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Author Topic: How do exchanges implement cold wallets and instant payments simultaneously?  (Read 242 times)
lukaexpl
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September 19, 2017, 07:44:51 PM
 #1

Many of the withdrawals from Poloniex were almost instantaneous.

That leaves me wondering how do they initiate something that comes from users input ("hot side") to send out coins from the "cold" side so quickly?

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September 19, 2017, 08:24:03 PM
 #2

Many of the withdrawals from Poloniex were almost instantaneous.

That leaves me wondering how do they initiate something that comes from users input ("hot side") to send out coins from the "cold" side so quickly?



They have their cold storage ready as if you see they send many big transactions daily, usually every hour they send 1 mln dollars in value, bitcoin transaction which includes all withdrawals from the users that's why their withdrawals come fast but not as fast as you are describing, sometimes I have had to wait for more than 30 minutes before I got my withdrawal.




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Boussac
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September 19, 2017, 08:32:07 PM
 #3

Well, they can't have their cake and eat it.

Meaning they are NOT storing all their private keys offline (i.e in "cold" storage) but keeping at least some online on customer facing servers to execute instant withdrawals, a very risky practice.

Stay away from exchanges that advertise instant withdrawals and ask exchange operators to use true cold storage instead.

Paymium stores all private keys offline and executes withdrawals in batches with the added benefit of enhanced user privacy since batch withdrawals are coinjoin-like mixed transactions.

lukaexpl
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September 19, 2017, 08:51:12 PM
 #4

Many of the withdrawals from Poloniex were almost instantaneous.

That leaves me wondering how do they initiate something that comes from users input ("hot side") to send out coins from the "cold" side so quickly?



They have their cold storage ready as if you see they send many big transactions daily, usually every hour they send 1 mln dollars in value, bitcoin transaction which includes all withdrawals from the users that's why their withdrawals come fast but not as fast as you are describing, sometimes I have had to wait for more than 30 minutes before I got my withdrawal.

https://blockchain.info/address/17A16QmavnUfCW11DAApiJxp7ARnxN5pGX

You can see that their transactions are coming significantly faster than 30 minutes apart.
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September 19, 2017, 09:07:02 PM
 #5

Most exchanges have a Hot wallet and a Cold wallet so not all coins are kept in Cold storage nor are they all kept online. The Hot wallet is online and that is the one that actually sends you the coins. IIRC you also usually deposit into the Hot wallet. Exchanges also have a Cold wallet where the bulk of their coins are stored. Coins are transferred from the Hot wallet to the Cold wallet when the Hot wallet becomes too full, and transferred from the Cold wallet to the Hot wallet when the Hot wallet becomes too empty. Such transfers are usually done on a regular basis.

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