CoinCorner Introduces Automated Bitcoin Hot Wallet that Stores Private Keys Offline
Danny Scott, the CEO of CoinCorner exchange, recently published the findings of an R&D project that promises to revolutionize the security of crypto exchanges. The CEO unveiled an early structure of a high-level device dubbed “Hoffline,” the first-ever automated, air-gapped BTC hot wallet where the private keys never go online.
CoinCorner’s research team developed Hoffline to combine the convenience of a hot wallet with the enhanced security of a cold wallet. The device is automated for use with crypto exchanges or Umbrel nodes, enabling the associated private keys to be securely stored offline at all times.
CoinCorner’s new installation comprises an offline device (OffDev) and an online device (OnDev). OnDev gets transactions sent from the database and creates an unsigned transaction and the corresponding QR code. The transaction process commences on the online device, which has a screen, camera, Ethernet cable, and Bitcoin wallet (watch only).
OffDev validates the request and signs the transaction, creating another QR code containing the signed transaction data. The QR code with unsigned transaction data is then scanned by a camera linked to the offline device (blue). To complete the process, the OnDev camera automatically scans the QR code and broadcasts the signed transaction to the Bitcoin Network.
Mitigating Risk Associated with Hot Wallets
Crypto exchanges have suffered devastating security breaches over the years, resulting in the loss of millions in user funds. The most common attack vectors are hot wallets, which exchanges use to automate customer withdrawals.
The wallets operate online to provide instant liquidity to customers during massive influxes of deposits/withdrawals. The problem with exchanges running hot wallets that store the private key online is that they expose exchanges to multiple attacks. That is why most exchanges keep only 10% of all holdings in a hot wallet at any given time.
In September of last year, a cyber-attacker siphoned $150M in cryptocurrency stored in KuCoin hot wallets. Other top exchanges such as Bisq Bitcoin exchange and Poloniex have also suffered hacks, flash loan attacks, and data breaches over the past year.
Some exchanges, such as BitGo, use multisig approaches to help secure their hot wallets, but that approach is still vulnerable as the private key is not stored purely offline.
Hoffline brings a distinctive approach to hot wallet security by facilitating exchanges to store private keys entirely offline. The CoinCorner innovation ensures that certain thresholds cannot leave the wallet without a two-factor verification sign-off to boost security levels further.
By combining offline and online crypto storage attributes while removing the manual human intervention needed to run a cold wallet, CoinCorner has automated the process so users can send transaction data via their website or app. Hoffline then releases payments in the same way a hot wallet would in an automated manner.
CoinCorner CEO Danny Scott’s new invention also enables exchanges to create two or more multisig setups in different locations across the globe that help mitigate against the physical attack vector.
CoinCorner Is Playing Its Part in Driving Bitcoin Forward!
CoinCorner has done a lot to contribute to the Bitcoin ecosystem since 2015. The UK-focused Bitcoin exchange has integrated Lightning for customers and merchants and rolled out the first BTC cashback in the UK. The exchange has also contributed to Bitcoin core, worked with regulators, and contributed to the education of the Bitcoin ecosystem.
In a recent Tweet, Danny lamented that not many industry players are contributing to the Bitcoin ecosystem. He Tweeted:
“It can be frustrating to watch companies with hundreds of millions in funding not innovating and driving bitcoin forwards. They list shitcoins instead of innovating.”
On their part, CoinCorner’s research team is continuing to drive Bitcoin forward for the future of money. They are looking at ways to improve speed and simplicity for Hoffline, including tapping the Blockstream satellite to receive the blocks and run a full node on OffDev to run a Bitcoin Core node.