MacKenzie Sigalos joins The Exchange to talk about a family who sold everything and invested in Bitcoin in 2017. Since then, the coin has appreciated 5,000 percent. Now, they have Bitcoin on four different continents and travel the world with the money they made.Subscribe to CNBC PRO for access to investor and analyst insights on crypto and more: https://cnb.cx/2BT2E7y
Didi Taihuttu, along with his wife and three kids, liquidated all of their assets and bought bitcoin in 2017, back when it was trading at around $900. Now, the Dutch family of five is safeguarding most of their crypto fortune in secret vaults on four different continents.
“I have hidden the hardware wallets across several countries so that I never have to fly very far if I need to access my cold wallet, in order to jump out of the market,” explained Taihuttu, patriarch of the so-called Bitcoin Family.
Taihuttu has two hiding spots in Europe, another two in Asia, one in South America, and a sixth in Australia.
We aren’t talking buried treasure – none of the sites are below ground or on a remote island – but the family told CNBC the crypto stashes are hidden in different ways and in a variety of locations, ranging from rental apartments and friends’ homes to self-storage sites.
“I prefer to live in a decentralized world where I have the responsibility to protect my capital,” said Taihuttu.
Hot vs. cold storage
There are a lot of ways to store crypto coins. Online exchanges like Coinbase and PayPal will custody tokens for users, while the more tech savvy may opt to cut out the middleman and hold their crypto cash on personally owned hardware wallets.
Thumb drive-size devices like a Trezor or Ledger offer a way to secure crypto tokens. Square is also building a hardware wallet and service “to make bitcoin custody more mainstream.”
People who choose to hold their own cryptocurrency can store it “hot,” “cold,” or some combination of the two. A hot wallet is connected to the internet and allows owners relatively easy access to their coins so that they can access and spend their crypto. The trade-off for convenience is potential exposure to bad actors.
“Cold storage often refers to crypto that has been moved to wallets whose private keys – the passwords that enable the crypto to be moved out of the wallet – are not stored on internet-connected computers, so that hackers can’t hack into the computer and steal the private keys,” said Philip Gradwell, chief economist of Chainalysis, a blockchain data firm.
Gradwell said exchanges will also often use cold wallets to secure the crypto their customers have deposited.
A recent Chainalysis report examining wallets holding bitcoin shows that 11.8 million bitcoin is in the hands of long-term investors, 3.7 million is lost, another 3.2 million is circulating among traders, and the remaining 2.4 million have yet to be mined.
“We can guess which wallets are cold storage – as they have particular behaviors, like receiving large amounts of crypto from a single source and not sending any for a long time until they are emptied all in one go – but you cannot definitively tell that a wallet is being used as cold storage,” said Gradwell.
In the case of the Taihuttu family, 26% of Didi’s crypto holdings are “hot.” He refers to this crypto stash as his “risk capital.” He uses these crypto coins for day trading and potentially precarious bets, like when he sold his dogecoin for a profit and then bought it back when the price of DOGE bottomed out.
The other 74% of Taihuttu’s total crypto portfolio is in cold storage. These cold hardware wallets, which are spread around the globe, include bitcoin, ethereum and some litecoin. The family declined to say how much it holds in crypto.
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