CEO of Coinbase Brian Armstrong is yet again in our crypto news in an attempt to explain some of the misconceptions about storing bitcoin in various types of wallets.
Armstrong explains the difference between hot and cold wallets saying that a hot wallet is connected to the internet and can conduct immediate transactions and that a cold wallet is secured offline. The private keys stored on a device connected to the internet but not loaded into an active wallet are still considered a cold wallet.
Coinbase CEO clarifies the myth of not being able to trade funds in cold wallets since Coinbase Custody allows delayed settlement of trades. This means that you can start a trade and it will be settled right after the funds are moved out of the cold storage.
The next myth is the staking systems prevent staking of cold wallets and Armstrong explains that Tezos allows for this to happen via the ‘’Baker’’ system. He writes:
“A well-designed crypto custody solution doesn’t rely on any single person. Instead, it utilizes multiple keys to achieve consensus and redundancy. The larger the transaction, the more parties need to consent. This is really just scratching the surface of a well-designed custody solution.”
He says that Tezos is a good option for holding Bitcoin but is still not as secure as cold storage. The storing of large amounts of Bitcoin in hot wallets is still very dangerous because you are not relying on your own security requirements.
Finally, it’s always safer to store your coins in a place you have the most control and is best to always own the private keys by yourself.
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