CFA Level I · CFA Level I Exam · Introduction to Digital Assets
An investor wants to hold a digital asset with the lowest exposure to online attacks and is willing to accept slower access to the asset. The storage method most appropriate for this investor is a:
A cold wallet kept offline is most appropriate. Because private keys are stored without an internet connection, exposure to hacking is lowest, though access is slower and less convenient. Hot wallets and exchange-held wallets are online and therefore more exposed to cyberattacks.
- Ahot wallet connected to the internet
- Bcold wallet kept offlineCorrect
- Cwallet held on a centralized exchange
Explanation
Cold wallets keep private keys offline, which reduces exposure to hacking at the cost of convenience. Hot wallets and exchange-held wallets are online and more exposed.
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