Cold wallets: The secure option for storing cryptocurrencies

Have you considered using a cold wallet to protect your digital assets? Do you really know what this device is and how it works? Let’s explore the world of cold wallets together and discover some prominent options available in the current market.

Understanding Cold Wallets

A cold wallet is a cryptocurrency storage device that operates offline. Its main function is to provide a high level of security for users’ digital assets, protecting them from potential cyber threats.

How It Works

It’s common to think that wallets store cryptocurrencies directly, but the reality is different:

• Digital assets are recorded on the blockchain.
• Wallets store a pair of keys: a public address on the blockchain and a private key.
• Access to funds is only possible through the private key associated with the public address.
• The private key allows authorization and signing of transactions from the address on the blockchain.

The primary task of a cold wallet is to manage and safeguard the user’s private key in an isolated environment. Therefore, it cannot interact directly with decentralized applications and is ideal for long-term storage. To perform transactions, users must transfer the necessary funds to a connected wallet, which then handles the transaction and interacts with various dApps over the internet.

Types of Cold Wallets

( Ledger Device

Ledger products are highly popular among users. These wallets are characterized by their sturdy metal construction and size similar to a standard USB flash drive. Some notable features include:

• Support for multiple cryptocurrencies such as Bitcoin, Litecoin, Ethereum, and other alternatives.
• Backup and recovery options in case of failure.
• An intuitive interface with a modern OLED screen.

Among the most recognized models are the Ledger Nano S and the Ledger Nano X.

) Trezor Device

Trezor, launched in August 2014 by Satoshi Labs, was one of the first devices designed for secure Bitcoin storage. Currently, it supports various cryptocurrencies such as Bitcoin, Litecoin, Ethereum, Dash, Bitcoin Cash, and Dogecoin, among others.

Key features of Trezor:

• Storage of multiple cryptoassets.
• Quick setup in approximately 15-20 minutes.
• Ease of use with basic computer knowledge.
• High security level, protecting access to servers and management pages.
• Backup function via specific recovery phrases.

SafePal Device

SafePal is the first cold wallet brand to receive investment from Gate. Its interface is intuitive and features multiple security layers that facilitate storage, transactions, and exchanges in a practical and secure manner. Its main features include:

• Ability to store various cryptocurrencies in a single device.
• High security with offline private key storage and self-destruct mechanism in case of tampering.
• Communication based on QR codes with the mobile app, without needing an internet connection.
• Ability to perform transfers and operations anytime and anywhere.

Why Choose a Cold Wallet?

Using a cold wallet is essential to protect your cryptoassets from security risks. Unlike online wallets, these physical devices are isolated from the network, preventing malicious software attacks or hacker intrusions. Cold wallets implement multi-layer security systems with PIN codes and automatic restart functions after repeated failed attempts, ensuring maximum protection of your assets.

While connected wallets are practical for daily operations, they do not offer sufficient security for large amounts of cryptocurrencies. Losing access to the account or a successful attack could result in the total loss of your funds. Therefore, using a cold wallet is the most recommended option to safeguard significant holdings of cryptocurrencies, ensuring complete privacy and protection for your digital assets.

Procedure to Transfer Funds to a Cold Wallet

Sending cryptocurrencies to a cold wallet is similar to using connected wallets, following these steps:

1. Obtain the destination address displayed on the cold wallet device, making sure to select the correct cryptocurrency and blockchain network.

2. Send the cryptocurrency from your current exchange, another wallet, etc., to the copied cold wallet address, carefully verifying the currency and network before confirming the transaction.

3. Check that the balance has been correctly updated in your cold wallet.

Advantages and Disadvantages of Cold Wallets

PROS

• Optimal security: manage private keys in an isolated environment, virtually eliminating all risks associated with online storage.
• Full control: users have complete ownership and control of their assets without relying on third parties.
• Portability: generally compact and easy to carry and store.

CONS

• Increased complexity: require connection to another device to perform transactions, which is more complicated than using online wallets.
• Higher cost: acquiring a cold wallet involves a larger investment than software wallets, justified by the security they provide.
• No direct interaction with dApps: need to connect them to an active wallet or transfer funds to interact with decentralized applications.
• Physical vulnerability: being a tangible device, it can suffer damage, wear, or loss, which could affect access to private keys.

Common Questions About Cold Wallets

( Can a cold wallet be hacked?

Although they are more secure than online wallets, cold wallets are not risk-free. Techniques such as phishing or social engineering can compromise their security. Some models include features to protect against these attacks, but private keys remain encrypted in the hardware, keeping the hacking threat latent.

) What is the cost of a cold wallet?

The price of cold wallets ranges approximately from $50 to $250, depending on the model, features, security level, supported cryptocurrencies, and compatibility with applications.

What is the best option among cold wallets?

Some of the most recognized and widely used cold wallets include Ledger Nano X, Trezor Model T, SafePal S1, ELLIPAL Titan Bundle, CoolWallet Pro, Keystone Pro, and Blockstream Jade.