Cold wallet for bitcoin and other cryptocurrencies. Creation and use

What are cold wallets

Cold wallets are crypto wallets designed for the safe storage of cryptocurrency assets. Their difference from hot wallets is that they are not connected to the network and are unavailable online. With cold wallets, users can store cryptocurrency assets offline, minimizing the risks of hacker attacks, hacks, and other cybercrime.

Cold wallets are physical devices that often look like USB drives. They are often presented as hardware devices specialized for storing cryptocurrency, or paper wallets, where private keys are stored on plain paper (or any other traditional medium that cannot be connected via a computer). They are ideal for long-term storage of Bitcoin and other cryptocurrencies.

A key aspect of cold wallets is that they generate and store private keys outside internet-connected devices. Private keys to access cryptocurrency assets are kept isolated, making them secure against cyberattacks. When performing cryptocurrency transactions from a cold wallet, the private key must be physically connected to the online device to confirm the transaction.

Types of cold wallets

Let's take a closer look at what types of cold wallets are there and how they differ from each other.

Hardware wallets

Cold hardware wallets are specialized devices for storing cryptocurrency. They provide a high level of security since the program and keys are installed directly on the device, which looks like a USB flash drive with a button or screen. Perhaps the best cold wallets for cryptocurrency are hardware ones, as they have additional security measures compared to the wallets we will discuss later in the article (desktop and paper).

Using a hardware wallet looks like this: the wallet is connected to a computer or phone, after which they log in using the keys for authorization. Then the wallet owner performs all the necessary operations with his assets and, after the session ends, disconnects the hardware wallet from the computer or phone. Even if such a wallet falls into the wrong hands, its security remains high since an additional password is required to start working with it.

Hardware cold wallets are the most secure way to store cryptocurrencies. They stand out from other types of wallets not only for their security but also for their price. Most devices cost around $100-$300, but such an investment is justified given the high level of protection they provide.

Desktop wallets

Desktop wallets are one of the categories of cold wallets that are installed on a PC. They allow you to interact with cryptocurrency even on a device not connected to the Internet. This category includes two main types of wallets: thick and thin.

• Thick wallets require prior downloading and copying of the entire blockchain of the cryptocurrency with which it is planned to work. It was such a wallet that the author downloaded back in 2015, plunging into how Bitcoin works. Leaving the computer for the night, it was possible to have time to download the entire blockchain. After the operations are completed, the data is again uploaded back to the network, which updates the system.

• Thin wallets, in turn, do not require downloading large amounts of data. The wallet exchanges information with the blockchain online. Thick cold wallets naturally have a higher level of security. However, thin wallets also provide vital protection and greater security than hot wallets, whose data is completely stored on the blockchain.

Paper wallets

The keys required to access the wallet are stored in printed form on paper. One of these keys is a public, in fact, wallet address, similar to a bank card number. This public key can be shared with third parties without risk, as they can only send you cryptocurrency, but do not have access to your assets.

The private key, like, for example, the pin code from your bank card, must be kept secret. This is an obvious thought - this private key is the key to your funds and provides access to your cryptocurrency assets. You shouldn't show it to everyone.

Keys can be presented as a combination of letters and numbers and in the form of a QR code. There are even special souvenir coins that display your keys.

The Best Cold Wallets for Cryptocurrency

In the author's opinion, hardware wallets are the best for security and convenience. They provide the maximum reliability of your crypto assets and are also quite convenient relative to others.

Hardware wallets are an established market where different companies compete for the title of the best, and as you know, to defeat competitors, you need to constantly develop and offer users advantages that others do not have. Let's look at the most popular models of hardware crypto wallets: SecuX, Ledger, Trezor, Safepal.

SecuX

SecuX is a blockchain security company that develops end-to-end solutions to secure valuable digital assets through blockchain technology. Founded in 2018, SecuX brings together experienced professionals from various fields, such as information security, blockchain technology, financial technology, electrical engineering and international business management.

SecuX hardware wallets allow you to securely store and manage digital assets, providing protection from cyber-attacks and keeping private keys offline.

From the article's author: I can recommend them as I heard good reviews about these wallets from several friends and colleagues.

SecuX V20 Hardware Wallet

Trezor

Trezor, a Czech company founded in 2014, is known for its high quality and reliability in cryptocurrency security. Thus, Trezor and SatoshiLabs received recognition for creating the world's first hardware wallet. There are currently two models under the Trezor brand: Trezor Model T and Trezor One.

Each Trezor wallet works on the principle of "zero trust" (zero-knowledge proof). In the context of asset security, Trezor operates on the assumption that even the most reliable cryptographic systems can be compromised.

Trezor Model One

Ledger

The French company Ledger has been manufacturing cryptocurrency storage gadgets since 2014.

Ledger cold wallets provide secure storage of your cryptocurrencies according to your needs. With Ledger Live, you can conveniently manage your assets using your computer or smartphone, minimizing complexity and increasing efficiency.

There are 4 versions in the Ledger assortment:

• Ledger Nano S is the simplest model
• Improved Ledger Nano S Plus supports more apps and has a bigger screen
• Ledger Nano X boasts integration with both iOS and Android smartphones and improved battery
• Ledger Stax is the latest model from Ledger; all the advantages of older models, plus a large screen and full NFT integration.

Ledger Nano X

SafePal

SafePal is an innovative cold wallet developed in 2018. It offers a complete set of solutions for the secure management of cryptocurrencies. It is designed for both experienced crypto enthusiasts and beginners, providing a high level of asset protection.

SafePal is used by millions of users around the world. The company has a whole ecosystem of different wallets connected and managed through a convenient application. It allows you to store, exchange and transfer your assets safely. SafePal is constantly expanding its functionality and supporting more languages and cryptocurrencies. Technically, SafePal can support an infinite number of different crypto assets.

SafePal Wallet

Pros and cons of cold wallets

Cold wallets for storing cryptocurrencies have advantages and disadvantages, and choosing the appropriate option depends on individual needs. We list the main pros and cons to help you make the right choice.

Pros of cold wallets:

1. Maximum security: Cold wallets provide the maximum security and protection for storing cryptocurrency assets. Their use on devices disconnected from the Internet guarantees almost absolute reliability.
2. Full control: The wallet owner has complete control over their assets. All operations, such as exchange, purchase and withdrawal of funds, are allowed only to the wallet's owner.
3. Multicurrency: Some cold wallets support multiple cryptocurrencies, making storing different assets convenient in one wallet.
4. Long-term storage: Cold wallets are great for storing cryptocurrencies safely for a long time, which is especially important for investors.

Cons of cold wallets:

1. Limited speed of transactions: Due to increased security measures, transactions on cold wallets may be lower than on crypto exchanges.
2. Difficulty of use: For beginners, it may take time and study of the program's functionality to use the cold wallet fully.
3. High cost: Some hardware cold wallets can be expensive, comparable to the price of a new smartphone.

When choosing a cold wallet, combining different types of wallets is recommended, ensuring that you change instruments regularly for more excellent protection. The best option for cryptocurrency holders may be a combination of cold and hot wallets. A cold wallet is suitable for storing large amounts without an internet connection, while a hot wallet is for quick transactions and withdrawals.

How to create a cold wallet: instructions

Creating a cold wallet for cryptocurrencies on a USB drive can be done in several ways, ensuring the safe storage of your assets. Here are some options:

1. Software or hardware cold wallet:

- Choose the right software or hardware cold wallet.

- Download and install applications and other required software on your device.

- Create a new wallet, carefully study all the instructions for generating a private key.

- Save the private key on a USB flash drive or any other safe place.

2. Creating a paper wallet:

- Use a paper wallet service or a secure generator to create your wallet.

- Save your private key as a QR code and keep it in a safe and secure place known only to you

- Keep the key in a safe place and do not share it with anyone.

Conclusion

Cold wallets are the safest way to store cryptocurrencies, providing maximum asset protection from cyber threats and hacker attacks. They work offline and do not connect to the Internet, which makes them very secure. The best cold wallets, like SecuX, Trezor, Ledger and SafePal, offer reliable solutions for storing and managing cryptocurrency.

When choosing a cold wallet, it is essential to consider various factors, including functionality, usability, support for multiple cryptocurrencies, and security measures. Different cold wallets, such as hardware and software, offer other features and characteristics, allowing you to choose the best solution depending on individual needs.

In addition, it is recommended to combine different types of wallets, cold and hot, for additional protection and ease of use. Cold wallets are suitable for storing large amounts of cryptocurrencies, while hot wallets provide fast transactions and access to funds for everyday needs.

The choice of a cold wallet depends on your needs, experience and preferences. Regardless of the option chosen, it is important to follow the manufacturer's recommendations and ensure that private keys are stored securely. This will help you ensure the safety and security of your crypto assets long-term.

This information does not constitute individual investment advice and may not reflect your investment objectives, expectations and acceptable risks. ATAIX Eurasia is not responsible for possible losses in case of making transactions or investing in the financial instruments mentioned in this information and does not recommend using it as the only source when making an investment decision