Wallet management requires special knowledge and skills. This document is intended to provide an insight and a guideline. It impotant to operators of the platform to understand the concepts of hot, warm and cold wallet denominations mean in the Peatio use case.
This wallet is used by peatio to trigger automatically withdrawals. It can sign withdrawal transactions without the need of manual confirmation. A private key for hot wallet is stored encrypted in peatio.
Requires manual confirmation for signing transactions. A warm wallet should be a multi-signature wallet (at least 2-sig) and can be configured for more than 2 signatures based on your specified parameters. (If you plan on utilizing third-party service providers (BitGo, Xapo) for your “hot” and “warm” wallets, you should read their security recommendation.*)
This wallet is offline. This means that the private key for this wallet doesn’t connect to the Internet. Most secure method of generating and managing cold wallets is by using a dedicated hardware wallet, example:
Hot wallet should keep the minimum funds possible just to operate small withdrawals quickly so users don't wait too much. When the Hot Wallet reaches the configured maximum balance, all new deposits will be collected to the warm wallet. When the Warm Wallet reaches the configured maximum balance, all new deposits will be collected to the cold wallet.
Best practices for hot and warm wallets is to set them up with a recommended balance parameters.
Recommendations per wallet type:
There is an increasing amount of options becoming available for to setting up a cold storage wallet. Each of these options requires a software or hardware cold storages from a 3rd party provider.
Software: Third-party software for cold wallet allows you to create a wallet on your local computer without an internet connection. Electrum and Armory are a few examples of such services.
Hardware: Hardware cold storage is a hardware unit with provider proprietary software for wallet management. Examples of these hardware device manufacturers/providers are Ledger and Trezor.
Cold wallet creation schema
Following be links below you can find security recommendation for wallets and cold storages provided by:
DISCLAIMER OF LIABILITY FOR THIRD PARTY PRODUCTS. As part of its services to the Customer, the Provider may provide recommendations for utilizing third party hardware, software and/or services (Third Party Services) OPENWARE DISCLAIMS ANY AND ALL LIABILITY, INCLUDING ANY EXPRESS OR IMPLIED WARRANTIES, WHETHER ORAL OR WRITTEN, FOR SUCH THIRD PARTY SERVICES. THE CUSTOMER ACKNOWLEDGES THAT NO REPRESENTATION HAS BEEN MADE BY THE PROVIDER AS TO THE FITNESS OF THE THIRD PARTY SERVICES FOR THE CUSTOMERS INTENDED PURPOSE.