Cold wallets – also referred to as hardware wallets – are the safest way to store your crypto. Regardless if you are a newbie crypto trader or a serious HODLer, it is highly recommended. In short, crypto cold wallets are the ultimate way to store your crypto while delivering offline security and effortless trading.
How do they do it, you ask? “Cold” and “hot” crypto wallets are devices crypto enthusiasts use to store digital assets. While both offer convenient ways to store and access cryptocurrencies, they differ. Hot crypto wallets are connected to the internet to access your crypto. Cold wallets achieve that by functioning primarily as offline storage and not internet-connected.
As such, cold wallets provide an extra level of security compared to crypto hot wallets. This is because, unlike cold wallets, hot crypto wallets do not have an offline mechanism for crypto storage. As a result, that offers maximum protection from online hacks and cyber-attacks.
Many types of crypto cold wallets ensure peace of mind for individuals wanting to access their crypto exchange to access their cryptocurrencies without online threats. But, many aspects must be considered before purchasing any crypto wallet.
Keep reading to learn more about the advantages of crypto cold wallets and which physical device would best suit you.
Essential roles of crypto cold wallets
Unlike hot wallets, crypto cold wallets benefit users who wish to store significant amounts of their crypto portfolio offline. They consider potential online breaches and other peeping toms by hiding private keys. Therefore, they are ideal for crypto users who do not want to sell and hold a long-term crypto portfolio.
Users can benefit from these devices’ enhanced security in the ever-fluctuating cryptocurrency market. As a result, they are associated with the crypto revolution and its significant societal impact on promoting financial independence.
Purchasing a cold wallet is the safest way to keep your crypto assets safe. Although the devices are costly — some cost around $1000. However, there is no price tag when risks are involved. That is certain if your risk tolerance is low while HODL-ing a considerable amount of crypto assets. That your one-time purchase will eventually become insignificant compared to your cryptos’ increasing worth.
With added security, it’s no surprise that cold wallets’ popularity is consistently growing, becoming integral to the crypto exchange industry.
Catering to the needs of crypto consumers
Cold wallets aren’t advisable for those recently dabbling in the crypto world. The rule of thumb is you invest in a cold wallet if you have more cryptocurrency than you’d be willing to lose. Like most of us, that is a given.
Such wallets are considered a longevity-focused way to store cryptocurrency. For this reason, they are mostly suitable for long-term traders. This is because the devices take more time and effort to operate than hot wallets connected to the internet. The prices of cryptocurrencies continuously fluctuating does not help matters.
Although hot wallets are faster to run, they pose risks by presenting more opportunities for digital intruders to mine personal information and steal funds.
Nevertheless, neither wallet is 100% effective, so you must do your due diligence before purchasing one. So, keep reading!
Technicalities behind the offline crypto hubs
Cold crypto wallets work over having the ability to sign off transactions with private keys stored in an isolated offline environment. During key access, it’s essential to make a physical connection between your cold crypto wallet (hardware devices and a computer); otherwise, no communication can occur.
Any transaction initiated online is temporarily transferred to an offline wallet on a device such as a USB drive, a compact disk (CD), a hard drive, paper, or an offline computer. It is then digitally signed before it is transmitted to an online network.
Although issues can arise, the devices are typically secure over having private keys that are hard for online hackers to access — even if coming across the transaction.
Keeping your digital treasures safe
Some cold wallets include better security than others. That is due to including different encryption methods for private keys, two-factor authentications, and backup protection services.
Secret key encryption keeps private information safe over scrambling the user’s wallet data before storing cryptocurrencies on devices and making transactions from one spot to another.
Two-factor authentication adds another layer of security, requiring additional verification that makes connected to the internet, even assets, tricky to access for anyone other than the user.
Last but not least, backup protection is necessary to protect against data losses. This security protocol enables users to create a copy of their wallet data to remain accessible should the original records be lost or compromised.
Regardless of which type of crypto cold storage wallet you pick, the most substantial cryptocurrency cold storage wallets provide high security for safekeeping your crypto assets. Improper security practices can lead to a complete loss of funds, so diving deep into such products before purchasing one is essential.
Exploring the best crypto wallet
There are numerous types of advantageous crypto cold wallets. Some of these devices offer more convenience and durability than others. To help you pick, check out our top six:
A hardware wallet is a cold wallet device that guarantees additional protection for your digital assets. Typically, they are USB devices, ledger hardware wallets, or gadgets that store digital currencies offline.
On top of storing crypto offline, they can also hold digital assets, including non-fungible tokens (NFTs), and connect directly to the best crypto exchanges where you can easily buy, sell, or trade your chosen cryptocurrencies — like a Coinbase wallet.
It is a simple process regardless of accessing the private key on the hardware or software wallets. All you need to do is add one of these wallets to your computer, phone, mobile app, or tablet device, and you are good to go. Once you connect your best hardware wallet and software wallet together, it’s self-explanatory.
Another plus side includes all legit wallets having robust safety protocols that protect against cyber thieves and hackers. That makes their top brands in the space a top choice among crypto owners who care about their digital tokens’ whereabouts. Numerous models of hardware wallets are available today, offering differing levels of encryption technology and compatibility with multiple currencies. The Ledger Nano X is typically known to be the best hardware wallet, alongside Trezor Wallets Keystone Pro.
- Digital and cryptocurrencies occupy minimal space on these devices so that you can store infinite tokens in your hardware wallet.
- It is easy to sign transactions on a hardware wallet, even if it is difficult to execute them on-chain.
- Viruses may risk computer or internet-stored crypto wallets because most viruses target system software. A hardware wallet device remains safe from attacks due to being offline.
- With a hardware wallet, your private key is never entered on devices other than your private one. There’s no fear of someone swiping or hacking your password since it will remain out of range from computers and other devices.
- Hardware crypto wallets often have a relatively premium price tag. This can be an obstacle if you are on a tight budget.
- To set up hardware wallets, you should have a solid understanding of digital currency technology to ensure everything runs smoothly. Therefore, it’s vital to take some time to conduct exhaustive research prior.
- Day-to-day transactions are impractical with hardware wallets. You must carry the device around and connect it to the internet for successful transactions to achieve such goals.
Big display wallets
Big display wallets have, you guessed it, big displays. These devices feature a large screen for tracking transactions and storing sensitive data confidently.
Additionally, the storage core uses an offline, cold-storage mechanism to secure public and private keys against unauthorized access. These devices also typically have buttons and other mechanisms that protect against unwanted access from third parties.
Even if you lose this type of crypto cold wallet, all of these devices have a backup seed phrase (customized to a 12, 16, or 24-word phrase) that will give you access to your digital crypto assets. To ensure maximum security (not your keys), the personalized PIN code you chose usually covers big display wallets. However, their large size makes them typically harder to misplace than other cold wallets.
- The large display makes reading and checking your details on the wallet easier.
- If you lose or damage your device, you can access your digital assets, provided you know your backup seed phrase and personalized PIN code.
- Some of the most successful cold wallets are in the big wallet sector.
- This device stores data on the cloud for extra security.
- Setting up the device can be time-consuming because information must be manually entered.
- The big display wallet is typically bulkier and, therefore, harder to carry around and make transactions while moving.
Alternatively, paper wallets are another cold wallet option. Typically, this was the go-to solution when hardware wallets did not have mnemonic phrases.
You do not need an internet connection or a computer to create a paper wallet. Instead, print your Bitcoin address and private key on paper before hiding them securely. This can be a safe or safety deposit box. Then, to access your wallet and use your Bitcoin, you must import your private key into a Bitcoin wallet app or software.
The letters and numbers printed on your digital wallet must represent the public and private cryptographic keys, which serve as a personal identification code to access your blockchain data. Therefore, paper wallets will allow users to print out their private and public keys, representing their ownership of cryptocurrencies on the blockchain.
Even though paper wallets cannot be accessed online, they still provide a certain degree of vulnerability. This is because a part of the process entails using a computer, which may leave digital footprints for cybercriminals to exploit if you do not consider security.
- Paper wallets are inexpensive to create and do not require any additional hardware like USB drives or specialized printing machines.
- This technique is the world’s most straightforward yet considerably effective way to store crypto.
- Paper wallets offer a cold crypto facility that keeps people’s funds safe from hackers and malicious users (providing only the owner knows its location).
- The process is easy and cost-free, involving no more than just printing/taking note of the encrypted keys on paper.
- Paper crypto wallets are unsuitable for holding large amounts of coins due to their fragility.
- An incorrect note of one’s private keys can spell disaster if your wallet is not secured or accessible with the proper credentials. Not being mindful of this may result in a total loss of funds.
- Paper wallets are vulnerable to water, fire, and other elements, making them unreadable if salvaged.
A sound wallet is another “old-school” way of storing encrypted keys, which is still successful.
Sound wallets encrypt the user’s private key with a unique code or passphrase and store it on a Compact Disc (CD) or another audio format. The encrypted key is then converted into an audio file, which can be played back using any device that supports the compatible format, including CD players, headphones, cell phones, etc.
Cryptocurrencies are better protected from intruders when stored via encryption protocols than conventional storage solutions that hackers can penetrate.
- Sound wallets are the pinnacle of security, utilizing advanced sound encryption technologies to keep your data safe.
- They offer better protection than paper and hardware wallets since the data is stored in an audio format that can only be accessed with the correct passphrase.
- Crafting a secure sound wallet is simple, giving users the luxury of toting around their private keys expediently.
- Sound wallets are not so relevant in the modern day of age due to now having other encryption methods that are much more reliable, like hardware wallets and USBs.
- This kind of storage can demand an audio device such as a CD, which can be inconvenient and difficult to source if needed.
- They are unsuitable for holding large coins because encryption requires significant computing power and time.
Deep cold storage wallets
Deep cold storage is a way to hold crypto assets stored offline in an inaccessible location. With this cold wallet, you can create multiple backups across various locations instead of depending on one backup for recovery.
This type of storage works by storing a private key in an offline location that never connects to the internet. This includes using USB drives, paper wallets, or even engraving the key onto a physical object like metal or stone.
Once stored, the user can create multiple backups of this key in various locations, making it more difficult for hackers or thieves to access them. Because private keys are never exposed to the internet, it eliminates the risk of hacking and theft associated with hot online wallets.
- Multiple backups in various locations make it more difficult for hackers to access your funds.
- These cold wallets reduce the risk of single points of failure.
- Retrieving funds from a deep cold storage solution can be lengthy, requiring multiple backups to be created.
- It is not cost-effective for users who plan on regularly transacting with their funds.
Credit-card-style hardware wallets
Credit card-style crypto hardware wallets are the perfect size for your pocket while protecting your cryptocurrency via encryption firmware and chips.
These cold wallets combine an integrated microcontroller and an enclosure for private keys to enable you to transact without connecting a wallet to any computer. Keeping sensitive information safe allows you to have full autonomy over your finances hassle-free.
Better still, they are straightforward to use; you can easily connect a credit-card-style hardware wallet to your own mobile app or device with a USB cable and approve the transaction through its integrated LCD panel. Then, your mobile device or app will validate it once you enter your private key.
Moreover, the expandable storage lets you add more cryptocurrency to your ledger wallet while providing extra protection. You never have to worry about it connecting to the internet or an online device that may not be secure. Additionally, these card wallets come with no extra frills or excess packaging — everything streamlines into one device.
Even if someone could access your Bitcoin wallet, they wouldn’t be able to steal your digital assets because the critical data is stored in encrypted form within the hardware wallet’s enclave. This makes it unlikely that your funds will ever fall into the wrong hands.
- Credit-card-style hardware wallets are small and easy to carry around.
- Users have complete autonomy over their finances.
- These cards allow for various layers of authentication — it’s almost impossible for anyone but the user to access the wallet’s contents.
- Credit-card-style wallets can come with a steep price tag, depending on your chosen style.
- Accessing funds from a credit card-style wallet can be tedious. You have to link the device to your hardware and then use authentication to validate transactions.
9 key considerations when choosing a Cold Wallet
When choosing one of the above cold wallets, there are many factors to consider to ensure you select the best option for your needs.
The convenience of portability
When considering a cold wallet, portability may be worth considering because of its practicality and safety. For instance, if you store large amounts of cryptocurrency, do not keep your cold wallet device somewhere, as it can be misplaced or stolen.
For ledger hardware wallet types, dimensions play an important role. Some of these devices are tiny and lightweight, whereas others are too bulky to carry around daily. Therefore, a hardware wallet or other wallets resembling USB flash drives are a good choice. Nonetheless, there is no limit on the shapes and sizes of ledger hardware wallets. So, take your time to research until you find one that fits your lifestyle.
Pro tip: If you want to carry a cold wallet daily, a big display wallet is likely not your ideal crypto cold wallet.
Multi-currency wallet solutions
Compatibility is a top factor when selecting a cold wallet. The best secure hardware wallets are usually easy to connect to a USB or, in rare cases, Bluetooth to your desktop or mobile phone. Consequently, knowing what operating systems the best hardware and software wallets support is important before purchasing one. Ensure the one you choose is compatible with the technology you use the most.
Furthermore, compatibility is integral when making cross-chain transfers or using DeFi applications. Therefore, if you intend to change currencies at any point in the future, it’s critical to ensure that whatever cold wallet you choose supports assets beyond what you currently hold. For example, if you want to store Bitcoin, ensure the wallet can store Bitcoin. However, remember that the space changes dramatically, so your cryptocurrency preference might change quickly, too. Pick one that offers many options.
Ease of access to cryptocurrency management
Consider ease of use before deciding on what cold wallet to buy. Ensure your wallet is only accessible to yourself or the person you pick to have designated permissions (if you wish).
An intuitive wallet is a good choice. These devices typically have an easy setup, clear navigation, prompts and guides, multi-currency support, customer support, and more. This will allow for seamless funding transfers so you can get the most out of your digital assets without compromising security. After all, a wallet that is too difficult to access and use can lead to security lapses and errors — a cold wallet offers no real protection if you can’t open it!
The value of cold wallets
Moreover, it’s important to note that some wallets are higher-priced than others, but it’s essential to think beyond their initial price tag. Spending more now may mean getting higher security standards for your crypto assets, which can help prevent losing them in the long run.
Despite cheap options being available, it’s vital to conduct due diligence into devices’ features and promises before purchasing one that’s not legit and finding yourself unstuck and without your hard-earned crypto.
Advanced security protocols
When assessing the security of your wallet, scrutinize the physical and digital protection features: passphrases, multi-signature encryption, and recovery phrases. Reviewing the source code is essential to guarantee that no malicious intent has been implanted.
You can ensure that your top cold storage wallet, whether it’s what you believe is the best hardware wallet, best crypto wallet, or best crypto wallet in general, has integration options with other platforms to use within the trading environment. Analyzing the different security features involves researching the level of maintenance they require.
It’s also advisable to check the quality of encryption protocols and backup processes. Look at how user-friendly they are and whether or not security professionals have audited them to ensure your crypto investments are well protected.
Benefits of managing crypto on the go
Investors need an efficient method for keeping their funds safe — especially as the cryptocurrency market has the potential to grow rapidly. Cold wallets with their own mobile app and wallets, mobile wallets, and desktop wallets provide extra security — offering convenience and reassurance by providing backups through open-source technology.
Furthermore, with the help of a top mobile wallet or mobile app, you can take advantage of features like remote back-ups that ensure your mobile wallet will remain safe from harm. Plus, you can manage your digital resources independently while protecting them with security measures.
Comprehensive customer support options
Choosing the right digital wallet is of utmost importance, but regardless of this, numerous companies provide sketchy support services (if any!). Managing a digital currency portfolio without access to customer service can be daunting and time-consuming. For this reason, invest some effort into researching reputable crypto cold wallets, such as Bitcoin wallets, that offer reliable support.
The availability of timely customer service is another factor to consider. If anything were to go wrong with your crypto cold wallet, such as lost passwords or forgotten private keys, it’s beneficial to have someone on call around the clock — to help gain access to your funds or information stored in your wallet.
Ensuring your wallet has reliable customer service will make you feel more at ease; there’s no need to feel nervous about your assets’ whereabouts, which is priceless.
Reliability of wallet providers
The reputation of your chosen cold wallet is also important. Wallets have unknown vulnerabilities, which can potentially put your cryptocurrency holdings at risk. So, look up reviews from trusted sources and those who have already used the specific type of wallet.
Hearing what others say about that particular wallet’s security protocols and compatibility can be super beneficial in the long run. You can then determine whether or not it’s trustworthy enough to secure your funds, helping you to avoid cold crypto wallets that may not live up to their promises.
Protection behind your digital gold
Lastly, ensure that the company that creates the cold wallet you have your eye on safeguards your data. Look for security measures like the transparent handling of customer information, prevention of third-party organizations accessing personal data, and best crypto-jacking practices to protect your information and assets.
Companies devoted to their customers’ security often make their defensive efforts transparently known on their websites or policies. A cold wallet is only as secure as the hosting provider, so research thoroughly and stay protected!
All things considered, cold wallets are safer than hot wallets for storing and protecting crypto assets more safely. Unlike hot wallets, you can have the peace of mind that your funds are secure, thanks to the devices not leaving traces of digital footprints that hackers may be able to threaten.
Frequent, active traders primarily benefit from cold and hot wallets together. This is because they most likely have many cryptocurrencies and digital assets they want to access online and offline. Although hot wallets are not as safe, there’s no denying that they are not helpful for those with assets wishing to make quick transactions.
When selecting a crypto wallet, it’s essential to consider all of the above factors:
- The type of wallet
- Ease of access
- Supported currencies
- Security features
- Support options
- Customer service
- Privacy policies
Hardware wallets are typically considered one of the best crypto wallets over being easy to carry around, having enhanced security, ease of use, and offline storage capabilities.
Following our tips and tricks, you can now find the perfect crypto cold wallet beneficial for your needs. Whichever cold wallet you pick, ensure you have multiple backups of your private keys in case of loss or theft, and you are good to go!
A non-custodial cold wallet designed for commercial use is among the most secure ways to store your private keys. Given that you can obtain one for around $200 to safeguard digital assets valued much higher, it can be a worthwhile investment.
Virtually nothing is completely safe from hacking, and this includes cold wallets. Although a cold wallet is typically not vulnerable to remote hacking, the situation changes if your device is stolen. For instance, if both your PIN and cold wallet are taken, someone could potentially access your cryptocurrency.