Cryptocurrency Wallets: Cold Storage

There is this option of storing your cryptocurrencies in another type of wallet called offline wallet, or more often called cold storage, which can keep your funds offline and secure all the time. Well, being offline really helps in keeping a wallet safe from hackers because it stores your private key offline, and thus inaccessible to them. Accordingly, using a hardware wallet is what I do to store my cryptocurrencies safely and I would recommend anyone to do the same thing if you value your hard-earned coins. Now, I want to tell you about the two great and useful sub-categories of cold storage called hardware wallets and paper wallets.

First of all, as it can be understood from the name, a hardware wallet is a hardware device which store users’ private keys on the device instead of the internet. These wallets normally remain offline but as they are plugged into a computer via a USB cable, they connect to the internet and then they can be used to make transactions. Most importantly, these devices are deemed extremely secure because of the following advantages:

  • Firstly, your transactions are signed offline and your keys are stored offline, so you don’t have to share your private key with a third party.
  • Secondly, the device asks you for your pin code every time you plug it into a computer, so no one else can access your device unless you share the pin code.
  • Thirdly, in order to approve a transaction, the device requires you to click on a hardware button, so a hacker would never be able to get hold of your funds without having physical access to your device first.

On the other hand, there is also another type of wallet available as a cold storage option: paper wallet. As it can be understood from the name, a paper wallet is simply a piece of paper that has a copy of your private and public keys printed or written on it. However, sometimes the term also refers to software programs that generate printable private and public keys. To prevent any misunderstanding, throughout the course I will be referring to a paper wallet in its first meaning, as a piece of paper with keys on it.

To learn more about cold storage, hardware wallets, and paper wallets => Watch the video above or Get the best blockchain course now to learn everything and become a blockchain expert!

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