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The need for institutional cryptocurrency storage

Cryptocurrency transactions are anonymous, immutable, and have no built-in recovery for lost keys. Therefore:

  • Losing a private key means permanent loss of the associated cryptocurrency.
  • Any unauthorized party gaining access to a private key can easily steal the associated cryptocurrency.

Losing the private key is a reliability issue; controlling access is a security issue. Reliability and security often have contrasting requirements, and in practice over time, one or the other are often compromised due to mistakes, ignorance or lack of planning.

In bitcoin's 14-year history, for example, nearly a quarter of all bitcoins are estimated to have been lost or stolen due to private key mismanagement, representing an approximate loss valued at approximately $27 billion USD as of September 12, 2018.

Daenerys Crypto Storage

Based on the Gregersen-Gono Standard (GGS) and insured by a grade A London based insurer, we solve some of the most challenging custodial and compliance problems associated with cryptocurrencies and other digital assets. Our innovative approach materializes encrypted private keys on laser etched polycarbonate cards, stored in a 630-ton capacity vault, The Safe House.

Our storage is covered against physical loss or damage by an insurance policy issued by a London based insurer rated A+ by Standard & Poor's.

For a full review of the GGS Standard as implemented at The Safe House please download the Gregersen-Gono Standard whitepaper.

Daenerys Crypto Storage Features

No Digital Storage Means
No Digital Theft

No Digital Storage = No Digital Theft

Security breaches at cryptocurrency exchanges so far have been the result of digital theft. Attackers have been able to surreptitiously gain access to private keys that were stored digitally.

Our physical cryptocurrency storage secures private keys as encrypted QR codes on non-digital media. Encrypted QR codes are etched by laser onto durable polycarbonate cards for secure vaulted storage. The hardware that handles private key generation and etching is secured inside the vault and has no Internet connection. Upon completion of the etching process all traces of private keys are immediately erased so that there is no possibility of digital theft.

Cards are stored at The Safe House, our 630-ton vault. Shown in the photo is the two ton class 1 entrance door to the primary silver vault.

Card Encryption means
Physical Theft Is Pointless

Card Encryption = No Physical Theft

Card encryption eliminates the "anyone who can see it, can steal it" risk typical of standard paper wallets and the mnemonic phrases utilized by hardware wallets, by making the private keys indecipherable to prying eyes.

Our clients’ private keys are secured with strong encryption: AES-256 symmetric encryption for the primary card, and RSA-4096 asymmetric encryption for the recovery card.

Encryption ensures internal security and makes theft of the physical cards pointless. The encrypted private keys can only be decrypted by the vault’s offline management system and requires multi-signature authorization from independent functional groups within the company. QR codes used between air-gapped systems are also encrypted. In case of theft, the recovery card will be used to recovery the data on the stolen card.

Durable Medium Means
No Data Degradation

Durable Storage Medium = No Private Key Degradation

Encrypted private keys are laser etched in QR and text formats onto durable polycarbonate cards. Once etched, each card undergoes a verification process to ensure legibility.

UV Laser radiation penetrates into the card and physically changes it. This chemical alteration of the material means that the top layer of the card can be forcefully scratched off without data loss. The QR code itself also has redundancies allowing up to 30% loss. Because no ink is used, the reliability problems associated with printed paper wallets (smearing, fading, etc.) are avoided.

The use of polycarbonate cards, a material also used in the manufacture of bullet-resistant panels, ensures that encrypted private keys can be reliably stored for very long periods of time.

Our storage method prevents the reliability issues common to digital storage media such as hard disks and flash drives, which often begin failing within to 5 to 10 years.

Private Key Redundancy,
No Private Key Loss

Private Key Redundancy = No Private Key Loss

As a precautionary measure, in the unlikely event that a primary card is severely damaged, lost, or stolen, each encrypted private key is also laser etched onto a separate recovery card which is stored in a different secure location.

The recovery card’s private key is encrypted with a different encryption algorithm (RSA-4096). As an additional security measure, the decryption process used for the primary card cannot be used to decrypt the recovery card.

The decryption process for a recovery card requires access to a recovery decryption key, which is sharded using a 3-out-of-5 rule and stored in five backup locations. The provision of the recovery cards is for emergency use and ensures that private keys will not be lost even if a catastrophic event destroys the vault.

Video Identifications & Standing Instructions

Video Identification

While deposits can be done anytime from any wallet by transferring into storage addresses ad-hoc withdrawals require a live video conference directly with the vault to verify the requester’s identity(es) and follow Authorization Mandate rules.

Video identification avoids most impersonation and "man in the middle" attacks as it does not rely on email, phone or 2-factor authentication systems, so hijacked or stolen phones cannot be used to make withdrawals.

Alternatively, Standing Instructions can be used to regularly schedule withdrawals to preset addresses or to convert Bitcoin to Fiat (USD, EURO, SGD) and wire proceed to the customer’s linked bank account(s).

Authorization Mandates
& Representatives

Authorization Mandate

Specify multiple representatives and customize withdrawal procedures to fit your security requirements using Authorization Mandates. The Authorization Mandate is a document provided by the customer that describes their specific requirements for transaction authorization.

For example, an Authorization Mandate might impose that withdrawals over 10 Bitcoin require two customer representatives for approval or that withdrawals can only be transferred to certain pre-approved addresses.

Insurance Coverage & Regulatory Compliance

Insurance Coverage & Regulatory Compliance

Your holdings are covered by an insurance policy issued by a London based insurer rated A+ by Standard & Poor's.

This insurance coverage, one of the first of its kind, in turn enables our clients to offer crypto services that are inherently more trustworthy and compliance friendly. Having digital assets insured by well known third parties will immediately address a number of the security concerns of interested parties.

Digital asset funds, law firms, custodial services and any other firm seeking approval from regulatory bodies will benefit greatly by having their assets protected by a well known insurer.