Crypto derivatives exchange Phemex hides 2.1 BTC in puzzle to demo HD cold wallet

Eight former core developers from Morgan Stanley, today released the latest portrait of Satoshi in which 2.1 BTC has been hidden. The team behind Phemex, a new crypto derivatives exchange, has put 2.1 BTC into a bitcoin address and hidden the private key within the picture.

To crack the code, participants will require a combination of algorithms, mathematics, and cryptography to find the private key and transfer the BTC to their own wallet. The puzzle aims to highlight the importance of private key custody and safety.

The Phemex team built its own, custom Hierarchical Deterministic Cold Wallet System, which assigns an independent deposit address to each user so that all assets are kept in cold wallets.

“Overall “hot” online wallets tend to be much more vulnerable than “cold” offline wallets. Managing thousands of private keys is inoperable and risky for an exchange, which is why we built our own Hierarchical Deterministic Cold Wallet System. From a “seed” our system can generate millions of private keys, each of which will be linked to their public keys, basically BTC addresses. All keys are independent of each other but can be easily recovered by the Phemex seed key if any private key goes missing. The seed key and all private keys are stored offline, hence in “cold” storage, to ensure maximum security for users.”
– Jack Tao, Founder & CEO of Phemex

The Puzzle

If the private key in the image is found, the participant will be able to transfer 1.1 BTC to their wallet. Another 1 BTC will be deposited to their Phemex account once they prove they control the private key.

Phemex’s low latency system architecture delivers an order entry and response time of less than 1 millisecond. The team hopes the puzzle isn’t cracked in a similar space of time.

“If no one can crack it in a week we will publish some hints to help people out.”
– Max Wong, co-founder at Phemex