Think of a situation where you receive and send bitcoins on a regular basis, like an exchange or a payments processor.
- You want to keep as large a portion of your coins as possible on the cold storage without compromising efficiency.
- You can't store all your coins in a cold storage because you need to send payments regularly too.
- You need enough bitcoins on the warm storage to be able to cover the daily outgoing transfers you send.
- Sometimes you receive a lot, sometimes you send a lot.
- You need a secure and efficient way to transfer coins between these storages.
How do you do this?
Keeping paper wallets in a safe and opening and importing/swiping them into the warm storage just doesn't work after a while.