KEEPING COOL, THE CASE FOR COLD STORAGE
- 23 Jun, 2022
Welcome to crypto.
The 1st rule of crypto is: Not your keys, not your crypto.
The 2nd rule of crypto is: Not your keys, not your crypto.
The 3rd rule of crypto is: Not your keys, not your crypto.
Ah...but the impeccable question remains...why?
Its the precipice of decentralized banking. Or more specifically the “decentralized” part of it. To give the authority and enforcability over the digital assets completely to the user.
To explain (1) lets through some examples in which the keys are not in the user’s control:
1) Suppose your assets are on a centralized crypto exchange. If the exchange is compromised, since you have no control of the private keys, you may lose access your assets.
2) Suppose you have deposited assets on a DeFi lending service. The lending service may at any time choose to pause withdrawals (which has been common place in tight financial environments). In this case you may lose access to your assets since you do not control the private keys.
Now to understand (2) lets examine a case where the memory on which the keys are stored is not tightly controlled.
1) Suppose your wallet is on a PC or smart phone. These are devices on which many entities are constantly running software programs and these programs have access to the memory of the device. This increases the possible scenarios in which a program is designed to extract the private keys from your wallet. Once your private keys are stolen, so will your authority and enforcability over your digital assets.
It is now perhaps that your understand the need for authority and enforcability for digital assets via criteria (1) & (2) above, but what kind of wallet achieves this purpose?
Enter cold storage, i.e. the Ronyn Vault.
Such devices provide the following:
1) The keys and the device are in the custody of the user.
2) Accessibility and usage of the private keys is done under tightly controlled cryptographic software processes.
3) As well the hardware is tamper proof to prevent physical key extraction.
4) The wallets once turned off, are totally disconnected from the internet, and no activity is happening within the device memories, I.e. they are cold. (hence why hardware wallets are also synonymous with cold storage)
Cold Storage Wallets are designed with one and only one purpose in mind, to secure private keys.