If you can't hold your own keys, a Swiss bank is a good alternative
If you can't hold your own keys, a Swiss bank is a good alternative
You can delegate authority, but you cannot delegate responsibility.
You have probably heard the expression by Andreas Antonopoulos, “not your keys, not your coins” . It is the first commandment of a real bitcoiner. It means that only the person who has the private keys of a specific amount of bitcoin, can move the bitcoin. To confirm your transaction, the nodes on the blockchain will only verify that the digital signature, generated from a private key is correct. The blockchain will never check an entity’s personal identity. The ownership of the coins is established by a digital signature, and a private key is needed to generate this signature. So if you want to be self-sovereign, you must hold your own private keys. It is like having your own cash, in your own vault.
But if you can’t or don’t want to do this, a Swiss bank can be a good alternative. As Romain Braud explains in a recent podcast (listen to it here) if the bank goes under, the coins are not on the balance sheet of the bank. This makes your coins bankruptcy remote. And this makes it different than cash, which does belong to the bank. So if a bank goes bankrupt, your cash will be lost but not your btc. This property makes Swiss banks different than American brokers and exchanges. Coinbase recently scared people. They warned that your assets probably are segregated, but this has not been legally tested yet (see this article). In Switzerland, this idea has been legally tested and is guaranteed by the Finma.
Furthermore, if you would like to know how your coins are stored by a bank, listen to this podcast with Rober Rogenmoser, CEO of Securosys (listen here). The simple answer is it is done with an HSM, or hardware secure module, which is like a super sophisticated wallet, made for institutional clients.
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