Detailed Explanation For Newbies: What Is The Cold Wallet?￼
Protecting cryptocurrency from sudden attacks is always a top priority for professional traders. Fortunately, today’s market offers various remedies for this demand. One of them is the cold wallets that have become popular recently.
Perhaps you may ask “what is the cold wallet?” This article has compiled information from many reliable sources, including Coin568, and provided the complete answer. Dive in!
What Is The Cold Wallet?
As a physical device, a cold wallet holds your cryptocurrency off the Internet. The connection is restored only when you make a transaction. In terms of shape, it usually looks like a USB stick.
Some people mistakenly think that it holds digital assets officially. The truth is that your cryptocurrency stays on the blockchain, and this device only comes to provide secure access.
This type of storage has the greatest impact if you intend to keep your holdings for the long term. On the contrary, a hot wallet gives you the best benefit for instant transactions.
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3 Types Of Cold Wallet
There are currently three models on the market for this type of device, including:
- Hardware wallet: The most common choice appears as a physical device similar to a small or medium-sized USB stick.
- Paper wallet: As the name suggests, this option is a piece of paper with public and private keys. This parameter is provided as a string of numbers and letters, along with QR codes (for scanning). On the downside, non-experts may grapple with it quite a bit due to the high-potential risk.
- Offline software wallet: The manufacturer built it as an application compatible with the non-Internet operation.
Cold Wallet And Hot Wallet In Comparison
In contrast to cold wallets, those hot ones provide an Internet connection that allows traders to access and execute transactions anytime, anywhere. As you have heard before, it is more secure than exchange accounts but never beat its direct competitor in this term.
The software device does not require complicated operations that may slow down your trading time. One of its other highlights is the variety of coins. Plus, some brokers offer this service for free.
When it comes to the minus point of hot storage, users have to verify their identity with personal documents. Meanwhile, those who want to avoid the online risks simply go to the store and buy any hardware gadget that fits their budget.
What Are The Advantages And Disadvantages Of The Cold Wallet?
Cold storage protects your holdings from high-tech theft, and what else? Are there any trade-offs, or in other words, drawbacks to this option? Scroll down for an overview of hardware devices
High level of safety
This kind of wallet saves you from unexpected cyber-attacks that can lose your assets without any prior preparation. Anyone who tries to connect to your belongings must gain access in a PIN or another password, depending on the brand.
With the coin’s price trending up recently, it is well worth the investment to have the best protection for your assets.
Due to its compact size, you can take this device with you anywhere. It is quite convenient if the trader wants to execute a trade on a whim. Of course, you have to make sure it can connect to the Internet at that time.
Ease of use
Say no to cumbersome registration steps; you can use the wallet immediately after returning from the store.
Some people find it time-consuming to perform multiple operations to complete the transaction. That is the biggest reason why they go for hot wallets. If you forget to bring it with you, nothing goes as expected.
It costs you $50-$180 to take advantage of all outstanding cold storage features. Another inconvenience is that users of offline software wallets have to prepare a separate smart device to store cryptocurrency.
Possibility of loss or damage
Due to the physical construction, your device may be stolen or broken somehow. Make sure your package comes from a reputable manufacturer rather than secondhand. As there is no backup, you could potentially lose your investment without doing anything more.
The Best Cold Wallets For Coin Storage Of All Time
Believe it or not, products from trusted brands outperform other options. Here are some high-quality products that you should consider first.
Ledger Nano S
The first product line from this famous French manufacturer provides maximum security with the private key located right on the chip. It effectively prevents illegal access as the wallet automatically locks after three incorrect password attempts.
This device supports more than 1500 coins and allows storing up to 3-6 types. It notably allows backup and restores data with a previously installed 24-character string.
Ledger Nano X
It is not coincidental that this brand became famous among traders. The second-generation cold wallet excites users with a compact design. The user experience enhancement with two physical buttons leads to easier operation.
It serves customers with Bluetooth function for wireless connection to smartphones. The manufacturer also provides a USB-C port for working on a laptop. As a respectable improvement, its maximum storage level reaches 100 tokens. The best part is that you can manage them all on one available software.
This option was the first cold wallet to appear on the market, but its technology has never become obsolete. It has now extended support to over 500 other coins from its original starting point only for Bitcoin.
Unlike the two above, it has a screen wide enough for up to 6 text lines. Users easily keep track of all information in one go and complete the transaction with two built-in buttons.
The manufacturer has set up various security methods: two-factor authentication (2FA), message confirmation, SSH security, etc. In the unfortunate event of losing your wallet, restore settings may help.
Trezor Model T
As an upgraded version of the one above, this option looks like a USB with a color LCD touch screen. The wallet supports nearly 2,000 different cryptocurrencies and has no capacity limit. In particular, it owns an exclusive Shamir Backup feature that allows 16 shares to restore when problems occur.
This device is significantly larger than the others on this list with a luxurious design. It features very impressive security with a personalized pin code of your choice. Plus, it works in tandem with the ShapeShift – an exchange platform, making cryptocurrency trading simple and safe.
What is the cold wallet? This article has just shown you the detailed answer. As mentioned above, this hard device has both advantages and disadvantages. It is best to consider whether it suits your needs and style.
However, we still believe cold storage is the safest measure to protect your digital assets and to keep track of today’s coin price.
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