Do Sportsbooks Keep Their Bitcoins In “Cold Storage”?

Storing your Bitcoin, Litecoin and other cryptocurrencies is crucial with online sportsbooks. Cold storage is the most secure, but how common is it?

Do Sportsbooks Keep Their Bitcoins In “Cold Storage”?

Cryptocurrencies have emerged as a popular transaction method amongst online gambling sites, including online sportsbooks. There are several major cryptocurrencies in circulation, including Bitcoin, Litecoin and Ether. Bettors are beginning to use cryptocurrencies more and more for the many advantages they afford, such as safety, transaction speed and absence of fees. Storing your digital currency is of paramount importance, as you want to protect your assets from hacks and other fraudulent risks, just like with any other currency form. Perhaps the best way of doing this is by utilizing what is known as “cold storage” in the cryptocurrency community.

What is cold storage? Bitcoins are stored in a digital wallet. There are different options for digital wallets, cold storage being one of them. Cold storage deals with a wallet that is either entirely offline or is at least encrypted with its password stored offline. The 3 primary cold storage methods are paper wallets, offline Bitcoin hardware wallets and USB drives or printed out private keys. A paper wallet is a document which contains all the necessary data needed to compose private keys. Mnemonic codes are generated and can be printed to make a multi-key paper wallet. Paper wallets are somewhat frowned upon by cryptocurrency experts because they are unrecoverable if lost by the user.

Cryptocurrency proponents recommend USB hardware wallets over paper wallets due to their stronger security measures. The most popular being Trezor which is known to be extremely safe and hack proof. These types of cold storage wallets feature microprocessor smartcards that are certified against all types of attacks. The same microprocessors are used by financial institutions and governments. The private keys for your wallet are never shared with a third party, but rather hard locked in your smartcard device.

Most Bitcoin and Litecoin gambling sites will store your money that is left in your account. This measure is taken to safeguard the current balance via data encryption and cold storage. They do keep a reserve amount on hand to handle their normal withdrawal demands. However, gambling sites are not entirely immune to cyberattacks, and there is no guaranteed way of verifying if they are truly and effectively putting your cryptocurrency away in cold storage. This is why it is highly recommended from avid cryptocurrency gamblers to personally store your own cryptocurrencies. Through a combination of security protocols and safe online behavior, you will drastically increase your protection level.

Online wallets are necessary for sending and receiving Bitcoins, but risks arise when leaving your Bitcoins sitting in an online account—thus presents the need for offline wallets. Gamblers using Bitcoin, Litecoin, Ether and other cryptocurrency users tend to only keep a small amount of their money present in their online gambling accounts, electing to store the bulk of it in cold storage. Most crypto-friendly betting sites store their coins the same way across the board to ensure the safety of its customers’ funds, but if cold storage is only as safe as you make it, additional preventative measures are suggested in order to protect your money.

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