Why Cold Storage Isn’t Enough

Cold storage is essential for Bitcoin security. Keeping your keys offline protects you from a long list of digital threats like malware, phishing, and remote hacking. But cold storage only solves part of the problem.

Real-world risks remain like:

• Losing or destroying the physical device
• Misplacing a backup
• Fire, flood, or burglary destroying your storage location
• Being a victim of theft, including via violence or kidnapping (‘wrench attacks’)
• Passing away without a foolproof inheritance plan

Cold storage keeps hackers out but there are still many ways you could still lose your Bitcoin.

Multisig Improves Cold Storage — But It Still Isn’t Enough

Multisig dramatically improves cold storage. By splitting control of Bitcoin across multiple keys stored in different places, you remove the single point of failure. Now it would take multiple failures or a motivated thief  to lose your Bitcoin.

Multisig reduces many risks like device loss, accidental destruction, or theft at a single location. But it might not mitigate other risks — like kidnapping or physical coercion. Even in a well-designed multisig vault, residual risk remains. And that's where insurance comes in.

Insurance Covers the Gaps Cold Storage and Multisig Leave Behind

At AnchorWatch, we created insurance to cover the risks that cold storage and multisig can’t fully eliminate. Our policies cover:

• Permanent loss of access due covered perils, including a wide variety of physical events, loss and theft
• Physical attacks or coercion events ("wrench attacks")
• Natural disasters that destroy multiple signing devices
• Operational mistakes that leave you locked out
• Fraud or collusion commited by AnchorWatch

Your exact premium rate is based on how your vault is actually configured, and higher levels of security earn better pricing. Insurance exists because even the best plans can be undone by unexpected events.

Wrench Attacks Are Real — and Rising

If you have a public profile, or if people know you hold Bitcoin, then you are a target. Violent thefts, kidnappings, and coercion attacks are no longer rare. They are growing. Multisig reduces some of that risk, but it does not eliminate it. If attackers believe you have access to bitcoin, you may be forced to act. Insurance steps in to take care of you even in the worst-case scenarios where physical threats or overlapping disasters strike.

Build Resilience the Right Way

Cold storage is a start. Multisig is a major improvement. But without insurance, your Bitcoin is still exposed to risks you can’t fully control.

If you're serious about holding Bitcoin long term, it is time to add a final layer of protection.

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