Understanding Cold Storage for Cryptocurrencies
Cold storage refers to storing cryptocurrencies in offline wallets, known as cold wallets, to enhance their security.
Cryptocurrency wallets are typically categorized into two types:
- Hot wallets
- Cold wallets.
Hot wallets
Hot wallets, or hosted or software wallets, are software applications accessed through a wallet service provider’s website.
They are widely used due to their convenience, ease of use, and constant accessibility.
Hot wallets secure funds through private keys, which can be single-signature or multisig, depending on the wallet type.
However, if these private keys are compromised, such as through theft or phishing attacks, the stored funds can be stolen and irretrievably lost.
Since blockchain transactions are irreversible and cryptocurrency users’ identities are often anonymous, recovering stolen funds becomes challenging.
For more information on hot wallets, we have curated an extensive list of the best software wallets.
Cold wallets
Cold storage provides an additional layer of security by physically isolating the wallet from insecure networks, particularly the public Internet, when it is not in use.
By air gapping the wallet, cold storage makes it virtually impossible for potential attackers to access the cryptocurrencies stored on it.
Individuals and companies utilize cold storage, especially centralized cryptocurrency exchanges that hold custody over customers’ funds.
Various cold storage methods exist, but the most popular ones are hardware wallets and, to a lesser extent, paper wallets.
A paper wallet is a physical piece of paper containing the wallet’s public and private keys printed on it. It serves as an offline storage option for cryptocurrencies.
A hardware wallet is a specialized device, often resembling a USB drive, requiring a physical computer connection to access one’s crypto assets.
It provides a secure environment for storing private keys and conducting transactions.
By employing cold storage techniques, individuals and businesses can significantly enhance the security of their cryptocurrencies, protecting them from online threats and potential theft.
See our curated list of the best hardware wallets/cold wallets.
More details
Ledger Nano S Plus is a fortress-like protection for your digital wealth, sporting an affordable price point. This crypto wallet supports many cryptocurrencies and blockchain networks, making them easily managed via the reputable Ledger Live app. Despite its significant advantages, some users have noted the lack of storage capacity.
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Support for up to 5,500 cryptocurrencies.
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Private keys are always offline.
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Integration with other hot wallets.
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Support for staking.
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NFT support.
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High fees for Ledger Live crypto purchases.
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Limited app space.
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Small display.
More details
Ngrave Wallet provides utmost security and a user-friendly experience. Its offline functionality, EAL7-certified OS, multi-crypto support, intuitive interface, and robust security make it a top choice for secure crypto asset management.
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Advanced security features.
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Interface with a 4-inch touchscreen.
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Over 1000 cryptocurrency support.
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Trusted certification (EAL7).
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Limited support for decentralized finance (DeFi).
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Higher price range compared to other wallets.
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Lack of Bluetooth and NFC connectivity.
More details
Arculus is an innovative cryptocurrency hardware wallet that safeguards users' crypto private keys. It stands out with its sleek metal card design, using Near-Field Communication (NFC) to store crypto private keys securely. With robust layers of protection, it ensures no unauthorized access to the stored keys.
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Digital passports and banking cards.
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In-app crypto purchases.
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Three-factor authentication and biometrics.
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Free crypto deposits and withdrawals.
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WalletConnect for DeFi and NFT support.
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Limited crypto support.
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Only USD and EUR are supported.
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High fees on crypto purchases.
More details
The Trezor Model T is a high-quality hardware wallet that offers top-notch security for cryptocurrency investors. Trezor is known for its transparency and trustworthiness. The ability to store 1500+ tokens and Non-Fungible Tokens (NFTs) justifies the premium price of $219. However, some users have reported issues with the MicroSD card slot. Trezor Model T is a solid pick to safeguard crypto despite minor concerns.
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It supports 1400+ crypto assets.
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Touch screen for a user-friendly operation.
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It supports NFTs storage.
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Too expensive when compared to its competitors.
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It has limited mobile compatibility.
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A bulky design that is quite hard to carry around.