Why shouldn’t you use safe-deposit boxes to store Bitcoin?

Banks are not exactly what they used to be. I don’t know exactly when it changed but as a boy I remember banks being these massive buildings with large vault doors, armed guards and cameras everywhere but it seems increasingly they are located in strip malls right next to a Great Clips with nothing more an alarm and a small safe in the back. Frankly most don’t even offer safe deposit services any longer.

The lack of security of these facilities offer is not why I don’t recommend their use; it is because they can’t be trusted to keep your valuables safe. Not only can the federal government seize the contents of these safe deposit boxes at will increasingly the state governments are doing so as well as a means to shore up their own finances via their unclaimed property programs.

You can mitigate some of these risks by using techniques like Shamir Secret Sharing to split your keys up into M of N parts or by utilizing multi-signature wallets where the parts or keys are stored at different facilities reducing the likelihood of these events impacting you (which you should do regardless) but as a general rule I recommend use of private facilities instead.

Private facilities have a number of value propositions above and beyond banks, these include:

  1. Not regulated which makes it more difficult for the contents to be frozen or seized
  2. Identification is often not a requirement to open an account making targeting assets in the vault more difficult
  3. Not subject to bank holidays (for example during 9/11 banks were closed in the US)
  4. May offer:
    1. Insurance that would protect you from loss;
    2. Improved security protections and procedures;
    3. 24x7x365 access to the facility;
    4. 24x7x365 armed guards;
    5. The use of “ceremony rooms” where you can privately perform transactions.

Above these value propositions a few things to keep in mind when looking at these facilities are:

  1. Do they offer dual key control? This is when they keep one key and you keep the other. This helps mitigate the risk of your key being stolen.
  2. Did they their ceremony rooms offer you sufficient confidentiality and space to perform your transactions?
  3. Do they limit how many people can be in the vault at a given time?
  4. Is the construction of the facility done in such a way that physical compromise would be difficult?
  5. Do they have adequate camera coverage and keep the recordings long enough to be useful to identify compromise?
  6. Do they follow strict procedures or are they overly lax?
  7. Do they have any attempted thefts and if so how were they handled?
  8. Have their ever been any legal claims from their customers?
  9. What are the BBB & Yelp reports for the facility?

Regardless of which facilities you choose to store your Bitcoin assets its also important to remember the old adage of “Trust but verify” and periodically access the assets to ensure their integrity and availability.


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