The head of Coinbase debunked four myths about the storage of crypto.

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Brian Armstrong, co-founder and CEO of crypto-exchange and Coinbase storage services, outlined four common misconceptions about cryptocurrency storage solutions. His article was published on February 22 in a subsection of Fortune called the Ledger.

"Cold storage»

"Cold storage" means storage method personal cryptocurrency user keys offline to prevent theft via remote attack. Hot storage, by contrast, refers to storage on a device that has an active Internet connection.

Armstrong's first argument concerns the notion that hot storage is always necessary to provide the flexibility and speed needed to make transactions. He notes that some platforms allow users to trade out is insensitive to almost platforms (OTC) using postponed calculation, that is, the funds remain in the offline store as long as the transaction is completed.

As we wrote earlier, a recent joint venture between the BitGo blockchain security company and The bitcoin over-the-counter (BTC) trading platform Genesis Global Trading also allows customers to trade cryptocurrencies without the need to withdraw funds from cold storage.

Proof-of-Stake

The second paragraph of the revelations of Armstrong's concerns cryptocurrency, is based on the algorithm of consensus PoS. The head of Coinbase notes that participating in the PoS network and receiving income from the coins held does not necessarily mean that the latter should be stored in a hot wallet.

The CEO cites the example of the Tezos crypto project, which allows token holders to delegate their invested funds to a so-called "Baker" who maintains a hot little of the funds to receive rewards from PoS mining - but customers ' funds remain safe offline.

Keys in hot and cold storage

Third, Armstrong explains the relationship between the holders of one key and whether the vault is hot or cold.

Revealing this aspect in more detail, the CEO of one of the largest crypto-exchanges in the United States explains that the development of a cryptographic solution for storing multiple keys is a reasonable measure, regardless of whether the stored funds are offline.

Hardware wallets

Finally, Armstrong mentions of hardware security modules, claiming that they can approach the safety of cold storage - and, of course, can be useful for architecture cold storage - but, nevertheless, can not be compared with her. Armstrong concludes his article with a note on hot storage, indicating:

With hot storage, there are many parts you need to keep your funds safe. Is it possible to make all these details right? Yes, and I'm comfortable using hot storage for reasonable amounts. Do I want to bet that all my business is infinitely right in all these details? Maybe not.

As reported, it was found that the industry's largest hacker hacking and theft of funds was facilitated by the storage of coins by the Japanese exchange Coincheck in a hot wallet with a low level of security.

Link -  https://altstake.io/news/glava-coinbase-razvenchal-chetyremifa-o-hranenii-kripto