Cold Storage Crypto Wallets

Cryptocurrencies are becoming increasingly popular these days amongst investors and traders. With the exceptional growth of the crypto market, the need for a safer storage option is also increasing. In this blog, we will discuss cold storage crypto, one of the safest ways to store crypto, and all you need to know about it. 

What is cold storage crypto?

Cold crypto storage is a wallet or device to store your cryptocurrency offline or without connecting it to the internet. 

Cryptocurrency is digital money based on blockchain technology that can be used as a medium of exchange to buy or sell goods and services globally. 

However, with the increasing popularity of these digital assets, theft, hacking, and malware activities are also increasing. That’s where you need a crypto cold storage wallet. Cold storage is amongst the safest ways to store major cryptocurrencies. 

As cryptocurrencies operate in a decentralized manner, the onus of securely storing them largely rests on the owner. In the unfortunate event of crypto loss or theft, there is no centralized authority to reach out to for retrieval. 

Hence, the significance of cold storage solutions for cryptocurrencies becomes paramount. Cold storage methods involve keeping crypto offline, disconnected from the internet. 

This precautionary measure ensures that hackers cannot gain unauthorized access to your crypto assets unless they are connected to the internet.

How to store crypto in cold storage

Well, if you are wondering how to store the digital asset offline. Let us understand the mechanism or step-by-step process of storing or saving cryptocurrency: 

The first step is to select the best type of cold storage wallet that suits your needs. You can go for a paper wallet, hardware wallet, or any other wallet. 

Once you are done with the crypto cold storage choice, connect the wallet to your computer system to store your digital assets. 

Now for receiving, storing, and exchanging cryptocurrencies, you need to generate a public address. 

You can now store your cryptocurrency in the cold storage wallet. These crypto wallets have both public and private keys. If you want to transfer the digital asset, connect the wallet to your computer, add the address, and share it. 

Types of cold storage for crypto

Different types of cold storage wallets are there to store your cryptocurrency offline. Each type has its own features, so let us discuss its popular types to help you in selecting the best cold storage wallet:

A quick glance

What is cold storage crypto?

Cold crypto storage is a wallet or device to store your cryptocurrency offline or without connecting it to the internet.

How to store crypto in a cold wallet

1. Select a cold storage method
2. Connect the wallet to your desktop
3. Generate your crypto address
4. Transact, store, or exchange cryptocurrencies

What are the Types of cold storage?

1. Hardware Wallet
2. Paper Wallets
3. Sound Wallets
4. Deep Cold Storage

What are the benefits of cold crypto storage?

1. Protection against Hacks
2. Multiple Asset Storage
3. Robust Security

What are the limitations of cold storage?

1. Expensive
2. Physical Damage
3. Complex

What is the difference between a hot and cold crypto wallet?

A cold crypto wallet is a way to store cryptocurrency without connecting it to the internet, while a hot wallet is a device to store cryptocurrency online over the internet.

Hardware Wallet:

Hardware Wallet is amongst the most common and safest cold crypto storage wallets. You can use hardware, including a pen drive, Bluetooth, USD, battery, or any physical device to store your private keys. 

One of the key features that makes hardware wallets different from others is you can install an app on your device to manage the cryptocurrencies. In addition, in case of losing the physical device, you can recover the wallet into any other device with the help of a recovery phrase. 

When it comes to dealing with online fraud, hacking, and vulnerabilities, hardware is the best cold storage for crypto wallet. Also, the hardware supports multiple digital assets or cryptocurrencies in a single wallet, which is beneficial for long-term investors. 

Paper Wallets:

As the name suggests, a paper wallet is with a private and public key printed on the paper. Exchanging or storing cryptocurrency in a paper wallet is quite similar to QR codes. You just need to connect your paper wallet with software to exchange cryptocurrencies. 

Paper wallets are among the oldest and most cost-effective cold storage crypto, yet not the safest. The chances of losing, misplacing, and physical damage are there. In addition, you can lose your digital assets if these paper wallets go to the wrong hands.

Sound Wallets:

Sound wallets are based on the same concept as paper wallets. The major difference is in a paper wallet, the keys are in the form of paper, while with a cold wallet, the keys are in the form of an audio file. 

Sound wallets provide cryptocurrency holders with robust security and protection measures. These wallets also provide the recovery or seed codes to recover the cryptocurrency if you have forgotten your password. However, these are also not foolproof and chances of physical damage are there.

Deep Cold Storage:

Deep cold storage wallets are highly secure for long-term and big investors. The wallet empowers professionals with highly secure technology, including multi-signature access or time-lock contracts for storing digital assets. 

However, the robust security comes with a disadvantage, and that is they are not immediately accessible. Hence, these are not suitable for short term trading strategies.

Pros and Cons of Cold Storage Crypto

Pros of cold storage

Protection against Hacks:

With the increase in the popularity of digital assets, cryptocurrency scams are also increasing. Exposure to the internet gives rise to viruses, malware activities, hacks, and theft of your digital assets. However, cold wallets are not connected to the internet and provide guaranteed protection for such activities.

Multiple Asset Storage

Cold storage is not limited to cryptocurrencies. You can store different financial assets, including Non-Fungible Tokens (NFTs), Decentralized Finance Tokens (DeFi), security tokens, and many others, in cold storage.

Robust Security:

Cold storage wallets are amongst the safest ways to store your digital assets. Also, the crypto holders enjoy full control and ownership of their private keys. So, there are no chances of third-party fraud.

Cons of Cold storage

Expensive:

Cold wallet may not be a suitable option for all crypto owners as these are quite expensive. The price of a cold wallet can range between 50 to 250 dollars, depending on the platform. However, the security these devices provide justifies the cost.

Physical Damage:

Cold storage may provide you security against online threats. However, the chances of physical damage, theft, misplacement, and loss are also there. So, one can actually lose access to their digital asset in such cases.

Complex:

The process of setting up the cold storage for crypto is quite complex, as compared to the hot wallet. Beginners with a lack of technical knowledge may find difficulty in using it. Also, it takes time to access and transact crypto with cold storage.

Difference between hot and cold wallet

Crypto wallets are majorly of two types:- Hot and cold storage.

However, many people do not know which is more suitable for them. So let us quickly understand their difference to help you in selecting the best according to your needs:

Wrapping Up

Cold Storage Crypto is amongst the best ways to store your digital assets in the world of cyber threats. However, like any other method, it has both advantages and disadvantages.

Also, cold storage wallets are not suitable for all crypto holders, especially for short-term traders like day traders or scalpers. So, the best way to store digital assets is to go for a combination of hot and cold wallets.

When it comes long long-term investment in large amounts of cryptocurrencies, you should go for a cold wallet, and when it comes to short-term trading, you should go for a hot wallet.