Bitstamp Integrates Ledger Wallet’s BOLOS Protocol
This summer’s Bitfinex hack, resulting in the loss of $70 million USD in bitcoin, has shaken the entire community. However, it has also led some exchanges to use better security methods.
Most recently, popular bitcoin exchange Bitstamp announced on September 19 that its platform is now tethered with Ledger software.
Bitstamp said users can safely store their funds with the Blockchain Open Ledger Operating System (BOLOS). The exchange said it wants users and traders to feel safer by being able to transfer their BTC into a secure environment.
Bitstamp’s website states:
Dear Bitstamp Customers, we are now offering users the option to transfer their bitcoins directly to and from Ledger’s HW wallet using Bitstamp’s interface. With just a couple of clicks is all that is required for you to transfer your bitcoins offline to your very own Ledger HW wallet, giving you total control over your bitcoin storage.
A hardware wallet has significant advantages over traditional software wallets. Devices store a user’s private keys in a secure fashion. Furthermore, private keys held on hardware wallets are typically protected by a microcontroller. With a microcontroller, BTC cannot be transferred without the owner’s authorization.
Hardware Wallet Companies Offer Security Assistance
After the Bitfinex compromise, Bitcoin.com reported on hardware wallet manufacturers Trezor and Ledger, and their offers to help exchanges improve security. Both companies claimed that exchanges and their customer’s funds would be safer if they used hardware wallets. Ledger published a detailed blog post about the subject.
“When you deal with private keys that you cannot revoke, and whose compromise would result in massive losses, you just can’t have them on a regular server architecture,” the blog post explained.
Bitstamp took the advice of Ledger and initiated a partnership with the hardware wallet manufacturer. The exchange said they want to continue improving their customers’ trading experiences — now making hardware wallet compatibility part of that effort.
Rumors suggest that Bitstamp plans to implement Trezor compatibility in the future. The company has not confirmed or denied those rumors.
The lessons learned from the Bitfinex hack have also applied to other exchanges. This past August, Shapeshift announced integration with KeepKey. The partnership with Shapeshift allows KeepKey users to house multiple cryptocurrencies on their hardware wallets.
User Control in the Exchange Environment
The collaboration between Bitstamp and Ledger Wallet will reportedly give customers better control over their digital assets. If everything works as intended, a security breach at Bitstamp would not affect user funds stored in hardware wallets. The exchange said they are open to feedback and questions concerning the recent update.
What do you think about Bitstamp integrating with the Ledger BOLOS protocol? Let us know in the comments below.
Images courtesy of Shutterstock, Bitstamp, Ledger Wallet.
Bitcoin.com’s online store offers the Ledger Wallet, for those interested in hardware wallet storage. Our store also sells competing wallets KeepKey and Trezor.