What is BitDirect?

Posted by BitDirect on April 28, 2023

BitDirect is a collaborative custody Bitcoin platform that uses a 2-of-3 multi-signature wallet structure. BitDirect holds one key, the client holds another key, and a trusted third party (such as a friend, family member, or financial advisor) holds the third key. To move the funds, two of the three entities need to sign off on a transaction. This is conducted using hardware devices that the client and the trusted third-party hold. This solution is ideal for people for whom Bitcoin is a significant portion of their net worth.

The benefits for the client are as follows:

Losing hardware device and recovery seed:

If the client loses their hardware device, BitDirect and the trusted third party can restore a new device for them.

An additional layer of security applied to the recovery seed:

In the event that someone finds the recovery seed, the funds are still secure because an additional key is needed to sign the transaction. This additional key is provided by either BitDirect or the trusted third party.

Dual signing of the transaction provides an extra layer of security:

There is a second set of eyes on each transaction, preventing the client from potentially making a mistake. This also prevents a $5 wrench attack where someone is trying to force the client to give up their bitcoin.

All funds are stored on-chain that can be verified:

With exchanges, clients cannot view their bitcoin on the blockchain. Bitcoin on exchanges is all stored in a bucket account and not directly attributed to each user on the blockchain.

Distributed security:

As each entity holds a single key, there is no method for a single party to move or misappropriate the funds.

Inheritance planning:

BitDirect will work with the trusted third party in an inheritance planning scenario to get the bitcoin to the rightful beneficiaries.