Bitcoin is stored on a public network called a blockchain. Each address on the blockchain can hold the digital asset. You use a private key to unlock and transact with your bitcoin on the blockchain though a wallet. This wallet can be "hot" or "cold". Meaning, it is "online" or "offline", respectively. Cloud Nalu, with our custodian partner Prime Trust, uses a combination of hot and cold wallets to store bitcoin safely, and to provide our clients with an easy, efficient way to buy and sell bitcoin.
When storing significant amounts of bitcoin, it is best practice to withdraw bitcoin to an address on a cold storage wallet, that you control, by holding your private keys to that wallet safely offline. It requires more steps to transact with bitcoin through a cold storage wallet, but it is also therefore much more secure and out of reach from potential hackers. When you buy bitcoin from Cloud Nalu, you can easily transfer it, after a brief holding period, to a cold storage wallet address, of which you hold the private keys. When you hold the private key(s) to your bitcoin, you then have full control of your bitcoin. No one can access your bitcoin without the private key(s) or backup seed phrase. If you lose your private key by losing your hardware or phone wallet, you can still regain access to your bitcoin on the network by using your backup seed phrase. However, if you lose both your private key and your backup seed phrase, no one can help you recover your bitcoin, including Cloud Nalu or Prime Trust.
If you hold bitcoin on our platform, technically, our custodian partner Prime Trust controls the private keys to that bitcoin, until you withdraw the bitcoin to a wallet address you have full control of. We encourage our clients to withdraw their bitcoin to a cold storage wallet they control, after they are properly educated, and are comfortable storing their private keys and backup seed phrases securely.