How bitcoins are stored

One of the biggest problems of the Bitcoin economy is coin theft. By its nature, a cryptocurrency is close in this sense to cash, so when an attacker manages to acquire a secret key, money goes away without a trace and irrevocably. Since bitcoin ceased to be a toy enthusiast and began to cost a lot of money, there have been several loud robberies. Robbed individuals and whole exchanges .

The server containing the secret keys of Bitcoin wallets is the heart of any financial service and the main goal of the kidnappers. Therefore, companies that are responsibly suited to security, as a rule, keep most of the reserve in “cold” wallets, that is, offline. On servers connected to the network there is only a small margin for running costs.

So, about 90% of the money in Coinbase startup accounts is stored in offline wallets . The keys to them were generally not a single second accessible from outside - they were generated on a computer isolated from the network and lie in a bank cell. So the only way to steal them is the classic robbery of a real bank vault. Unscrupulous bank employees will not be able to use them either - the keys are stored in encrypted form. For reliability, three identical flash drives are used and (in case of possible electromagnetic cataclysms) printouts on paper.

You can replenish such a money storage remotely - using the public key. In those rare cases when the stock of bitcoins on Coinbase servers is exhausted (this is theoretically possible if a very large client performs a very large transaction), the payment will not be instantaneous, but within 48 hours. A Coinbase employee goes to the bank during this time and copies one or more secret keys. Over time, they count in Coinbase, as the user base grows, the likelihood of this will be less and less, and the percentage of money in offline wallets will be more and more.
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Such an approach to security may seem amateur and frivolous, but against the background of sometimes quite anecdotal cases of theft or loss of coins, it is still better than nothing. The economy of bitcoins is still very young and it only has to develop reliable and proven protection strategies, such as those used in banks or the military. But similar methods are available not only to large companies and special services, but also to ordinary users .