crypto keys, we put them into vaults, offline, physical Bitcoins, physical products, because the moment your key is online, someone can hack them."
— Vinny Lingham, entrepreneur and advisor.
Technology has continued to evolve, resulting in new approaches that combine top-notch security with ease of use — the OGs might not need this, but your average retail crypto investor does. It's now possible with the mini-super computers we carry in our pockets to take an image in memory of your private key, encrypt it and distribute the shards directly to 12 trusted members of your friends and family, the original disappearing from your phone and nothing stored in any cloud, anywhere. This is the modern-day equivalent of what was done by the Winkelvoss twins in twelve safe deposit boxes with the first generation of bitcoin, and it is this type of security that powers the way forward — protecting your most precious digital assets in a simple and natural way so that you never have to worry about the security of money of any of your digital crypto assets.
Clearly, this is not a traditional review, but Ben, who is one of my favourite authors — now part of the Billions writing team, has weaved a dramatic tale that helps us understand the journey that bitcoin has gone through, and throws open the vista of a bright future for crypto. Read the book today.
The author, Ben Mezrich and the Winklevoss twins at 92nd Street Y in the Summer of 2019
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(including Cryptocurrency Seeds, NFTs and Art)
Every digital asset you own should be backed up, protected and remain accessible. Cryptocurrency in particular is difficult to secure. With natural disasters, hackers, to badly implemented security, you are always at the mercy of others.
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Vault12 Digital Inheritance is the first solution to offer a simple, direct, and secure way to ensure digital assets can be accessed by future generations. Digital Inheritance enables investors to designate an individual who will inherit their entire portfolio of digital assets stored in a secure Vault once the time comes, eliminating undue risk and the need to continually update an inventory or continually issue updated instructions.
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A digital Vault containing your digital assets is assigned to trusted people or devices, known as Guardians. Your Guardians can be adjusted as needed in real-time so that the appropriate number are always guarding your digital assets. No one can access your assets and only you get access when you need.
The Winklevosses came up with an elaborate system to store and secure their private keys. They cut up printouts of their private keys into pieces and then distributed them in envelopes to safe deposit boxes around the country, so if one envelope were stolen the thief would not have the entire key.
The idea behind Vault12 is how do we essentially split that responsibility, make that problem of key control less a technological one by essentially making it into a social one with networks of people that they trust.
Exchanges are the main target for hackers. Those are the biggest honeypots. So the number one rule in Crypto is, do not keep your money on an exchange, and if you're going to custody that money, you need to do it off of the exchange with a product like Vault12.
Security and usability are inextricably linked, the former cannot exist without the latter. Vault12 understands the need for end-to-end management of this experience as well as the importance of integrating into the prevailing crypto ecosystem
As we move to a more open financial system driven by advanced blockchain technology and cryptocurrency, we need smarter ways to ensure that the system is trustworthy. Vault12 does this by addressing a foundational need -- ensuring that your crypto assets are not only protected by decentralized security, but also by your trusted inner circle. Your private key never exists in one place or with one entity, reducing risks from hackers as well as everyday accidents.
Security is the lifeblood of industry, commerce, and leisure. As more people use decentralized applications, they will need a way to back up their crypto wallets and exchange accounts. Vault12 provides a simple and natural way to reduce risks and combat the fear of forgetting seed phrases and private keys.