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points by nostrademons 6 hours ago | 0 comments
You can move money into a crypto wallet without that wallet needing to do anything, or being online at all, or even having a private key that physically exists anywhere in the universe. It's just a public/private keypair; send it to the public key of a private key that's offline and it still exists on the blockchain, you just can't do anything until the matching private key comes online.

The point of a cold wallet is to keep the private key physically offline. That way you know it cannot be stolen by electronic means, because the physical device containing the key needed to authorize transactions is locked up and not powered on. Then you only power it on during very specific, audited times and conditions when it's needed to fund the hot wallet, which does all the actual automated trading and transfers.

GP's point is to have all incoming transactions to an exchange go to a cold wallet, which becomes a one-way sink, and then periodically the exchange powers up the cold wallet to sign transactions transferring assets to the hot wallet, which then funds all outgoing transactions. This isn't a bad architecture, though I'm not sure it'd save all that much here.

[–] bombcar 5 hours ago
I was taking it that your bitcoin bank would have a SHTF lever that would immediately dump ALL your hot wallets into an offline cold-wallet.

Then when things calm down you go and find ... the keys under the birdbath are lost, and you're fucked in a different way.

But at least it might work.

[–] idlewords 2 hours ago
Until the SHTF lever was hacked to divert all hot wallets into somebody else's cold wallet
[–] AlienRobot 4 hours ago
The words you are using are very confusing.

You can't "move money into an offline crypto wallet that is not online at all."

If "money" i.e. crypto "currency" is in a crypto "wallet" then it is online. Anyone with the key and an Internet connection can transfer it at any time.

The wording is confusing because to someone who doesn't know how cryptocurrencies work it sounds like you can simply "take the crypto offline and put it into a physical device" as if it was a file. But that's not how it works. The physical key merely contains the actual key for the always-online wallet.

[–] nostrademons 3 hours ago
It's true that anyone with the key and an Internet connection can move money out of a crypto wallet at any time, but the point of the cold wallet is that they don't get the key because it's kept on a computer (or other storage medium) that is physically offline and disconnected from the Internet. Same reason government intelligence agencies use a SCIF for any important information work: you keep the information physically disconnected from the Internet.