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Title: Cold storage for exchanges? Post by: riekinho on March 03, 2014, 08:14:59 PM When exchanges claim they have 97% of BTC in cold storage what exactly do they do?
How is it different from making personal cold wallets? Title: Re: Cold storage for exchanges? Post by: DarwinNexus on March 03, 2014, 08:19:26 PM It's not different.
Cold storage means that their wallets are not online. Title: Re: Cold storage for exchanges? Post by: riekinho on March 03, 2014, 08:23:46 PM So when you ask for a bitcoin withdrawl some employee of the exchange takes a paper wallet and sends you BTC?
How do they prevent in-house theft? Do they require multiple signatures to approve a cold wallet withdrawl? What type of cold wallet do they use? How much overhead does it create? Title: Re: Cold storage for exchanges? Post by: Rannasha on March 03, 2014, 08:33:16 PM So when you ask for a bitcoin withdrawl some employee of the exchange takes a paper wallet and sends you BTC? How do they prevent in-house theft? Do they require multiple signatures to approve a cold wallet withdrawl? What type of cold wallet do they use? How much overhead does it create? The idea is to have enough BTC in the hot wallet to be able to handle normal withdrawals (which should be mostly balanced with deposits). How much this is will depend on your operation and may not to be adjusted from time to time. That's why some exchanges post a notice that large withdrawals may take longer as they have to be done manually. Furthermore, there can be several layers of cold wallets. Not everything has to be in a safe somewhere off-site. It's possible that the exchange keeps part of the cold wallet funds on an offline computer in the office. Topping up the hot wallet from that cold wallet should be doable in 5 minutes, but I imagine that such a wallet would be encrypted with only select people having access to the passphrase. The largest amount, I reckon, is stored in safes, possibly at several locations and requiring some form of m-of-n signature and should under normal circumstances not be needed. Title: Re: Cold storage for exchanges? Post by: DeathAndTaxes on March 03, 2014, 08:36:34 PM So when you ask for a bitcoin withdrawl some employee of the exchange takes a paper wallet and sends you BTC? How do they prevent in-house theft? Do they require multiple signatures to approve a cold wallet withdrawl? What type of cold wallet do they use? How much overhead does it create? "Cold Storage" is just words. You would need to ask the exchange in question. Title: Re: Cold storage for exchanges? Post by: QuestionAuthority on March 03, 2014, 08:38:28 PM Cold storage for exchanges is where you keep all of your customers money in an offline wallet at your house. You also have an offline wallet at your office. Then when you want to steal all of your customers money you can honestly say that somehow the offline wallet at your office doesn't have any Bitcoins in it.
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