The new product is now available for pre-order in 95 countries including Canada—an important market for the firm, according to Bitkey’s business lead. Shipping is set to begin in early 2024.
In an interview with BetaKit, Bitkey business lead Lindsey Grossman said that the idea is to provide Bitcoin holders with a safe and secure storage alternative to crypto trading platforms that is simpler and easier to use than existing self-custody solutions.
“People are stuck in the middle of two very bad options.”– Lindsey Grossman, Bitkey business lead at Block
“The problem today that we see in the market is that the vast majority of the millions of Bitcoin owners today keep their Bitcoin on exchanges,” she said. “The problem with this—by leaving your money on exchanges or custodial platforms—is that you put all of your trust in these companies and additionally, they, not you, set the rules on what you can do with your money.”
For those who have not been content with keeping their Bitcoin on these platforms, other self-custody crypto wallets have existed for some time. But according to Grossman, many are “extremely hard to use” and “way too complex” for the average Bitcoin owner.
“People are stuck in the middle of two very bad options,” argued Grossman.
In light of this, Grossman said that Block decided to build Bitkey for a broader audience. “You don’t have to be an expert engineer, you don’t have to be a Bitcoin [maximalist] to be able to take control of your money,” she added.
Grossman noted that Block sees Canada as a particularly important market for Bitkey, citing the country’s Bitcoin adoption and mobile financial app use as two factors informing this viewpoint. In Canada, Grossman said that most Bitcoin owners are currently saving long-term, but over time, she expects to see Bitcoin usage for other applications, such as payments, grow.
Block’s Bitkey solution consists of three components: a mobile app that allows customers to make Bitcoin transactions, track their balance, and manage security preferences, a hardware device, and a set of recovery tools. The product costs Canadians a one-time fee of $220 CAD.
The Bitkey wallet has three keys, any two of which are required to move Bitcoin and approve security-related changes. The app contains one, while another key is held in the offline hardware device, which offers users an added layer of security to authorize money movement, and facilitates recovery if customers lose their phone. The third is stored on Bitkey’s server and is used to help customers move Bitcoin with just their phone while on the go and recover their wallet if they lose their phone, hardware, or both—in which case, this key alone would suffice to initiate the recovery process.
According to Grossman, Bitkey’s “two-of-three multi-signature” approach does away with the need for customers to remember long passwords or ‘seed phrases,’ which have been a barrier to self-custody wallet adoption for some folks.
In a crypto context, self-custody refers to the practice of individuals holding and managing their own Bitcoin, rather than relying on a third party, like a bank or crypto exchange, to do so.
Grossman said that to date, customers Block has spoken with in a variety of countries have expressed anxiety about storing their Bitcoin on crypto exchanges. “They experienced frustrating limits and delays with their money, hidden fees, and as history has sadly shown us in the past, sometimes … companies they entrust do not act responsibly with customers’ money.”
The rollout of Bitkey comes just over a year after the collapse of a number of large, high-profile crypto firms, including the exchange FTX, which mishandled customer funds. When the market crashed and companies like FTX went under, a lot of crypto investors lost a lot of money. In the aftermath of this activity, Grossman said the conversation around self-custody shifted.
According to Grossman, Block has been developing Bitkey since earlier than that, starting in the summer of 2021. The company later spent six months beta-testing Bitkey in 40 countries, including Canada.
With its stock price down over 80 percent from its 2021 peak, Block has been under pressure recently. Block co-founder and CEO Jack Dorsey has expressed that he wants to see “a significant return to growth” for Block, which owns point-of-sale suite Square and payment platform Cash App. Bitcoin has already been a growth avenue for the FinTech firm.
Bitkey’s launch coincides with a notable rebound in crypto markets following a challenging 2022. Bitcoin has rallied more than 120 percent this year, leaving some in the sector optimistic about a potential 2024 bull run.
Feature image courtesy Block.