An announcement to Trinity Wallet users was posted to Reddit regarding the security of their seeds in IOTA’s hot wallet mobile and desktop application. The post calls out to users who had opened the Trinity Wallet from December 17, 2019 to February 17, 2020 that their tokens may be at risk of being stolen. In response to the threat, IOTA released a Seed Migration Tool for users to safely transfer their funds onto a new seed. The migration period started on February 29, 2020 and will end on March 7, 2020.
Edit, updated 3/9/2020: David Sønstebø, the founder of Iota, has confirmed that he will personally reimburse all stolen MIOTA tokens to the victims of the hack. The payback is valued at roughly $1.97 million.
Hot Wallets vs. Cold Storage
In the never ending comparison between hot wallets and cold storage, it is events like these where cold storage will come out on top in terms of security. Many crypto investors prefer hot wallets for their convenience and hassle-free design, however, it comes with the sacrifice of security. On the other hand, cold storage keeps your seeds and keys on a non-hackable hardware device that is kept away from your mobile or desktop. Therefore, making seed theft a lot more cumbersome for thieves and scam artists.
Hardware wallets do come with some caveats though. When compared to hot wallets, token exchanges and transfers do require extra steps to complete them. Many popular hardware wallets, including Trezor and Ledger, rely on USB connections to a computer in order to make transactions. USB connections do also carry some hefty baggage, especially in 2020. If your computer does not have the compatible USB ports built-in, you may also have to worry about adapters and dongles.
CoolWallet S – The Best of Both Worlds
The CoolWallet S, from CoolBitX, combines the convenience of hot wallets and the security of cold storage into one device. The revolutionary credit card-sized hardware wallet connects to a smartphone running iOS or Android via an encrypted Bluetooth connection. Once connected, all your crypto balances can be viewed in the provided app. In the app, you can also make transfers and coin-to-coin trades.
Identical to other hardware wallets in the market, the CoolWallet S stores all keys on the card itself. Inside the wallet is a CC EAL5+ certified Secure Element chip that offers military-grade security for your keys. The card is also tamper-proof. This means that the device becomes unusable after being opened or tampered with. To add another layer of security, access to funds is guarded by a 2+1 authentication standard. To access the app, you must first go through your smartphone’s biometric (fingerprint or face) gate. The app can also be password protected. Finally, all transactions happening within the app must be verified with a physical button press on the CoolWallet S.
The main advantage of the CoolWallet S is its mobile and familiar design along with its Bluetooth connection. Making transactions on-the-go without the need for a computer allows for quick and secure transactions.