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As the tweet points out the bad practice and doesn't comment on the good practice how _should_ one store their keys? Specifically the tweet states that using a

As the tweet points out the bad practice and doesn't comment on the good practice how _should_ one store their keys? Specifically the tweet states that using a secret manager or password vault is a problem, so what is the solution?

HL33tibCe7 4y ago
Hardware security modules.
datadata 4y ago
A normal pattern is to tier storage into a hot wallet and a cold wallet. Hot wallet is used for daily operations and can have lower security, but has a very low percentage of value, so that if hacked the exchange and eat the loss. The cold wallet can have very very high security measures such as multisig, physical security, geographic distribution, etc, and only needs to be periodically accessed. Analogy in a old bank with cash or gold is hot wallet = cash that tellers have on hand, cold wallet = vault in the back that has everything else.
- pcthrowaway 4y ago
  Yep. You can also put cold funds behind a multisig, which to use the vault in the back of the bank example, would require two managers to turn a key at the same time to open the vault.
mithr 4y ago
I think that if you, an individual who owns some crypto, wants to store your key in a password vault, that's probably fine, as long as you accept the risks (you've done your due diligence and trust your password manager is secure enough for your expected risk factor, etc). But if you're an exchange handling billions of dollars of customer assets, the requirements should probably be higher. The text implies that many employees at the company had access to the password vault, for example. Also, shared password vaults that I've seen tend to have functionality like the ability to share a password externally (something you probably don't want!), relatively low logging abilities (while it would probably be a good idea to track each and every time a crypto key was accessed and who acccesed it), etc. At least that's my guess at what they meant — perhaps someone had deeper knowledge and can share that.

HL33tibCe7 4y ago

Hardware security modules.

datadata 4y ago

A normal pattern is to tier storage into a hot wallet and a cold wallet. Hot wallet is used for daily operations and can have lower security, but has a very low percentage of value, so that if hacked the exchange and eat the loss. The cold wallet can have very very high security measures such as multisig, physical security, geographic distribution, etc, and only needs to be periodically accessed. Analogy in a old bank with cash or gold is hot wallet = cash that tellers have on hand, cold wallet = vault in the back that has everything else.

pcthrowaway 4y ago
Yep. You can also put cold funds behind a multisig, which to use the vault in the back of the bank example, would require two managers to turn a key at the same time to open the vault.

mithr 4y ago

I think that if you, an individual who owns some crypto, wants to store your key in a password vault, that's probably fine, as long as you accept the risks (you've done your due diligence and trust your password manager is secure enough for your expected risk factor, etc). But if you're an exchange handling billions of dollars of customer assets, the requirements should probably be higher. The text implies that many employees at the company had access to the password vault, for example. Also, shared password vaults that I've seen tend to have functionality like the ability to share a password externally (something you probably don't want!), relatively low logging abilities (while it would probably be a good idea to track each and every time a crypto key was accessed and who acccesed it), etc. At least that's my guess at what they meant — perhaps someone had deeper knowledge and can share that.