One interesting component of developing blockchain technologies is the cold storage tools that holders use to decrease risk.
Case in point: today, the announcement of developments involving a new offering by CoinKite that some describe as a “USB condom” enabling air-gap connections not exposed to a network device’s connection to the global Internet.
“The comedian Dennis Miller once joked about computer viruses, ‘When you link up to another computer, you’re linking up to every computer that that computer has ever linked up to,’” writes Alyssa Hertig at Coindesk. “If so, CoinKite, maker of the Coldcard hardware wallet, has invented an extra-strength prophylactic for bitcoin investors.”
It may seem like a coarse way to talk about cybersecurity, but the ColdPower tool, which links a USB wallet up to a 9-volt battery instead of a laptop’s USB port, is supposed to eliminate that direct connection that has cybersec experts worried about the STD-like risks of local networking.
“In a company or organization handling Bitcoin reserves of high value, cold wallet access would likely be limited to cleared and trusted employees, with no one individual granted full privileges,” write Edward Felten and Steven Goldfeder in the Journal of Cybersecurity. “Cold wallets may need to be accessed for a number of reasons, including for routine inspection, to reinforce existing security systems, and, of particular importance to this study, to refill depleted hot wallets. In particular, hot and cold wallets are vulnerable to theft in fundamentally different ways.”
The key philosophy here is simple – after making a transaction on a hot exchange, the best practice is to remove your digital assets and get them to someplace where they are not connected.
Air-gapping will also prevent some kinds of malware from taking hold, although its power in that regard may be somewhat limited.
“Despite the level of isolation, air-gapped networks are not immune to breaches,” writes Mordechai Guri, head of R&D of the Cyber-Security Research Center at Ben-Gurion University of the Negev, Israel in a presentation describing various types of “air gap jumpers.”
These risks notwithstanding, air-gap connections are an excellent first step in wallet hardening.