Millionaires are stashing their bitcoin fortunes in a fortified bunker under a Swiss mountain
These days, bitcoin can be summed up in two words: Big money.
A single bitcoin is currently worth close to $19,000 Cdn. That's more than a thousand per cent increase over what it was worth a year ago.
For the global millionaires who have invested in digital currencies, the cryptocurrency boom hasn't just created wealth — it's also generated paranoia.
So some millionaires have decided to stash their bitcoin fortunes away in a place they believe hackers will never be able to find them. And no, it's not in cyberspace.
It's a secret vault in a modified underground military bunker — hidden under a mountain in Switzerland.
Joon Ian Wong is a technology reporter with online news site Quartz, based in London, England. He's one of the only people in the world — other than staffers for Xapo, the company that owns the vault — to get inside the bunker.
He says the security is like something out of a Bond film.
"They have additional measures to prevent outlandish scenarios from happening, like the detonation of an electromagnetic bomb that could compromise the data stored [there]."
Physical storage for a digital currency?
Wong was granted unprecedented access to the data centre, which is run by the security firm Deltalis.
"The company [that owns the bitcoin security suite] is called Xapo, and it was founded by an Argentinean entrepreneur named Wences Casares, who is most often called the 'patient zero' of bitcoin among Silicon Valley and Wall Street's elite," Wong says.
Casares gave tech luminaries like Bill Gates and Reid Hoffman their first bitcoins, and now Xapo helps others with burgeoning cryptocurrency fortunes ensure those riches are kept safe.
It's unclear whether any of those luminaries are clients. The company was equally tightlipped about the value of the bitcoin currently stored in its vault.
"They refused to tell me," Wong says. "But they did kind of let slip in the conversation that sometimes they bring clients with millions of dollars worth of bitcoin to tour the facility. So it's safe to say that there's more than a million dollars' worth of bitcoin stored there."
It's safe to say that there's more than a million dollars' worth of bitcoin stored there.- Quartz reporter Joon Ian Wong
But why would a virtual currency need physical storage in the first place?
Turns out the bitcoin bunker doesn't store actual bitcoin units — what's being stored are private cryptographic keys that provide access to the balance of coins stored on the bitcoin network. The vault aims to prevent unauthorized access to those private keys by keeping them on a secure, offline machine.
As the value of digital currencies has climbed, tales have emerged of hackers attempting to crack even the most secured accounts.
Bitcoin's astronomical rise in price has made firms like Xapo a key target for those would-be thieves.
"One of the most important ways to prevent bitcoins from being hacked is to ensure that it's offline," Wong explains. "So the purpose of this vault is just a very extreme version of keeping your bitcoins in an offline environment."
Given the high-level security measures at the bunker, certain areas of the bitcoin storage suite remained off-limits to Wong during his tour.
"I think I am probably the first journalist to have visited the facility, but even then there were large portions of the facility that ... I didn't get to see or photograph," he says. "And so for those portions I had to take their word for it, essentially."
Wong didn't even know exactly where he was headed when a Xapo staffer first picked him up to transport him to the facility.
"I landed in Zurich and a Xapo executive then took me in his BMW convertible and drove me about 45 minutes away from the airport. At one point, we passed Lake Lucerne, and that's the point at which he points to a mountain on the opposite bank of this huge lake and says that's where we're headed."
"[That] was kind of my first glimpse of where this bunker was located."
The purpose of this vault is just a very extreme version of keeping your bitcoins in an offline environment.- Joon Ian Wong
The facility, which is dug into the side of a granite mountain near Attinghausen, Switzerland, is actually a decommissioned Swiss military bunker.
It still bears clear signs of its previous history as a Cold War-era facility.
"There's an entire section of the bunker that has been left untouched," Wong says. "Map rooms, for example — just gigantic maps across the wall; you can see all the radio equipment, conference tables and so on."
At first glance, Wong says the bunker's main entrance looked just like any other corporate building's lobby. But it soon became evident that this was no ordinary facility.
"First of all they photograph you, take your credentials [and] your fingerprints and then they lead you to this kind of a glass phone booth which they call a 'mantrap,'" Wong explains.
"It kind of slides open, you get in it, it slides closed and the idea is that you can't exit it unless the operator in the security booth opens the other side. It was pretty tight. So I'm glad I didn't eat too much for breakfast," he says.
The entrance to the bunker proper is equipped with massive, heavy steel doors that Wong could hardly budge.
"I was told that these doors are closed every night and they can protect the facility from a from a nuclear explosion," Wong says.
A Xapo employee escorted Wong through the data center's tunnels to the private suite where the company stores its clients' bitcoin. But the doors of that suite remained closed to him.
"What I didn't get to see were two rooms that are contained within that private suite — the operators' room in the first layer and then beyond that something called the 'cold room,' which is a room that I was told no one is allowed to enter," Wong says.
"Even the operator cannot enter the room, and to ensure the seal of the door, [they cover it] with tape."
One step ahead of the hackers
If a client wants to withdraw their bitcoin from the vault, it's a multi-stage process.
"They would get in touch with Xapo, and Xapo would send an operator into the operators' room and this operator would then sign the transaction to get those funds out of cold storage and to that customer's wallet," Wong says. "But before that can be done, two other signoffs in two other facilities run by Xapo on two separate continents also have to be done."
That way, a client's funds will remain secure even if one of the company's facilities is compromised.
All those precautions exist for a reason. The employees Wong spoke with told him that Xapo's bitcoin storage facility is under "constant attack."
"Their threat model is to protect against well-funded terrorist groups who have the means and the motive to get their hands on that bitcoin," Wong says.
"In addition, in recent months, several independent researchers have found evidence that North Korea is either sponsoring hackers or is directly behind hacks on South Korean bitcoin exchanges. So a nation-state, in that case, would be a potential threat."
If digital currencies' value continues to rise this year, Xapo and other firms bent on protecting bitcoin fortunes may well find themselves welcoming new clients.
"Suppose you had at one point 100 bitcoins that were worth, you know, $100,000 — suddenly now they're worth 13 or 14 times that much," Wong says. "So you would definitely start thinking about ways to keep those funds more secure than before."
To hear the full interview with Joon Ian Wong, download our podcast or click the 'Listen' button at the top of this page.