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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.

3

I would personally use a linux/bsd computer, without a desktop-environment. This means, you'd command a bitcoin command-line client without having a graphical interface. Probably something like FreeBSD or Ubuntu. This computer can still be online and used for everyday transactions, but it's much less prone to keylogger attacks and any other sort of attacks since you're not using a Web-browser or Email client or any other malicious type of software that could harm your computer - you just have the command-line.

In my opinion having a minimal setup, with no software installed whatsoever except your bitcoin command-line client, is the best way to go for this type of scenario where you need to send regular payments.

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So if you need to do regular transactions daily, using something like this is better than a cold storage in my opinion. You could backup your keys in paper wallets sure, but you'd need something online for everyday transactions. And command-line freebsd system would be your most secure option. Unfortunately if the constant swiping/importing doesn't work for you, this is the next best thing imho.

  • Hey Thanks! This is an answer for how the warm storage can work alone as securely as possible. But the questions is how can you make cold to warm transfers safe and efficient? – Emre Kenci Nov 16 '13 at 11:59
  • Ok added some extra text. If importing/swiping doesn't work for you, then there's really nothing better out there than the system I described. You'd still keep the keys in cold storage thought. – Luca Matteis Nov 16 '13 at 12:03
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    This is already how the warm storage is working. That's not the issue. The problem is not keeping the client/wallet secure. The problem is managing the cold to warm transfers securely and efficiently. There is bitcoinarmory.com but I'm curious if there is any other way. – Emre Kenci Nov 16 '13 at 12:11
  • Thank you for the answer. I decided to mark it as valid anyway. It is valuable information – Emre Kenci Dec 3 '13 at 7:36
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Very late answer, but I'd run Armory, and the transactions/signatures would be moved between the online and offline computers via serial cable rather than by flash drive (some medium-size crypto (not bitcoin, rather, CA signing, etc) installations I know of do exactly this).

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