Bitcoin [BTC] adoption takes leap forward as Square open-sources their custody solution

Payment processing company Square recently announced that they would be open sourcing their cold storage system for securing their Bitcoin [BTC] holdings. This marks a significant step forward in pushing the adoption of Bitcoin, as custody solutions are widely considered one of the biggest pitfalls of cryptocurrency adoption.

The company announced late last year that they would be offering users with the ability to transact in cryptocurrencies, leading them to create the infrastructure required to secure their funds. This is because the users’ Bitcoin is held by Square, leading them to store them in a combination of hot and cold wallets for maximum security and convenience.

This solution is now known as ‘Subzero’ and is a Hardware Security Module [HSM]-backed solution for the cold storage of Bitcoin. HSM are hardware devices which have gained prominence in the cybersecurity field and are used to store sensitive key material. They also have specifications to perform operations with those keys.

The system is for the implementation of an enterprise offline Bitcoin wallet, with support for the implementation of other protocols in the future. This can also be customized to the enterprise’s liking, providing a template for any financial institution to potentially work on.

Subzero also utilizes Bitcoin’s multi-sig feature natively available in the Bitcoin protocol to ensure security. Moreover, the participants use a combination of smart cards and passwords to authenticate the system to access the cold wallet, which is said to “remains offline throughout its lifetime.”

For added security, the system can also be distributed geographically, making it harder to compromise. The wallet also supports Hierarchical Deterministic and the Segregated Witness functionalities. Square also utilized Trezor’s open source projects in order to create the service.

Square stated:

“We hope that by sharing our work, we can make it easier for others to fulfill their security needs, enabling even more innovation — and better protection for all players — in the cryptocurrency space. In the long run, since we had to solve problems that other companies may face, we are interested in standardizing some of our work.”