Advantages and disadvantages of storing cryptocurrencies in the cloud

облако

Statistics show that the vast majority of virtual coin owners prefer to keep their funds on exchanges and online wallets. Convenience beats cold storage reliability, but can these properties be combined?

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Why local storage is disliked
Bitcoin blockchain size in 2019 tends to reach 300 GB, although this does not pose a problem for installing a local wallet. The catch is that most of the users do not know how to synchronize the blockchain without downloading the full database. As a result, long-term synchronization frustrates newcomers and forces them to abort the installation.

It is worth taking into account that modern trends force a large number of people to abandon stationary PCs at home, leaving only tablets and smartphones, and installing a cold wallet on a portable device loses its sense of reliability. Another reason for distrust of cold storage lies in the lack of knowledge about the correct procedure for backing up, due to which there is a fear of losing money due to a computer failure. Taken together, it turns out that in some cases it is safer to shift the responsibility of storing cryptocurrencies to third-party services, one of which is a cloud-based crypto wallet.

Hot cloud
Public crypto moguls sometimes come to the conclusion that it is better to keep their funds away from themselves. And what could be further than a virtual cloud? In addition to posing as millionaires, the cloud system can be useful for teams of traders, as it solves the problem of joint remote access to a cryptocurrency wallet.

Decentralized and cloud technologies seem to be antipodes that complement each other. As a result, it turns out that one of the most insecure places for storing digital data becomes reliable without losing convenience. To combine the two properties, the programmers decided to put an entire local wallet in the cloud.

Горячее облако

To do this, they used a remote server. It is accessed via the remote desktop protocol and is supported by all popular operating systems. The server itself is distributed and allows you to use the pre-installed fat wallet with the entire database. The closer the full network node is, the better. Thanks to the use of a data center, a complete blockchain can be downloaded in an hour, regardless of location. Data protection is ensured by the following methods:

Communication channel encryption.
Each user is assigned a separate operating system.
Low density of cloud computers on a single host.
Random host selection using the Russian roulette method.
LVM volumes are encrypted.
Host selection is implemented using the Russian roulette method. The process of working with a cloud cryptocurrency wallet is no different from a local one. As a result, the service combines the advantages of a hardware and an online wallet:

Full control.
Confidentiality.
Security.
Easy to customize.
Fast start.
Remote access.
Physical protection.
The main disadvantage is the price – from 1,500 to 3,000 rubles per month.

Trust in the administration
The administration of the service does not have access to the logins and passwords of clients who set up all the necessary keys themselves. Administrator rights also belong to the clients, so all access data is in the possession of the users. If we assume that one of the hosts decides to use the user’s wallet, it will still not gain access to management. Encrypted data from LVM volumes will be an obstacle in its path.

Obviously, such services should be open source. The distributed method of storing cloud wallets is based on other corporate data centers. Each service host is geographically distributed and connected to only one router. The load on each host does not exceed 6 users, which increases data security.

Criticism
Hacking any OS is just a matter of time and money due to the zero-day threat (a vulnerability that has not yet been invented to counter).

Нулевой день

A crypto-millionaire who disclosed his fortune is bound to be the target of targeted theft of funds, and storing bitcoins in the cloud is likely to be successful. The main vulnerability of the cloud is that hackers constantly have remote access to it and can try different hacking options. Because of this factor, the cloud loses even to a regular PC, which disconnects from the Internet at night and cuts off access to itself for 8 hours. In terms of protection methods, the cloud is similar to cryptocurrency exchanges, which are constantly being successfully attacked.

The question of password encryption also remains vague. If the user configures all the keys himself and does not encrypt them, then can the administrator of such a service gain access to the wallet?

Output
The cloud wallet for cryptocurrencies is a new tool that has combined the convenience of working with cryptocurrencies, but has not yet proven its reliability. There are not enough reviews of such services yet.

We also recommend that you learn how to properly store keys and backups of cryptocurrency wallets.