-snip-
A few answers here may be of interest in resolving the above queries and statements
Let us look at an example: A Bitcoin exchange typically offers an instant withdrawal feature, and might be a steward over hundreds of thousands of Bitcoins. To minimize the possibility that an intruder could steal the entire reserve in a security breach, the operator of the website follows a best practice by keeping the majority of the reserve in cold storage, or in other words, not present on the web server or any other computer. The only amount kept on the server is the amount needed to cover anticipated withdrawals.
Q. Is it possible to run away with coins in cold storage?
A. You generate a wallet on the offline computer the same way that you do on an online computer. This makes sure your Bitcoin private keys are in cold storage. You then make a watching-only copy of that wallet to be used imported on the online computer. Using this watching-only wallet, you can generate addresses and monitor payments exactly the same as any other wallet. In order to send money, you will be doing the following:
Create unsigned transaction (online).
Sign it (offline).
Broadcast it (online).
That is not an answer to the question you just explained what cold storage is. It certainly is possible to run with an offline stored private key the same it is with an online stored private key. The big difference is if the corresponding address is publicly known you can not leak funds slowly over time.
Q. Why other dice sites provide cold storage addresses?
A. Main purpose of cold storage is to ensure protection of coins against hackers, there is NO guarantee of any sort that admin (such as Dean of PocketRocketCasino) won't SCAM you eventually.
True.
All the funds in any cold wallet (for instances PocketRocketCasino's one) are as fragile as any ordinary wallet as private key holder can RUN with your coins at any time, there is nothing stopping them from doing so.
Yes, but it will get noticed.
Note to the technical sites that should be considered as well.
Let's assume we have only one investor who has invested 100 btc at kelly 10
That's all
So we would have a bankroll of 1000 btc, shown to everyone who would wish to check.
However, the cold wallet would only show 100 btc.
Now, with more and more investors and different kelly selections, the picture is even more bizarre
Like ours:
Bankroll is currently 924
Actually available 546
Thats just a communication problem. You expect investors to understand how kelly works, thus it should be no problem to list the invested amounts by kelly rate.
This means that we still have not reached the 10% originally stipulated
We have another issue as well. Our largest investor in the site does not wish to have this publicly known.
No one is asking you to publish information about the investors.
We have the most advanced stats site of any dice site and strive to be as transparent as possible, but we cannot act against the wishes of our members, particularly our largest investor.
Interestingly this is the most common reason I have heard from cloud mining services that turned out to be ponzis. The secret investor does not want X.
As a matter of fact the investor came to our public chat to discuss his concerns and that it was witnessed by many other members. The reason behind the investors statements: Privacy concerns
In addition we have decided to provide each investor who has invested a minimum of 1 BTC their own private cold storage address.
Maybe they can come here and explain this in a more accountable way. How would my privacy be at risk if I were to invest at your site and you have a publicly known cold storage address?