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Cryptocurrency storage is an important aspect that an investor and trader should think about when entering the crypto market. Cold cryptocurrency wallets are considered the safest for storing an asset. We will tell you how a cold cryptocurrency wallet works; we will understand the types and features, the selection rules.
What is a cryptocurrency cold wallet?
It should be said right away that the crypt is stored in the blockchain, and the wallet is used to store the keys that provide access to it. There are cold and hot wallets. Cryptocurrency wallets are storages for public and private keys that give the right to manage a digital asset. The difference between hot and cold wallets is the connection to the network. Hot ones are always or almost always connected to the network, while cold ones are used offline.
So, what is a cold wallet for cryptocurrency? What does he look like? There are several types:
- desktop program;
- physical media;
- hardware storage.
Any of these types can be replenished without connecting to the network. Depending on the type of wallet, you can store one cryptocurrency in it or several at once.
What are cryptocurrency wallets?
One of the best cold wallets for cryptocurrency can be called hardware. The device is similar to a flash drive, it performs two functions – it generates keys and stores them. The device does not require a network connection to operate. The first positions are occupied by models from the brands Trezor, SecuX, Tangem in the rating of cold wallets for cryptocurrency.
A software wallet includes both desktop and mobile options. Desktop is software that needs to be installed on a computer. Using a cold wallet for this type of cryptocurrency is easy; it provides full control over the keys. After installing the program, a file called “wallet.dat” appears on the computer, it stores the keys. A password invented by the owner is used to protect the file from hacking. The disadvantage is that you can forget the password for the file, and access to it will be lost forever. The user can make a backup copy of the wallet and place it in a safe place to prevent the problem.
The mobile wallet is used on smartphones or tablets. This is a mobile analogue of a desktop program, it allows you not only to store the crypt, but to carry out operations with it, and a QR code is used for buying and selling. There are mobile wallets that sync with cryptocurrency exchanges, they provide advanced functionality.
It is important! A wallet that is used not only for storing crypto, but also for selling via QR codes or NFC, can no longer be called cold in full. It is not recommended to use it for storing large amounts.
The physical medium is called a paper wallet. This is a paper printout with the address of the crypt storage and private keys. The user completely protects the data from fraudsters by saving the keys on paper and removing them from the network. Keys can be encrypted and printed as a QR code. This type of wallet is used extremely rarely due to the high risk of losing physical media today, more and more users will melt away their preference for software and hardware versions.
How to choose a cold wallet for cryptocurrency?
Choose the option of storing a digital asset, focusing on your needs. The price of a cold wallet for a hardware type cryptocurrency depends on the manufacturer; top models can cost $300-400 or more. Therefore, it makes no sense to buy it to store small amounts. An expensive hardware wallet will pay off with the safety of large amounts of crypto, and it can also be used to conduct secure transactions. It is important to pay attention to the developer if you prefer a desktop wallet. Choose products from trusted brands, not aliases, such as Electrum, Exodus, Bitcoin Core, and Armory.
Learn about the top cryptocurrency cold wallets and how to use them on the Crypto Crew course. We teach not only to successfully earn crypto and invest in it profitably, but also to store your assets safely.