The storage of cryptocurrency asset is a hot topic in the cryptosphere, hot as it may seem, a lot of people do not know the nitty-gritty of the subject matter. Developers in the cryptosphere are constantly rising to beat the challenges of data security, cyber-attack and other such malicious acts that can lead to the loss of assets. While many feel that the highly encrypted nature of the cryptosphere coupled with the anonymity of transaction would help in securing their wallets, it should be well understood that hackers are always looking for ways to take advantage of loopholes. A deep understanding of the various ways in which cryptocurrency assets are kept or stored is essential in choosing which method works best, this article will explore these options and specifically for cold wallet storages.
Understanding the Concept of Hot and Cold Wallets
Hot Wallets: Hot wallets refer to any cryptocurrency wallet that is connected to the internet. Hot wallets are wallets associated with all centralized and decentralized cryptocurrency exchanges, cryptocurrency’s wallet address and ERC-20 wallets such as IMToken, MyEtherWallet etc. Hot wallets are relatively easier to set up, it entails opening an account with the particular website and after registration, a wallet would be assigned to you. Hot wallets in addition to their easy setup also allow for more coin storage. Hot wallets are generally free of charge.
Cold Wallets: These refer to any cryptocurrency wallet that is not connected to the internet. Unlike hot wallets, cold wallets have limitations in supporting many coins. Cold storage usually entails the purchasing of a hardware device which may cost tens of dollars. Examples of cold wallet hardware include:
- Trezor Ledger
- Nano S Ledger
- Ledger Blue etc.
The Need for a Cold wallet
Active investors in cryptosphere or those who have been following events in the space would understand that coins in hot wallets are relatively not safe. The dangers of leaving coins stored in hot wallets include but limited to:
- Hacking: Since hot wallets are internet dependent, they remain a point of target for hackers. The industry has recorded cases whereby major exchanges were hacked thus leading to the loss of thousands of coins. Notable examples include Mt.Gox hack of 2011 in which 2609 BTC were transferred to a wallet unrecognized by the exchange, Poloniex also lost about 12.3% of all its Bitcoin in 2014 to hackers. Over time, cryptocurrency exchange hack has surpassed $1.3 Billion with about 60% occurring in 2018 alone
- Unfavourable Regulations: Many country’s governments are not in favour of cryptocurrency and its notable financial revolution bid and as such, they pass unfavourable regulations. Any of these regulations can adversely affect an exchange or a platform in which hot wallets are.
- Technical Deficiencies: Any exchange or website with hot wallets can suffer any technical or unforeseen vulnerability that can make cryptocurrency assets stored in hot wallets insecure.
These highlighted reasons have necessitated the development of hardware with cold wallets to help mitigate these negative sides of hot wallets. The storage of coins in cold wallets is particularly recommended for:
- Large cryptocurrency holders
- Investors buying crypto for long term storage
The question of focus for this article is whether offline cold wallets are as secure as they are projected to be. While cold wallet makes up for the deficiencies of hot wallets, cold wallets themselves have worrisome security threats including:
- Hardware virus invasion
- The cold wallets can fall into the wrong hands
- Hassle in keeping the cold wallets safe
These threats if not properly factored in can lead to a more devastating loss than what hot wallets may present.
The safety of crypto assets remains a reference point when discussing the security infrastructure currently in place in the industry. The two ways of storing coins are through the internet-based hot wallets or the offline cold wallets. The two no matter their inherent pros possesses some cons that should be watched out for. Cold wallets, however are gaining huge publicity because the question of the wallet’s safety is solely in control of the owner and this reduces to a very large extent, the risk associated with hot storages that are out of the control of the owner. It is on this premise that we can safely say that cold wallets are secure especially in keeping highly valuable cryptocurrency assets
Bantu Network – The Rise of the African Vision
Africa has once upon a time been the center of innovation. Africa is home to one of the cradles of civilization yet, for a long time now, the continent has been setbacked.
The once glorious and thriving community bound by society sustaining culture and ideals has been slowing washing away due to various factors such as wars, hunger, diseases and poverty.
Despite the challenges and/or limitations which the African continent has faced over the years, Africa is a continent filled with great potential in various disciplines, the continent is home to many markets. Aside other factors of production, Africa boasts of a unique class of natives.
The ones whose creativity, culture, aspirations, competences are inextricably tied to the African dream. These are the ones changing the face and faith of the African people.
Introducing the Bantu Blockchain Foundation
The Bantu Blockchain Foundation (BBF) is a non-profit entity that develops blockchain-based financial inclusion solutions to help address Africa’s unique challenges.
The BBF is championed by Africans building the Bantu ecosystem with the vision of making Bantu the largest distributed network infrastructure with the most decentralized governance model for wealth creation and economic sovereignty for humanity.
The Bantu Network
The Bantu Network is an advanced and highly scalable blockchain platform designed to make it possible for instant and secure transfer of value, swap and trading of digital assets. Companies can easily connect to the Bantu Network via its API.
The Core Features of Bantu Network
Bantu network is a highly scalable platform that combines the best attributes of top blockchains and DLTs such as speed, security, reliability. It also adds what it calls the human element that economically empowers every network participants while lowering entry cost.
The Core features are:
- Real time settlement of 2-5 seconds. Over 15,000 TPS.
- Highly secured cryptographically using Elliptic-curve cryptography.
- Global reach with single integration with effective asset control options.
- Low cost. Ability to process over 100,000 for less than $0.01.
- Support for smart contracts and regulatory AML/KYC Compliance support.
- Built-in Currency and digital asset Decentralized Exchange.
The Bantu Network Tools and Services
The Bantu Network has revealed it will go live with several tools and services that will enable users to access the full functionality of the network and ecosystem from the beginning. These are:
- Bantu Token – Bantu is the native token of the Bantu network. It is a utility token and serves as the currency fees are paid on the network.
- The BantuPay Wallet – It’s a noncustodial wallet to enable users securely hold, transfer, receive, swap and trade digital assets.
- BantuTalk Forum
- Bantu Dashboard
- Bantu Laboratory – The Bantu lab allows developers perform tests on mainnet and testnet.
- Bantu Node Viewer – A tool for viewing all the servers and devices contributing to the Bantu network.
- Bantu Token Creator – A tool enabling anyone to quickly create and distribute digital assets effortlessly without coding abilities.
- Bantu Blockchain Explorer – A tool for anyone to browse, search through the entire Bantu network.
- Bantu Decentralized Exchange – An highly secured platform for the trading of digital assets.
The Bantu Blockchain Foundation is on a mission to empower humanity across all industry sectors, both in the public Abe private using blockchain and other 4th industrial Revolution (IR) technologies. It’s expected to go live soon.
Access resources here
Hybrid blockchain and Algorand
Blockchain systems keep evolving as new discoveries spring up in the community of digital technology. The community is not only finding dynamic ways to make the transactions swift and secure but also modifying previous technologies for supreme results.
If you’ve wondered what hybrid blockchain means for the blockchain system and how it relates to Algorand, then this is the content you should be reading. For newbies, we will quickly breakdown core concepts of blockhain systems before we talk about the good stuff.
Blockchain simply means a digital ledger, systematically distributed, that records all transactions executed among various players in a network. Participants could be businesses or individuals and each are linked to the blockchain with an identical copy of the ledger. These participants are referred to as nodes.
Now, for us to grasp the idea behind hybrid blockchains, we must first understand what public and private blockchains are. Public blockchains, are permission-less by design. This means that it would allow virtually anyone to conduct transactions and join any consensus protocol being conducted, as long as this party is connected to the internet.
Public blockchains possesses zero restrictions, making it possible for interested users to download that software, bring in fresh blocks, verify information or run their own nodes on the blockchain.
If you have observed the volume of activity that takes place on public blockchains then you now know the reason. Its pemission-less design makes it a hotspot for tons of nodes which go on to form a distributed, large-scale network of node which verify other nodes and communicate. Each of these nodes in this network is independent.
Despites it’s unique benefits such as anonymity, immutability, openness and high security, public blockchain cannot guarantee users privacy. Also because it requires zero permission for anyone to participate, public blockchains commonly have very low efficiency in comparison to other blockchain types like private blockchain for example. Most corporate organizations and governments are known to opt for other types of blockchain due to the vulnerability of public blockchains to unethical activity, its high cost and instability.
On the other hand, private blockchains are the opposite of public blockchains. They are permissioned networks which require permissions for participants to conduct any action on the blockchain. Joining this type of blockchain is by invite-only and to keep it secure, information is often times encrypted. Efficiency and stability are primary features of private blockchains.
Unlike public blockchains which are saturated with nodes, private blockchains are cost-effective since they do not demand much to maintain. They also do not have the anonymity and immutability of public blockchains. Private blockchains are managed by either a small body of entities or a singular entity.
Now what is hybrid blockchain and what is the connection to Algorand?
Hybrid blockchain is a unique network in blockchain that integrates both public and private features to bring about a transaction space that is flawless. In other words, this blockchain is centralized and decentralized at the same time. Users are presented with security, transparency, reduced cost of transaction and privacy, all in one blockchain. Members of a hybrid blockchain choose which transactions are made public and who gets to join in. This means that though transactions are private, they are open for public access.
Why is the hybrid blockchain so remarkable?
Hybrid blockchain takes all the best features of public blockchains, all the best features of private blockchains, and incorporates them together to form one of the most incredible blockchain systems to ever be developed. The structure of hybrid blockchain goes a long way to help businesses and governments maintain control and flexibility over their data. While big organizations want to enjoy the benefits of a blockchain, none of them are willing to manage the risks that come with conducting transactions. Hence, the value of the hybrid blockchain to these organizations. An example of a hybrid blockchain is Algorand.
Algorand blockchain is the first blockchain platform in the world to develop a trustless and flawless Proof-of-Stake blockchain protocol which offers users a decentralized platform to conduct scalable, safe transactions. This sort of decentralized platform is highly needed in the world’s current economy as it grows.
What does Algorand technology do really?
The answer is simple. The Algorand technology eliminates technical barriers, that prevents transactions on its blockchains from being decentralized, scalable and secure. Its design makes its consensus mechanism trust-less and to guarantee efficiency, complete participation and protection its Pure Proof-of-Stake protocol is fully utilized.
Coordinated by winner of the Turing award, Silvio Micali together with his team of highly skilled mathematicians, engineers and cryptographers, what users have with the Algorand blockchain is a platform that is committed to churning out the best solutions for the future of economic exchange. Today, the most recent version of Algorand consists of multiple functionalities to accommodate the demands of many businesses.
Its most unique functionality is the layer-1 fundamental which enables atomic transfers, tokenization of asset, smart contract creation. This brilliant feature has facilitated the cooperation of decentralized exchanges and stablecoin who are currently making the most of Algorand’s remarkable blockchain system which helps them to manage resource-extensive applications and resources.
It would interest you to know that though Algorand blockchain is categorized as hybrid blockchain, it is also a very public blockchain courtesy of its permission-less nature. With Algorand blockchain, users have true decentralization. Unlike the average hybrid blockchain, Algorand blockchain has no one contact point or influential central authority. Publicly available for anyone with internet access to audit with an open-sourced node repository, it is one of the best examples of a hybrid blockchain. This explicit characteristic of Algorand blockchain ensures exactitude, transparency and objectivity.
Now while Algorand blockchain has the same features of a hybrid blockchain, it is not like your regular hybrid blockchain. The inclusiveness and collaboration of Algorand blockchain is sustained by a supportive, dedicated community wholly driven by the vision of a scalable, borderless economy on a global scale. This means that Algorand blockchain is more of complimentary to the overall features of conventional hybrid blockchains.
Tighter AML/CFT Checks Emerge As US Regulator Traces ‘Privacy Protection Backed’ Transactions
It appears that the United States Internal Revenue Service (IRS) wants to be able to pry into wallet holders’ accounts the way they have central access to digital dollars in traditional bank accounts. In light of this, Ricardo Spagni, Monero’s Privacy Maintainer, recently explained that regulators’ determination to control privacy in the crypto sector may continue to be in vain as smart cryptographers are always a step ahead of regulators.
Talking about Monero, this protocol which was released in 2014, is a private, untrackable and secure token. It allows maximum privacy in transactions as users’ identities are protected. No regulator gets to know the details of users’ transactions nor the amounts that users transfer, except if they so allow themselves.
Government Interested In Blockchain Users’ Privacy
Many regulators, the world over, are increasingly getting interested in controlling protocols that ensure the privacy of users. For a fact, the United States’ IRS employed the services of two Blockchain Analytics Firms: Chainalysis and Integra FEC so as to develop a tool that will enable the agency to track transactions on Monero and Layer 2 protocols as the firm had previously done to monitor on chain activities for privacy tokens like DASH and (ZEC).
Looking at the rate of financial crimes in the world today, the government probably has genuine reasons to develop tools that will enable transparency and allow the tracing of transactions on privacy enabled protocols. This is especially as allowing absolute privacy of transactions may fuel money laundering or even financing of terrorism. To this end, the United States’ Department of Justice (DOJ) released a whitepaper dubbed “Cryptocurrency: An Enforcement Framework“ on the 8th of October 2020. The department emphasized that enabling anonymity enhancing cryptocurrencies (AECs) that run private blockchains will result in money laundering and easy financing of terrorism.
Ricardo Spagni explained that the best option for the government is to lay down checks and controls (regulation) at the entry and exit points, anything other than that is going too far, according to him.
According to him:
“Payment service providers and merchant service providers are sorts of the points at which they can apply a degree of regulation. And that I think is feasible.”
Users may be required to ascertain their location or may have to go through checks before their transactions are approved in the case that they are using a Merchant Service Provider.
Privacy Coins Are Here To Stay
As at press time, the brains behind Monero are able to detect bugs made by external forces and will fix them so as to protect the privacy they have promised their users.
The Chief Economist and Co-founder of a Blockchain Analytics Firm (Elliptic) Dr. Tom Robinson, emphasizes;
“Untraceable cryptocurrencies such as monero are here to stay…in the short term, it may well be possible to find exploits in these systems and trace transactions to some degree, but these bugs will be fixed.”
As a matter of fact, Monero has gone ahead to upgrade its functions by creating the “Oxygen Orion,” which will inadvertently boost the present uptight security.
Government Desires to Prevent The Financing of Terrorism and Money Laundering
Although the government’s rationale for wanting to trace transaction details may be made in utmost good faith, this may give a leeway to hackers to abuse even a controlled system of limited access to accounts. Spagni laughed off the present passive surveillance methods of tracking bank accounts, facial recognition systems, and reports of suspicious activities by the traditional financial systems. He emphasized that the government has to take their game to the next level when it comes to trying to control emerging technologies.
David Jevans, the CEO of CipherTrace, a blockchain forensics firm notes
“Our position is that financial privacy is important, and people should be able to pay for day-to-day expenses without having to fear hitting regulators’ radar and providing identity proofs.”
This is an opinion that a lot of people may not agree with because if indeed the transactions are made in good faith and they are compliant, no trader or merchant should counter transparency to the degree that the government is asking for.
It appears that the government will have to find a legitimate solutions model that will strike a balance between countering financing of terrorism and anti-money laundering checks on the one hand while making sure that the model does not stifle the privacy concerns of users.
Some regulated exchanges are already taking the hint and developing ways to support privacy coins with a legally compliant model.
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