Tom Honzik
@tom_honzik
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working at @unchainedcom to educate people about bitcoin and multisig self-custody 🔑 | NOSTR: tomh @getalby .com ⚡️
Joined March 2021
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@getalby
.com
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After running a lightning node for 10+ months, today I’ve reached 21 BTC routed. One millionth of the total supply has travelled around the world by way of this little machine!
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I’d rather have 10M sats and understand why I should never sell them, than have 10 BTC and no clue.
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There are around 80
#bitcoin
addresses that hold more than 10,000 BTC. Altogether, they possess around 2.5M BTC, more than 10% of the supply.
What can we learn from these addresses about how some of the biggest bitcoin holders approach security?
Study Results 🧵⬇️
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Bitcoin exists as UTXOs, which exist on addresses, which exist on the blockchain.
Which addresses are yours can be found with public keys.
Moving your bitcoin to a new address requires private keys. Seed phrases are human-readable private keys.
“Wallets” don’t exist.
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Ever wonder how the biggest institutional
#bitcoin
holders (exchanges, companies, governments) secure their stack?
They don't use a hardware wallet with a passphrase. That's not good enough.
Institutional-grade security means threshold security.
Thread to learn more 🧵⬇️
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It’s been over a month since I quit my fiat job to work for
@unchainedcap
. So much more fulfilling, exciting and enjoyable.
Anyone with a
#bitcoin
obsession should check out
@BitcoinerJobs
, and don’t give up! Lots of opportunities arising that aren’t all software engineering.
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📢 Your bitcoin is NOT in your bitcoin wallet!
Don't be alarmed, this is normal. However, it can also be really confusing to most people.
Keep reading to learn more about wallets, including "hot," "cold," "hardware," "software," "watch-only," and "self-hosted" wallets!
🧵⬇️
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You can tell just by looking at this address, that BITB is not holding their bitcoin in multisig.
This is a singlesig address, and so the highest level of security they can achieve is SSS (Shamir's secret share) or MPC (multiparty computation).
Short thread 🧵⬇️
Announcement: Today the Bitwise Bitcoin ETF (BITB) becomes the first U.S. bitcoin ETF to publish the bitcoin addresses of its holdings.
Now anyone can verify BITB's holdings and flows directly on the blockchain.
Onchain transparency is core to Bitcoin's ethos. We're proud to…
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Distaste for CBDCs is an important common ground that I believe can be used to orange-pill the wider population to great effect.
Once you realize that CBDCs can't be stopped from within the system itself, you realize
#bitcoin
is the only viable alternative.
🧵 1/
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My bitcoin UTXO article trilogy is complete!
The 1st article is an introduction to what a UTXO is, and why they matter.
The 2nd focuses on transaction fees, and why holding a lot of UTXOs can get expensive.
The 3rd goes through important privacy considerations.
Links below!👇
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Sometimes I think about how humiliating it must be to work at a money printing factory.
"We appreciate your hours of labor cutting, painting and stacking millions of pieces of paper today.
As payment, you can keep a couple of them!"
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Crypto exchanges are crumbling before our eyes.
Meanwhile, over here at
@unchainedcap
we are calmly providing the tools and education needed to make sure your bitcoin is secured in your own custody for future generations
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“Today is already the tomorrow which the bad economist yesterday urged us to ignore.”
- Henry Hazlitt
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If you've ever heard that you should avoid holding small sized UTXOs, my latest article dives deep into why this is, and what might qualify as "small".
Is it 1 million sats? How do some people arrive at that number as rule of thumb? Learn more below!
You should be concerned about your
#bitcoin
becoming worthless because of skyrocketing demand for block space, not falling demand for bitcoin.
Unchained's own
@tom_honzik
explains in his latest addition the UTXO saga:
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1. You care about yourself and your family, so you decide to work, earn, and save for a better future.
2. You watch the money in your bank account increase, but realize that each unit is becoming less valuable over time, because it's being diluted by other people printing more…
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Know someone who thinks they missed the
#bitcoin
boat? ⛴️
An excerpt from my recent article:
"Bitcoin is not a boat. Bitcoin is a gondola lift operating in a continuous loop. It transports anyone and everyone out of the dark valley of inferior financial systems, up to the…
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Some people buy and hold bitcoin because they want to support a new financial system that incentivizes responsibility and long-term thinking.
If this is you, but you keep your bitcoin on an exchange, you’re actually achieving the opposite effect. 1/
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Anyone curious about what "offchain multisig" is and how it saves on fees?
Most bitcoiners who have used a multisig wallet are using "script multisig," or multisig that is enforced on the blockchain.
However, there are alternatives.
Another thread 🧵⬇️
@peterktodd
They are probably using some form of offchain multisig
BitMEX is also moving from onchain multisig to offchain multisig to save on transaction fees
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I've been working on presentations designed to orange pill folks who are curious about bitcoin.
In 5 chapters: what is money and what makes one monetary tool better than another, the fundamental value of bitcoin, and why bitcoin > crypto.
Check it out!
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This
@mempool
chart doesn't mean what a lot of people think it means.
People see new record highs in this cart and often assume it means the fee environment is more expensive than it's ever been. That's not true.
Quick thread 🧵⬇️
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5.3 million BTC has passed through this address in 83,600 different transactions:
1KFHE7w8BhaENAswwryaoccDb6qcT6DbYY
Nearly 1 million BTC has passed through this address in 6,000 transactions:
1GX28yLjVWux7ws4UQ9FB4MnLH4UKTPK2z
🧵⬇️
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Recently I helped create some diagrams intended to assist people diving into
#bitcoin
self-custody.
The first one highlights the tradeoffs of various popular models for securing bitcoin.
The second one highlights the differences in multisig quorums. 🧵
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If you want read the full report on the richest addresses holding more than 10,000 BTC, it can be found using the link below.
Keep in mind that this data is fairly recent, but the richest addresses will certainly fluctuate over time!
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Earlier this month, the largest bitcoin UTXO in existence was consolidated with other bitcoin UTXOs, to form an even larger one: a gargantuan 204,010 BTC!
It remains on the same 3-of-5 multisig address.
Did you know:
Currently the largest bitcoin UTXO is worth more than 178,010 bitcoin ($6B) and was created in March 2023.
It sits on the 2nd richest address, believed to belong to Bitfinex, in a 3-of-5 multisig quroum.
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Going forward, unless network activity changes in big ways, my node projects to route over 50 BTC per year and have an annual yield on outbound liquidity of closer to 2%.
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The volume of singlesig addresses might seem surprising, but there are ways to introduce threshold security (institutional-grade security) to bitcoin held in these address types. The methods include SSS and MPC, which you can learn about in this thread:
Ever wonder how the biggest institutional
#bitcoin
holders (exchanges, companies, governments) secure their stack?
They don't use a hardware wallet with a passphrase. That's not good enough.
Institutional-grade security means threshold security.
Thread to learn more 🧵⬇️
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If the address begins with a "3" or begins with "bc1q" and has 62 characters, then it *might* be a multisig address.
You can learn more about why this is, in our article about address types, found here:
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Great article by Parker.
Consumers being eager to spend their bitcoin is not how bitcoin payments will popularize. Gresham's Law.
Merchants demanding bitcoin for goods and services is how it will happen.
Bitcoin Accepted ➡️ Bitcoin Preferred
Add a surcharge to accept fiat.
My Pay Me in
#Bitcoin
Theory. Why receiving bitcoin payments is actually a balance sheet decision, why merchants will drive the shift to bitcoin payments, and the rationality AND irrationality of consumers spending bitcoin. Latest blog post linked below!
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My total node capacity has always been under 1 BTC, and the net fees I’ve earned from routing would (so far) average out to be about 1% yield annually on the outbound liquidity invested.
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Of the remaining 75 addresses:
53 are singlesig
16 are multisig
6 are unknown (possibly multisig)
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@americanhodl8
We need less than 21 million high conviction wholecoiners in a world of 8 billion people, for the game to be completely over and fiat paper to be rendered worthless.
Make use of these cheap sats!
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In particular, the address types of these richest addresses can provide important info.
If the address begins with a "1" we can deduce that it is a singlesig address. The same is true if the address begins with "bc1q" and has a length of 42 characters.
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I hear a lot of bitcoiners refer to "watch-only wallets" without a clear understanding of what this term really means.
A brief thread 🧵⬇️
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@BTCGandalf
@mempool
The first bitcoin address (P2PKH) shows up in block 728, about 13 days after the genesis block.
It was fun researching this stuff when writing my article on address types 🙂
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Using script multisig as a foundation, a fundamental blockchain-level threshold can be applied. Each key can be spread among key agents, and be protected by using a secondary key-level threshold (SSS or MPC).
Learn more about multi-level thresholds:
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First of all, 6 of the 81 addresses are holding bitcoin that is likely lost forever. The addresses were created back in 2010 or 2011, and have either never had a withdrawal, or had a final withdrawal way back in those years.
These are less useful for our security investigation.
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Fee rates are dipping below 10 sat/vB for the first time in nearly 4 months!
Not too long ago, many folks were unsure if we'd even get back this low any time soon.
It's an ideal time to consolidate UTXOs, and save your future self many sats in transaction fees.
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@BlankReg1x
@addie_macm
The only people who are broke in this world are those who don’t have bitcoin.
Few.
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It's challenging to know who all of these addresses belong to, and asking the owners to reveal the full details of their security is unlikely to be successful.
However, we can still learn certain things about security models from public information on the blockchain.
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@SBF_FTX
Too many crypto bros liking this vid, smdh.
You do realize you’re next right?
The only secure digitally native asset in existence is bitcoin in self custody.
No, your shitcoin is not an exception, and no there is no second best.
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Time, effort, ownership, coordination.
Can't proof-of-stake your way to a better world.
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Conclusion: at the top levels, there is no consensus about "the best method" of securing large amounts of bitcoin. There are a variety of approaches.
However, I believe there is one approach that stands above the rest in terms of security: multi-level thresholds.
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A sitting congressman linking people to the Satoshi Nakamoto Institute so that they might read A Cypherpunk's Manifesto is bullish.
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And there you have it! I hope you enjoyed this thread on institutional custody.
If you want to take a deeper dive into threshold security, learning about how multisig compares with SSS and MPC, check out our main article from yesterday! Link is here:
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6 months ago, just 25% of the mined bitcoin supply was available to short-term traders.
Today it's below 20%. The high-conviction holders are relentless in taking sats off the market.
If this pace continues there will be no BTC available in 2 years. Something's got to give...
UTXOs younger than 6 months now account for less than 20% of
#bitcoin
's total supply.
80%+ of all bitcoin has not been moved in 182 days, and the 2024 halving is only ~195 days away.
Historically, a supply shock has come next.
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@PrestonPysh
@saylor
The vicious cycle:
Gold (not sufficiently divisible or portable) to gold-backed paper (susceptible to fraud) to fiat (not scarce) and hyperinflation, then back to gold.
Gold is fundamentally flawed and always leads to fiat.
#Bitcoin
is the way out.
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Who is Satoshi Nakamoto? A reflection on Atlas Shrugged
Thanks for recommending,
@satoshis_gulch
@mjwhitemjwhite
@_MattHill_
@SvetskiWrites
@Breedlove22
@saylor
and others.
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There are many tools that individuals use in an attempt to address the risks of loss and theft. You can dive into them and find a comprehensive comparison here:
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@OzerCodesCrypto
“Sell” implies converting back to dollars or other fiat. I have no intention to ever do this; I believe bitcoin is a superior form of money.
I may “spend” some bitcoin in the future to buy things, but I won’t “sell” it simply to increase my amount of dollars.
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I say *might* be a multisig address, because we can't know for sure unless the address has been spent out of.
Luckily, many of these richest addresses have indeed been spent out of, providing useful data.
Here are the results from the top 81 addresses in the end of January:
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However, there is also a wide range of more unusual multisig quorums, as well:
2 instances of 2-of-2
1 instance of 3-of-9
1 instance of 4-of-8
1 instance of 3-of-8
1 instance of 4-of-6
1 instance of 3-of-6
1 instance of 2-of-6
1 instance of 3-of-4
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If you want to learn more about multisig, SSS, and MPC, keep an eye out for an upcoming
@unchainedcom
article comparing them! You can find a bunch of great educational content there right now:
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Today could be a great day to consolidate your
#bitcoin
UTXOs.
-Fee rates are the lowest they've been in more than 3 months
-In just a few days we are on pace for a 9% difficulty adjustment, which would make it more difficult for fee rates to continue to fall further
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The addresses that we know are multisig have been spent out of, and therefore we also have insight into the multisig quorums being used.
Unsurprisingly, some popular quorums make appearances at the top levels, such as:
4 instances of 3-of-5
3 instances of 2-of-3
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MicroStrategy now has 1% of the bitcoin that will ever exist.
Prediction: even if they never stop aggressively accumulating, they will never reach 2%.
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We can't know for sure if these addresses are using SSS or MPC (both of which have tradeoffs) because those arrangements are managed privately off-chain.
It's possible that some of these $500M+ stacks don't even utilize threshold security at all, which would be astonishing.
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When all the cool kids are discussing UTXOs and you aren't sure what they're talking about, you know it's time to read my introductory piece.
You'll learn why managing UTXOs is important for anyone holding bitcoin in self custody!
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Lots of people hold bitcoin in an IRA with iTrust.
They are also affected by Ripple acquiring Fortress.
It's always the best move to hold your own keys to your bitcoin, even for IRAs.
Huge News: Congratulations to our partners at
@Fortress_io
on their pending acquisition by
@Ripple
. iTrustCapital was the first major platform to bring back XRP in July and we have many team members, brand partners, and clients that are passionate about XRP and Ripple.
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@Tokenomicus
is a great way to get started, it’s free and they walk you through the steps of what hardware you’ll need and how to set it up. Pretty easy even for people who aren’t technical.
It’s how I started and I still use it today
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Multisig, SSS, and MPC all have tradeoffs. At the end of this thread, there's a link to my main article comparing them.
Here is a quick reference chart (blue is favorable, red is unfavorable, grey depends on your perspective):
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Removing third party custodial risk is fantastic.
Removing single points of failure is as well. With this address type, it’s possible that multisig is being used, and I hope that’s the case! But the language of the post raises some questions.
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If you liked this thread, you can check out the more detailed article it's based on, which was published just the other day!
Found here:
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You can tell this is a singlesig address by the address type. It begins with a "1" and is P2PKH.
Multisig addresses use P2SH, P2WSH, or P2TR, which all look different.
You can learn about address types and how to identify them, here:
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A solution is to direct your F2 mining distributions to one address and then take the extra step of making a second transaction that moves that BTC to another address you control for longer term storage.
Or, use a different mining pool until F2Pool changes how they distribute.
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Are you a bitcoin miner or DCAer who wants to save on future transaction costs, so you aren't leaving sats on the table?
Do you want to avoid paying $1000s just to move your bitcoin around?
Learn about UTXO consolidations and how to time them!
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Bitcoin is incredibly scarce, due to the supply limit (21 million) rule.
It is also increasingly difficult to obtain, because of the halving cycle rule and difficulty adjustment rule.
These 3 rules can't be changed, because there is no one with the power to change them.
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I've talked to many people who know how to set up a bitcoin multisig wallet all on their own, but choose to use an Unchained vault.
They want a team of experts that can assist their loved ones with safely recovering their bitcoin if something happened to them. Worth considering!
#Bitcoin
inheritance is a complex problem requiring simple solutions. Today we're launching the Unchained Inheritance Protocol to complement our collaborative custody vaults, included with every Concierge Onboarding and available for stand-alone purchase.
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21M bitcoin divided by 8B people is about 250k satoshis per person.
That’s ignoring the bitcoin that governments, companies and other institutions will try to obtain, and the 2M+ bitcoin that may be lost forever.
Currently 250k sats costs about $60.
👇
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Good morning, Texas is known for its cowboys and Nashville is known for its men who sing about cowboys, just an observation.
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If you aren't 100% sure how hardware wallets actually work, and why they are so helpful for securing bitcoin, then taking 3 minutes to watch this video is going to be time very well spent.
Nice job Cole!
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Don't let it worry you, heading into 2024. Just spread the word about managing UTXOs, and look for good opportunities to consolidate.
Happy new year!
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Ok you clever people, having 10 BTC and learning why to never sell would definitely be the best option.
Though, without having an initial understanding, one might accidentally sell the BTC before learning. 🤔 So, not sure my opinion changes. 10M sats will turn out to be plenty.
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Are you someone who takes privacy seriously, and wants to learn how to avoid common mistakes?
Find out how UTXOs and addresses can affect your privacy when you send and receive.
You'll also get an explanation of CoinJoins, a powerful privacy tool!
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Script multisig means a typical multisig wallet that many people are already familiar with.
If you aren't sure what multisig is or why it's advantageous, you can get an introduction through this video:
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@degraciajf
@DylanLeClair_
@unchainedcom
Here's a chart we recently created to highlight some of the tradeoffs. There are pros and cons to both options!
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We just crossed 19.5 million
#Bitcoin
mined, only 1.5 million more to go!
The majority of which will be mined in just the next 5 years (a statement which has always been true).
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Multisig is a bitcoin-native, battle-tested method of introducing threshold security, something that is pretty much required for protecting large balances.
Learn more about multisig here:
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As long as the number of required signatures is less than the total number of keys, then any one key could get lost without the bitcoin becoming lost.
If the required signatures is above 1, any one key could get stolen without any immediate risk of theft for the actual bitcoin.
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10 years from now, would you rather be holding:
40,000 of the ??? dollar supply
15 of the ??? ethereum supply
250 shares of the ??? AAPL supply
20oz of the ??? gold supply
1 of the 21 million bitcoin supply
Scarcity matters.
In uncertain times, I choose certainty.
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@BTCGandalf
@mempool
The genesis reward went to P2PK, not an address.
If this P2PKH address is a product of that public key, they’re basically equivalent, but I’d imagine that is why it doesn’t show up on
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Receiving just 3-4 of these distributions to your wallet from F2Pool will cause a
@COLDCARDwallet
Mk3 to be unable to sign for a full wallet withdrawal in one transaction.
4 previous transactions of 100 kB each adds up to larger than the 384 kB PSBT maximum for an Mk3.
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An institution who wants to secure bitcoin doesn't actually have to choose between these three options... they can be combined!
A multisig threshold can be the foundation, and then each key can include a threshold of its own by using SSS or MPC.
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Multisig is the simplest way to keep your bitcoin safe for the long-term.
Sorry, but people need to stop saying that multisig is hard.
It's not.
Multisig has one "gotcha": you must have your wallet descriptor*. That's easy.
Don't misrepresent "this one easy thing is really important" with "ack, it's so hard to do"!
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If you buy bitcoin with a DCA strategy, be mindful how often you withdraw to self-custody, and the amount of the withdrawals.
Your main metric for the UTXO health of your wallet should be your average UTXO size.
Don’t rug pull yourself!
UTXO management getting me down today.
I don't understand how people DCA unless they use custodial exchanges and withdraw it all at once.
Else, are you all seriously just stacking a tonne of 0.000x UTXOs? That's gonna really hurt one day.
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1/ There's a lot of transactions like this one in the mempool right now.
UTXO consolidations that are combining 500 small UTXOs worth around 300 sats each.
Notice that the user only gets to keep/spend less than 67% of the sats, the rest goes to fees.
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@jokoono
Multisig wallets shouldn't be just a simple dot on this graph, they should be a full range of dots depending on the quorum structure.
N-of-N has a higher risk of losing funds. 3-of-5 is more complex than most people need. Etc.
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The bitcoin industry has been busy building during this bear market.
Lots of exciting announcements recently, with with several hints of more just around the corner. It’s great to see.
Proof of work! 💪
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MPC for ECDSA is not nearly as battle-tested as multisig, and far more complex (wider surface for things to go wrong).
Ideally, an institution would use multisig as their foundation, and use distributed key agents with SSS or MPC for each key.
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My favorite dashboard decoration is back!
Wants me to check. Not gonna check. Stacking more sats instead, bitcoin is severely & absurdly discounted.
🫡
@FinneJay
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