What Is Hot Storage And Cold Storage?
Hot Storage And Cold Storage . Saving Bitcoin on a computer is like carrying money in a wallet. So when the wallet is lost then the money is also certainly lost. So is your Bitcoin stored in the computer. If something happens to the computer we use. It is very likely that our Bitcoin is also affected.
Bitcoin storage media on computers that are connected to the internet is also called Hot Storage . Quite comfortable but also quite risky. Meanwhile, there is another storage that can be done offline, without connecting on the internet. This storage medium is called Cold Storage .
Basically, inside Bitcoin is distinguished on these two things. Is the storage medium is done online (hot storage) , or inline of (cold storage) . But then because to make it easier, people then give a sense of storage media Bitcoin (wallet) is based on the shape.
In order for our Bitcoin storage to be safer, of course it becomes somewhat less friendly.Because it means how you can carry money anywhere, but you should be able to put additional security in another place.
To be more secure by using both, then we need a private key on each wallet. If not, Bitcoin that has been stored in Cold Storage can be unsafe, if it has been connected in hot storage .We can move our Bitcoin back between both in hot storage and cold storage . So, each of them must know each other address or public key .
Why is that? because as mentioned above, that cold storage is not online. So between hot storage and cold storage will not be able to connect to each other on any network. Well, interestingly, that cold storage does not have to be online to be able to accept Bitcoin.
How can cold storage accept Bitcoin if it can not get online and not connect to hot storage ?Because the hot storage can recognize cold storage address. So from hot storage, can send a number of Bitcoin in cold storage anytime. So if we have a large amount of Bitcoin stored in the hot storage wallet, it can be transferred mostly from the amount to the cold storageto be more secure. Because there is no risk since cold storage can accept Bitcoin delivery without having to connect to the network. If at any time cold storage online and connected on the network, then can receive information transfer transfer from blockchain.
A slight disadvantage in cold storage , is in address handling. Because cold storage is more effort on security and privacy. Thus, each of us receives a coin, will use the address with a different private key .
Let’s be clear again. So, when we will send some Bitcoin from hot storage to cold storage , we will use the new address for the transaction to receive the delivery. Well, because the cold storage is offline, then in hot storage , must first know the new address in cold storageit.
Therefore, usually in cold storage can generate addresses at once in large quantities. And the address can be used for hot storage one by one. Of course, the drawback is, we also have to periodically also do that, transferring using multiple addresses one by one. It will not be a problem because of the security and privacy of our Bitcoin.
Here are some key security methods that can be done offline.
Furthermore, in the end there is a more effective solution. Namely by using Hierarchical Wallet . By using this Hierarchical Wallet , it becomes possible on hot storage to know a large number of addresses in cold storage .
The trick is to use a short communication path from both. However, in that communication, it requires a special trick in cryptography. Let’s see how this cryptographic trick is done.
In the generate key in Hierarchical Wallet is done differently . More precisely, on this Hierarchical Wallet will result in “derived info address”. With this info address derivative, it can be generated in sequential address. Then enter the info address derived function as input from various integer “i” , then generate “i ‘th” in successive address. This method is also used to generate private key, by using “private key info derived”.
Well, so this trick can generate i , i ‘th address, and also i’th private key match. So with that secret key, can be used to send bitcoin also in the end. Just as the generated generate keys in the usual and common way. And finally, even this way can generate a sequence of key pairs.
So what about its security if using cryptographic tricks to generate a pair of keys in this way?In this info address derivative, it will not divulge anything related to private key . If so, then the address can be known by anyone, and we can tell many people will address it, because it will not affect.
Previously, we have also recognized the scheme used for digital signatures . In Bitcoin, the scheme used is ECDSA. While ECDSA is, can and support the key derivatives generated from this Hierarchical Wallet . From here, a conclusion can be drawn. If the cold storage will generate a lot of keys, and in hot storage will generate the appropriate address.
The process will go like this:
Cold storage will create and store private key info derivations, as well as address info derivations. In the delivery process in hot storage , it will generate a new sequential address each time it wants to send a coin to cold storage . When cold storage is re-connected, will generate the address in sequence and check the transfer. Likewise also in other addresses that have not been sent bitcoin. To send bitcoin from cold storage can be done, because can generate private key in sequence.
Hierarchical Wallet can be said this can generate the appropriate sequence of keys.Between key pairs generated from the cold storage side (offline), as well as online (hot storage) . So there will be two levels of security in this Hierarchical Wallet . One level below from the hot storage side. So if hot storage is disrupted, then its private key and Bitcoin in it is still safe. And the second from the cold storage side.
Another way that can be used to improve security in storing Bitcoin is by using Brain Wallet. In this Brain Wallet storage, it can provide access control over Bitcoin, using a secret passphrase . So with this function will be useful in special situations that we may not be able to access our physical wallet. For example, when we are abroad for a vacation and so forth.
The trick is to use a predictable algorithm to convert a passphrase into a public key , and private key . For example, we can hash a passphrase with a suitable hash function to obtain a private key. Next with the private key , it can be downgraded public key in a common way.
If the methods used in Brain Wallet and Hierarchical Wallet are combined, will get one complete wallet. However, an attacker would still be able to find the gap point. Because they can get a private key in the brain wallet, if they can guess the passphrase .
Let’s say that the attacker already knows the procedure used to generate the key in Bitcoin.At once, how the key generating process is done in this brain wallet . Then, the attacker experiments on a series of passphrases and generates addresses from there as well. If he finds some unused Bitcoin, he can also send the bitcoin to his address. Even this can be done without having to break into any machine. Because the process is done by guessing passphrases only, without leaving a trace anyway.
Attacker in launching the action is not like guessing passord email. Attackers can download list addresses that have a number of coins. Then try a number of potential passphraseowned. Here, the attacker does not need to know the appropriate address in his target brain wallet . The way used by the attacker is commonly called password cracking .
While in the brain wallet , the process of generating a private key from the passphrase is deliberately slowed. This is done to be sure that the attacker will take a long time in trying all possibilities. This is also called key streching .
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Another safeguard method is to use paper wallet . Using paper wallet the security level lies in the physical paper used. Meanwhile, the paper wallet generally encodes the public keyand private keys in two ways. One with two-dimensional barcode and base58 notation.
Another way to save Bitcoin offline is by putting it into multiple devices that are resilient to many disturbances, both intentional damage and attempts to sabotage others. This device was dirangcang so there is no gap to leak key.
On this device, change the signing process of a statement with key. Say when we press a button, then a password will appear. So one benefit comes when the device is lost or stolen, we will know. Because the only way that can be done is to steal this device. But this device is quite different on the key storage in devices such as laptops.
In general, people will probably use one of the above ways to be able to secure their key offline. Or maybe people will use the merge of some way above. Well, now we already know what is meant by hot storage and cold storage.