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What Risks Exist with Cold Storage and blockchain development

Discussion in 'Off Topic' started by sinbad10, May 16, 2018.

  1. sinbad10

    sinbad10 New Member

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    How does cold storage work?
    Cold storage means keeping all one’s private-key data for assets on an offline computer or device. This means they cannot be accessed online or on a network. They are therefore much more secure from hacking, theft or network failures. Unless someone has access to your password and device, anyone wanting to steal another person’s cryptocurrencies would have to break through complex encryption systems in person. There is simply no safer or easier way to manage large amounts of cryptocurrencies.
    [​IMG]

    Kinds of cold storage​

    A USB drive or other data storage medium such as an external hard drive
    A paper wallet (a piece of paper containing your key and personal address)
    On an offline hardware wallet (a storage device that you can connect into a computer to sync for transactions)
    A traditional crypto wallet that does not have internet access (i.e. a wallet on a phone set to airplane mode)

    What Risks Exist with Cold Storage?​

    While cold storage is the safest way to store cryptocurrencies, there are still some risks. Different from traditional wallet employed blockchain development, USB devices may be damaged; paper wallets may be burned, lost, or made physically illegible; cryptocurrencies kept on an offline computer are still at risk for viruses, malfunctioning hardware or theft. When transferring cryptocurrencies to a cold storage device, it is still potentially possible for someone to access your original, traditional crypto wallet and recover a deleted wallet to access your funds. It is therefore very important that you protect your cold storage devices and understand there is no way to 100% securely digital assets.

    Cold Storage Limitations​

    While cold storage is the safest way to protect your assets, there remain some things they cannot do compared to traditional cryptowallets. For example, because they are offline, you cannot trade assets to other wallets or exchange currencies for one another with speed or ease. As cryptocurrencies are increasingly used for physical purchases, traditional wallets will be increasingly necessary.
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  2. Wes F (Wolf)

    Wes F (Wolf) New Member

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    Has anyone looked into XSN's Trustless Proof of Stake tech? Essentially transforms devices like Ledger from mere storage into profit generating devices. Ability to stake from ledger essentially, while coins remain offline.