Arculus

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Frequently asked questions

What is cold storage?

Cold storage refers to the practice of storing digital assets, such as cryptocurrency, in a physical, offline wallet device. This is done to protect the private keys, or secure codes, associated with the assets. By keeping the private keys offline, in a secure and encrypted cold storage wallet, individuals can maintain control and ownership of their cryptocurrency, also known as self-custody. Cold storage provides a vault-like protection against risks such as exchange bankruptcies, hacks, exploits, and freezes, which can result in the loss of digital assets.

What is 3-factor authentication (3FA)?

3-factor authentication (3FA) is a method of confirming one's identity using three different categories of authentication: inherence, knowledge, and possession. Inherence refers to something you are, such as biometric data like fingerprints or facial recognition. Knowledge refers to something you know, like a password or PIN. Possession refers to something you have, such as a physical item like a key card or a mobile device. By requiring authentication in all three categories, 3FA significantly enhances security and is considered the highest standard for protecting user data and assets.

How does ownership work in cryptocurrency?

Ownership in cryptocurrency is defined by access and control. When you own cryptocurrency, it is not actually stored in your account on an exchange, but rather on the blockchain. The exchange acts as an intermediary to facilitate transactions on your behalf. True ownership is determined by your access to the blockchain-based assets and your ability to manage and trade them. Access is granted through a combination of private keys and public wallet addresses. Private keys are like passwords and can be stored either on a separate device or on a wallet provider's server. There are two types of storage wallets: non-custodial (self-custody) wallets and custodial (hosted) wallets. Self-custody refers to having control over your private keys and therefore your cryptocurrency.

What are private keys and how are they stored?

Private keys are the equivalent of passwords in the context of web3. They are used to access and manage cryptocurrency assets on the blockchain. Private keys can be generated and stored in two ways:

1. Non-custodial (or self-custody) wallets: In this type of storage, private keys are stored on a separate device from the wallet provider's server system. This gives the user full control over their private keys and ensures that the wallet provider cannot transact on the blockchain on their behalf.

2. Custodial (or hosted) wallets: In this type of storage, private keys are stored on the wallet provider's server. The wallet provider can then transact on the blockchain on behalf of the user. This means that the user is relying on the wallet provider to securely store and manage their private keys.

Additionally, cold storage is a method of storing private keys offline in a physical device, such as a hardware wallet. This provides an extra layer of security as the private keys are not connected to the internet, reducing the risk of hacks or exploits. By maintaining control over their private keys through cold storage, users can truly own their cryptocurrency and have self-custody.

How does Arculus ensure the security of digital assets?

Arculus ensures the security of digital assets through its cold storage wallet solution. The Arculus Card, which uses a best-in-class CC EAL6+ Secure Element, encrypts and stores the keys. The card is not connected to anything, and if it is lost or stolen, no one else can use it. Additionally, Arculus employs 3-factor authentication for added security. This includes biometric lock (something you are) through the Arculus App, which is only accessible on your mobile device with your unique biometrics, and a 6-digit numeric PIN (something you know) for the second step in the authentication process.