The Hot Wallet dilemma | Bitcointalksearch.org

Rikafip

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Quote from: ArikeTobi on February 13, 2024, 05:30:21 AM

Advise,

If you're interested in using hot wallet, there's more danger in it than when you're using a non custodial wallet, you can only use hot wallet for a short time trading or exchange of currencies, but as for your storage of asset, its not a safe zone for use.

Since you are advising people on something as serious as use of a proper crypto wallet, the least you can do is to actually know what you are talking about. If you bothered to check what hot wallet actually is, you would realize that it can be non-custodial as well.

Having said that, hot wallets shouldn't really be used be used for a long term hodl (at least I woulnd't) even if they are non custodial and open source.

Marvelman

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Quote from: ArikeTobi on February 13, 2024, 05:30:21 AM

There is no security in using hot wallet because they are custodial wallets, you don't have access to the wallet private keys, you don't have your privacy and the exchange or mobile wallet could be hacked and you cannot recover your bitcoin back since you're not having any private key details with you, lastly, not your keys not your coins.

It seems that you are wrong. A hot wallet is any wallet that has access to the Internet and direct or indirect communication with the blockchain. But this does not mean that all hot wallets are custodial.

Quote from: ArikeTobi on February 13, 2024, 05:30:21 AM

If you're interested in using hot wallet, there's more danger in it than when you're using a non custodial wallet, you can only use hot wallet for a short time trading or exchange of currencies, but as for your storage of asset, its not a safe zone for use.

Now it seems you're actually talking about wallets from exchanges. They are indeed custodial, but not all web wallets are custodial.

Kruw

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Quote from: ArikeTobi on February 13, 2024, 05:30:21 AM

There is no security in using hot wallet because they are custodial wallets, you don't have access to the wallet private keys, you don't have your privacy and the exchange or mobile wallet could be hacked and you cannot recover your bitcoin back since you're not having any private key details with you, lastly, not your keys not your coins.

Advise,

If you're interested in using hot wallet, there's more danger in it than when you're using a non custodial wallet, you can only use hot wallet for a short time trading or exchange of currencies, but as for your storage of asset, its not a safe zone for use.

"Hot" doesn't mean custodial.

ArikeTobi

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Quote from: arikh Anpin on February 12, 2024, 06:52:02 PM

If Hot Wallet developers already have access to users' databases, they certainly know what each person's private key is. So, what is the security of a Hot Wallet?

There is no security in using hot wallet because they are custodial wallets, you don't have access to the wallet private keys, you don't have your privacy and the exchange or mobile wallet could be hacked and you cannot recover your bitcoin back since you're not having any private key details with you, lastly, not your keys not your coins.

Advise,

If you're interested in using hot wallet, there's more danger in it than when you're using a non custodial wallet, you can only use hot wallet for a short time trading or exchange of currencies, but as for your storage of asset, its not a safe zone for use.

goldkingcoiner

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Quote from: adaseb on February 12, 2024, 10:59:12 PM

If the wallet is open source then most likely they are not creating a way to leak your private key. It might be possible but since the source code is open any mid type of developer can see what is happening and warn others.

With closed source there is no proof but this is why you need to go with a legitamite company which has been around for years. Generally most hard ware wallets are closed source but they developed trust and people still use them despite being closed source.

I agree, somewhat.

Although I would not go as far as to trust any company no matter how legitimate it may seem. The very essence of the spirit of cryptocurrency, especially Bitcoin, is to not have to trust any third party.

Lets look at a wallet like Trustwallet. Closed source but very trusted. Who says they are not collecting private keys of wallets? Just because they are trusted does not make them infallible.

Best to avoid any closed source wallets, whether hardware wallet or not. I would only trust a open source wallet that has been around for a long time. I trust the developer community to do a decent security audit over a couple of hired experts from some third party company.

ABCbits

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Quote from: arikh Anpin on February 12, 2024, 06:52:02 PM

If Hot Wallet developers already have access to users' databases, they certainly know what each person's private key is.

First of all, why do you assume hot wallet send private key to the developer or implement user/registration system?

Quote from: arikh Anpin on February 12, 2024, 06:52:02 PM

So, what is the security of a Hot Wallet?

In short, security of the device you use and security feature implemented by that hot wallet software itself.

pakhitheboss

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Quote from: arikh Anpin on February 12, 2024, 06:52:02 PM

If Hot Wallet developers already have access to users' databases, they certainly know what each person's private key is. So, what is the security of a Hot Wallet?

It depends on what kind of wallet a user is using. There are two kinds of hot wallets, one is open source and the next one is closed source. If a user is using a closed source wallet then what you have written is correct. If a user is using an open-source wallet then their source code can be verified to check where is the private key is being stored. Another important thing a user needs to check while using a hot wallet is that it should be noncustodial.

Reputed and trusted wallets like Electrum don't use such tactics. Some wallets have a big reputation and they do publicly claim that they don't have access to the private key of a user. Either you can trust them or go for wallets that have been recommended on your thread.

Charles-Tim

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Quote from: arikh Anpin on February 12, 2024, 06:52:02 PM

If Hot Wallet developers already have access to users' databases, they certainly know what each person's private key is. So, what is the security of a Hot Wallet?

Just make sure that the wallet you are using is open source and having an excellent reputation in the community. Example of such hot wallets are Electrum and Sparrow bitcoin wallet. Also know that it is not about wallet to be a hot or cold wallet, if the code is not available to the public to review, you can not know if there is a backdoor that can reveal your seed phrase to the wallet developers. You also do not know if the seed phrases are pregenerated. That is the disadvantage of using close source wallets.

Assface16678

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Quote from: adaseb on February 12, 2024, 10:59:12 PM

If the wallet is open source then most likely they are not creating a way to leak your private key. It might be possible but since the source code is open any mid type of developer can see what is happening and warn others.

With closed source there is no proof but this is why you need to go with a legitamite company which has been around for years. Generally most hard ware wallets are closed source but they developed trust and people still use them despite being closed source.

The thing about developers and passwords or private keys: As an IT professional, I don't think developers will do this thing, viewing the private key of the users; even if they have the capability to do so, they cannot because they will lose their job and they might be sued by the authority and cyber security. About developers, they have a system wherein it is programmed to mask or encrypt the passwords or private keys of the users. That's why I said they have the capability to decrypt it, but not easily because decrypting a password or private key will undergo a lot of security laws.

So I'm confident that those developers for wallets used in crypto are safe because they cannot operate if there is an anomaly to their software; all things are undergoing testing or what, so if there is a thing that is not masking or encrypting the passwords and private keys of the customers, then they will never be able to operate.

adaseb

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If the wallet is open source then most likely they are not creating a way to leak your private key. It might be possible but since the source code is open any mid type of developer can see what is happening and warn others.

With closed source there is no proof but this is why you need to go with a legitamite company which has been around for years. Generally most hard ware wallets are closed source but they developed trust and people still use them despite being closed source.

Fundamentals Of

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It doesn't necessarily mean that a hot wallet is a custodial wallet or one that gathers and keeps users' data including private keys. There are noncustodial and open source hot wallets out there.

They don't have access to the private keys of their users. You can also use hot wallets as watch-only wallets. You can keep your private keys in a cold hardware device while using the hot wallet.

I think the main thing is that the wallet should be noncustodial and open source. Even if it's a hot wallet it can still give you a good amount of security. But a cold wallet is a must for big savings.

Helena Yu

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Incorrect, it's not only a hot wallet where the developers can know it's user's private key, but any wallet including hardware wallet or cold storage, there's a probability too.

This is the reason why people should use open source wallet, at least it's already reviewed by other developers, but if you can read the code, it's way better because you can know if the wallet is safe or not.

What makes wallet secure is the RNGs not flawed, if the developers know the ECDSA key, it's over.

If you generated and use a secure hot wallet, the developers doesn't know your private key, but you're inevitable against online attacks.

arikh Anpin

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If Hot Wallet developers already have access to users' databases, they certainly know what each person's private key is. So, what is the security of a Hot Wallet?

Topic: The Hot Wallet dilemma (Read 175 times)