When it comes to keeping cryptocurrencies secure, cold storage is considered necessary.
Cold storage is important whether you’re an old school Bitcoin investor with your own wallet, or a novice using a trusted third party, like Coinbase and Circle, to hold your crypto.
Regardless, cold storage is all the rage in cryptocurrency security… But what about fiat?
What is Cold Storage?
Cold storage means storing your cryptocurrency keys offline to protect it from a hack…
This is accomplished often using dinosaur-age methods such as writing your codes on pieces of paper and storing them in a safe deposit box.
Cold storage can also mean keeping important information on a USB drive that is not connected to the Internet.
Keeping digital assets in cold storage makes them available for retrieval in the event of a malicious hack, bad malware event…
Or other digital disaster we haven’t considered (or don’t want to) consider.
IMHO, it’s the latter we should be concerned about not only as it pertains to crypto, but also to fiat.
The Coming AI Wars and Your Money
An article in the New York Times on the feud between Mark Zuckerberg and Elon Musk regarding potential threats posed by artificial intelligence (AI) raises some issues …
Here are a few:
- Artificial intelligence is advancing more quickly than many researchers expected.
- Artificial intelligence behavior surprises even the smartest researchers.
- China wants to be the leader in artificial intelligence. (So does the U.S…. By extension we must assume Russia also does… Etc.)
- Cyber attacks on computers and devices connected to the web are constant… 1
- Cyber attackers will become more sophisticated with advances in artificial intelligence.
- Most money today is not cryptocurrency, but still digital in concept and practice. We use credit cards, debit cards, make transfers, etc… All digital… Relying only on the records held by our banks as evidence of how much money we have.
All of the above factors indicate that eventually it may be extremely easy for artificial intelligence to be unleashed to steal money from unwitting individuals.
One approach hackers can use is to quietly infiltrate a system, steal information over time, then use a cryptolocker software to lock up your files while the damage is done elsewhere (such as at your bank).
As such, you need a backup of what money you have… In some cases, this goes beyond the FDIC insurance that many banks offer customers who hold cash in their accounts.
Cold Storage for Fiat
The extent of “cold storage” today for many bank account holders is the paper statements that people receive (**SHOULD INSIST ON RECEIVING**) every month.
Going paperless is all well and good… But when you need information on your holdings, what if you can’t get them from your bank?
IMHO, you should have your own fiat cold storage strategy. Keep at year at least of paper statements and records that are preferably sent to you from the bank itself.
Footnotes
- Software robots are designed by hackers (or by robots themselves) to work around the clock, 24/7/365, to stress test the “perimeter security” systems of small to medium sized businesses (SMBs) and larger fortified businesses. When a weakness is found, they infiltrate with malware or other harmful viruses or to monitor and collect information in the background.