What is a cold crypto wallet and how do you use it?

What is a cold crypto wallet and how do you use it?

Over the last few years the cryptocurrency popularity has grown rapidly, and it has led to necessity of ensuring reliable and secure storage of assets. One of the best ways to prevent your virtual currencies from being hacked is a cold wallet, which functions autonomously and does not require Internet access.

Types and features

Generally speaking, the cold crypto wallet is an offline device that allows you to store data, requiring access to blockchain. It is preferred to store data in a cold wallet in following situations:

• you need to store the significant amount of funds;

• you plan to store your funds for a long term;

• you make transactions very rarely.

There are a wide variety of cold wallets for cryptocurrencies, which differ depending on the principle of storage. Types of cold storage include:

1. Paper wallet – involves storing a cryptographic key on a sheet of paper;

2. Encrypted paper wallet – an updated version that allows you to encrypt a password with a specific algorithm. It is also possible to adapt and write everything to a USB-drive, so you can sign transactions when you connect to a computer;

3. Fragmented passwords – separating and keeping several parts of the key in different locations: on a computer, flash drive, disk and other devices;

4. Wallets from official developers – a special program that encrypts and encodes information;

5. Hardware wallet – a high-tech version representing a mini computer that functions offline with a database of stored codes that are encrypted with special keys.

A good way of storage is also to record passwords on various souvenirs, where QR codes or private keys are marked in a hidden place.

Additional security recommendations

The large list of cryptocurrencies encourages developers to release more programs that allow to store them or perform various transactions with a high level of security. Most of the popular virtual currencies have applications from developers who support only their own coin. But there is already a sufficient number of multicurrency wallets, with support for several cryptocurrencies simultaneously.

The most popular and functional applications are: Electrum, Jaxx, Exodus, Holy Transaction. They are all simple and straightforward to use. To ensure the best security, you should carefully choose high-quality services with a multi-level security system, excellent reputation and only positive reviews.

Leave a comment