Auditors can use cryptography to verify assets.
In the traditional financial system, auditors rely on bank statements, ledgers, and third-party confirmations to verify balances and activity. In bitcoin, those familiar tools may not always apply—but that doesn’t mean audits are harder. Unlike traditional systems where access to financial data is siloed and permissioned, bitcoin is built on a public ledger (the blockchain) where all transaction history is openly accessible.
This transparency offers new audit opportunities, but it also requires a shift in approach:
- Proof doesn’t come from banks—it comes from bitcoin keys.
- Ownership isn’t confirmed by a statement—it’s demonstrated cryptographically.
The good news is that traditional audit objectives—existence, ownership, completeness, and accuracy—can still be met in a bitcoin context. Here are some steps that an auditor may choose to follow to verify your bitcoin holdings.
Step 1: Determine the bitcoin custody arrangement
Custodial arrangements vary. Bitcoin may be held:
- In independent self-custody (the bitcoin owner holds all the controlling keys)
- With a custodian (a third party holds the controlling keys on behalf of the owner)
- In collaborative custody (the controlling keys are distributed among multiple entities, which could include the bitcoin owner, and/or bitcoin key agents). When auditing bitcoin held in collaborative custody, it typically makes sense for auditors to focus on the party which holds or directs the quorum of keys necessary to effectuate transactions.
Understanding the custody model is critical to knowing who controls what, and under which conditions. Unchained vaults utilize collaborative custody.
Step 2: Verify address balances and control
There are several methods to approach the verification of bitcoin address balances and control over a bitcoin address.
- Use independent blockchain data. Public tools (like Mempool.space or Blockstream) can help verify balances and trace activity.
- Hardware wallet confirmation: If a key holder uses hardware wallets to secure keys, most allow confirmation of an address on the device's screen. This verifies that the private keys held by the device generated the address. Auditors can witness this process to confirm control.
- Sending a test transaction: Sending a small bitcoin amount from the address to a destination specified by an auditor can prove control. This transaction is recorded on the blockchain, providing public evidence.
- Signing a message: Using private keys to sign a message provided by the auditor is the most private method. This cryptographic signature proves control without transferring funds or broadcasting information.
Learn: If you want to learn more about these methods, check out our blog article on this subject.
Important: Unchained is not a bitcoin custodian, and does not store, control, or hold the bitcoin in any Unchained vault. With an Unchained vault, any audit firm can cryptographically verify your assets using the private keys you control. Please consult with your auditor, CPA, and/or your attorney to work out an acceptable procedure.
If you would like assistance performing a specific bitcoin transaction into or out of your Unchained vault, please contact the Unchained support team.
None of the above is legal, tax, or security advice. This article is educational only, and not catered to the specific reader. Neither Unchained Capital, Inc. nor any of its affiliates can make any representations regarding any bitcoin wallet. Vault statements provided by Unchained may not fully represent the bitcoin wallet and its control. We encourage any audit firm to cryptographically verify the existence of such bitcoin through use of its own methods. Unchained does not represent that the techniques, software, and/or hardware referenced by this article are appropriate for your given use case or legal in your given jurisdiction. Please do your own research before using any specific technique, software, or hardware for purposes of storage or transmission of any bitcoin.