This is why multi-sig exists. Put the funds in a 6-of-10 account, done. You would need a 60% attack (60% of the executives to collude/conspire, or 60% being hacked/kidnapped) to be robbed.
Firstly it's not the executive's money to actually hold onto.
Secondly they have sooooooo many options where their own incompetence/mistakes will not be a factor in their money literally disappearing into nothingness. There's a reason why bank deposit insurance exists.
If you think you can hold onto the money cheaply, by all means start this business and get them as a client. But you'll probably want insurance, you'll likely need some security measures, etc etc. Things start costing money.
Not to mention the coordination costs for them of "yet another holder of assets". What if they want to sell a chunk of it? They need to get 60% of execs in a room every time?
These people hold money for a living. I understand that they might not be aware of the latest and greatest technical stuff... but this is their job and they've likely thought of a lot of details here.
There's also value in a human being the last step in the security mechanism. No matter what happens, a court order/explanation of force majeure/etc means that the money is never really truly lost.
https://btcarmory.com/fragmented-backup-vuln/
edit: the problem has been fixed since
See a good Reddit post about it: https://www.reddit.com/r/Bitcoin/comments/2uj2qe/difference_...
However, I still don't really get the usage difference between SSS and multisig. In a M of N situation, you give N secrets to N people, and M people together can spend the funds.
In my mind, Shamir secret sharing wallets (e.g. Armory) belong to the family of multisig wallets.
It would be nice if you could elaborate on that point.
- SSS can be bad if just your own client gets it wrong, multisig can be bad only if the blockchain itself is implemented incorrectly and somehow everybody who's been poking at its crypto for years with billions of dollars at stake has missed it.
- With SSS, once you reconstruct the key, there's one person holding that single key who will sign a transaction with it. You'd better trust that person. With multisig, each of the m keys can be controlled by a different person and they don't have to share. So (unbroken) SSS is fine for protecting your own key, but an organization that wants to distribute responsibility should use multisig.
So, slightly paraphrasing, IIUC : - multisig is more adapted for organizations, there is no need of trust between the key holders. And it's more secure, because it uses a more widely audited code than that of wallets.
- SSS seems more adapted for individuals. It has more flexibility and privacy in N and M, since no P2SH script identifier is sent to the blockchain. I guess transaction fees should also be lower.
These people allocate and mostly invest in funds with exposure to certain asset classes (private equity, VC, hedge funds, equity and bond funds, etc).
Are you really referring to a single (non-plural) custodian...?
Now you have to pay a company for this service and also have counter-party risk. Great.
Maybe the risk and cost is not worth it and setting up a multi-sig inhouse is worth it?
Bitcoin is a paradigm shift. Its more important value proposition is the lack of counterparty risk (which other people refer to as "self financial sovereignity"). If you're hiring a custodian to hold the bitcoins for you, you're doing it wrong.
> They think that they don't have the 'expertise'
If bitcoin is seen as requiring some special knowledge to hold it safely, it's simply a UX problem that will be solved when wallet software/hardware matures.
I trust my bank a lot more than I trust myself to keep things safe.
This seems to be a controversial opinion in the crypto-space :)
The "be your own bank" idea which crypto offers was one of the reasons it has taken me a while to get into it. That was something that I really didn't want.
I trust my bank living up to the task of keeping it safe and reimbursing me if they don't. I don't care about the individual coins but I do care about the value they represent and I trust that even if a bank loses a number of coins that it will not affect me. Just like if a bank vault was broken into it would not come out of my account.
Your trust will have a cost. That's what I meant. You will pay with risk or value.
Who, if they are competent, will happily print out a bunch of keys on paper and lock them in boxes, and charge you a 75 basis point asset under management fee for that service.
What has that really accomplished though?