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An exchange doesn't have to have all of their assets ready to use at a moment's notice. They could have 95% of their assets locked up in an inconvenient but saf
by AgentME 9y ago
An exchange doesn't have to have all of their assets ready to use at a moment's notice. They could have 95% of their assets locked up in an inconvenient but safe method. If their hot wallet starts running low, then they begin the process to top it up with their hard-to-use multisig protected funds.
- decker 9y agoGood thing nobody can tell when the hot wallet starts to run low, otherwise they might know the exact moment when the keys need to come together.
- tehlike 9y agoFor bitcoin, they can actually tell. For things like monero, not really.
- AgentME 9y agoThe keys don't have to come together. Each keyholder can separately sign the transaction from wherever they are on the planet. The transaction to add funds into the hot wallet could have been pre-arranged. One of the keys could be controlled by a law office on the other side of the planet with contractual obligations to only sign the hot-wallet-refill transaction with a certain amount when the hot wallet falls below a certain amount and when the exchange requests it. The cold-wallet that they're funding from could itself be funded by a timelocked transaction to guarantee that the cold-wallet isn't emptied out too fast, and an entirely different set of law offices that the exchange doesn't regularly contact control the keys that allow the cold-wallet to be emptied out faster. If the different types of on-chain controls like timelocked transactions aren't enough, then some of the keys could be in tamper-proof hardware-security-modules that further restrict how the keys can be used.
- tehlike 9y agoThe analogy to this is bill gates not having all of his networth stored in his house