how Bitcoin is stored
Bitcoin,  Commentary

Craig Wright Lawyer: Are you familiar with how Bitcoin is stored on a device?

Ira Kleiman: Not really

According to a copy of a deposition obtained by Modern Consensus, Ira “Steven” Kleiman doesn’t understand how Bitcoin works or even how Bitcoin is stored. But he is suing self-proclaimed bitcoin creator Craig Wright for roughly $10 billion worth of BTC either way.

In that deposition, released on June 19 in Kleiman v. Wright, it is clear that the adopted brother of Wright’s late partner, Dave Kleiman, is nearly Bitcoin-illiterate. But he does know that if Wright and his brother really were behind the pseudonym Satoshi Nakamoto—which most of the crypto community doubts—there are 550,000 BTC with his name on them. 

How Bitcoin is stored
When Craig Wright attorney Bryan Paschal asked Ira Kleiman… (Photo: CourtListener)

We hope this is one of those informative articles for you, Ira!

Block the babelchain 

“Bitcoin and other cryptocurrencies are stored in a wallet address contained in a centralized database called the blockchain. This is where all wallet addresses and amounts are stored,” according to our friends at Learn-Bitcoin dot com. “All bitcoin addresses contain two variables: a public key and private key. This is the essence. For online wallets the public key is usually generated but the private key is stored internally.”

how Bitcoin is stored
If you’re suing for 550,000 bitcoins worth more than $5 billion maybe try for basic cryptocurrency literacy (Photo: DarkWorkX-Pixabay/FreePNG)

“What’s empowering is that you don’t physically keep the amount locally on a computer—as long as you have the key/s backed up you can access those coins anywhere through any online tool,” according to the educators at Learn-Bitcoin.

So it is a bit of a stretch to say that “Bitcoin is stored on a device” since it resides in the blockchain and can be accessed using a private key. This is similar to how I can store the money in the bank and access it using my debit card number or just my PIN at an ATM. If I wrote these numbers down in my phone I wouldn’t say that I “stored” my money in my notes app. Just that I kept a copy of the “keys” there.

[Editor’s Note: If you’re looking for a somewhat more in-depth description of what Bitcoin is and how cryptocurrency and blockchains work, former NSA analyst Edward Snowden gave one of the best and most layman-friendly explanations we’ve seen to date in an article by his ACLU lawyer.]

Need to know

This issue came up when Ira volunteered that he himself owned bitcoin. But he couldn’t explain how he owned it. And his attorney, Velvel Freedman, wouldn’t let Kleiman say how much bitcoin he owns.

How Bitcoin is stored
We’d kind of assume that Ira Kleiman would say he owns 550,000 BTC (Photo: CourtListener)

No shade from us! Helping people understand the complexities of blockchain and digital currency is what we’re all about over here at the decentralized office of Modern Consensus!

We’re gonna go out on a minor limb and tell Ira that he probably doesn’t need to know how it is stored. Most minor bitcoin users just buy from an exchange like Kraken or Coinbase. You sign up and then log in with your email and a password (just like in your regular email inbox) to gain access. You probably have this password “stored” in your memory or possibly on a Post-it note.

The third Kleiman brother

We’ll be going over the 133 page deposition over the next few days with some updates to follow. 

Notable: Ira and Dave Kleiman lived “five to ten minutes” from one another and didn’t see each other from Thanksgiving 2009 until Dave’s death in 2013. Dave used a wheelchair at the end of his life and died of complications from an MRSA infection. 

How Bitcoin is stored
Spoiler alert: Ira did not know why Dave disinherited Leonard (Photo: CourtListener)

Dave had a heart condition and cocaine showed up in his autopsy. A third adopted brother named Leonard Kleiman previously died of an overdose, according to Ira Kleiman’s deposition. That brother, Leonard, was excluded from Dave Kleiman’s will. 

Will the real Satoshi Yakamoto please stand up

Finally, we’re going to give attorney Velvel Freedman the benefit of the doubt and assume that referring to “Satoshi Yakamoto” on page 21 was the court reporter’s error.

How Bitcoin is stored

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Brendan Sullivan is a writer, producer, and author of the memoir Rivington Was Ours: Lady Gaga, the Lower East Side, and the Prime of Our Lives. Disclosure: he owns cryptocurrencies. Follow him on Twitter.