Many of the questions received by the Glitzkoin support team, relate to crypto wallets. This is quite understandable as growing interest in the GTN token has drawn, many non tech crypto investors. In this report, we aim to highlight the features and issues related to hot and cold (crypto) wallets. The info will be kept as simple and non-technical as possible.
Crypto assets (coins/tokens) are stored in wallets and since, cryptos themselves are virtual the wallets used to store them are also virtual. Access to crypto wallets are controlled through ‘keys’. You will often come across the terms ‘private key’ and ‘public key’.
A private key will always remain with the owner of the crypto wallet, it will never be shared with any other person. A public key on the other hand is like the number of a bank account. You would share the bank account number if, you expected another person to deposit funds into your account. A private key is like the login detail for your bank account – something that you would never need to share.
It is quite obvious that compromising a private wallet key, leaves it open to scammers and fraudsters. It is not uncommon for crypto scammers to use various types of malware and even misleading emails and messages, to hack through a crypto wallet. This process becomes a little more likely when, the crypto wallet is connected to a device that is linked to the internet.
We now come to the issue of hot and cold wallets. A hot wallet would generally be accessed frequently for both, receiving and sending crypto assets. The owner of a hot crypto wallet is likely to share the public key of the wallet with outsiders. This would allow the outsider to deposit tokens into the wallet. Given the role performed by a hot crypto wallet, it is necessary that the wallet remains online – connected to the internet.
A cold wallet is like ‘cold storage’, the crypto assets in this wallet would not be moved in or out very often. The keys to a cold crypto wallet will never be shared with anyone and will always, remain with the owner of the wallet. To put it very simply, an outsider would never know that a cold wallet existed.
So if a cold crypto wallet remains unknown to the outside world, where does it gets its crypto assets from. The owner of the crypto wallet will himself or herself, move cryptos in and out of a cold wallet. Cryptos in a cold wallet would be moved in from a hot wallet or another cold wallet. It is important to understand that all the wallets in this case (hot and cold), would be belong to the same owner. This highlights what we said earlier – that details of a cold wallet will never ever, be known to anyone but the owner of the wallet.
Another feature that adds security to a cold wallet is that, the wallet is ideally kept offline. This eliminates the chances of scammers using programmed access hacking tools to break into the wallet.
Technology has stepped in to better the performance and functionality of cold wallets. While they could be made on computers that are disconnected from the internet, you also have a choice of external devices that are specifically designed to act as cold crypto wallets. Some of these hardware based cold crypto wallets, have become very popular but, the technology is still being researched to make them even better and safer.
We do hope that the report made the concept of crypto wallets clear. As would be evident from the information presented above, both hot and cold wallets are necessary and have a strategic role to play in transacting and storing crypto assets.
Here is some very constructive advice from the Glitzkoin tech team. It is a good idea to move your crypto assets stored on a wallet provided by a crypto exchange, to your own wallet – one that is created and controlled by you.
GLITZKOIN: Glitzkoin is developed on the Stellar blockchain. The project includes the multifaceted GTN token that currently trades actively on 3 crypto exchanges (Cointiger, Stellarport and Dobitrade). Glitzkoin makes a direct connect to the multibillion dollar diamond industry. The project is promoted by second generation diamond veteran Navneet Goenka, it aims to improve productivity and market scope for the glittering industry. A comprehensive diamond trading platform (DiaEx) is part of the project, it supports both B2B and B2C trade in diamonds. As mentioned above GTN is traded by crypto traders on three exchanges, it is also designated as the mode of payment on DiaEx.