red 
Are cold wallets as safe as they seem?
In this article, I’ll walk you through the basics of cold wallets, one of the most popular solutions if you want to keep your crypto safe from thieves and hackers. I’ll explain how they work, highlight the best cold wallets on the market today, and help you decide if they’re right for you.
Table of contents
So, what exactly is a cold wallet?
In short, a cold wallet is a cryptocurrency wallet that is not connected to the blockchain network or the internet. Its main advantage is that when you are not using it, these wallets remain completely offline. This makes them virtually unhackable to hackers, giving us peace of mind knowing that our cryptocurrencies are highly protected.
Are hot wallets better than cold wallets?
When it comes to security, there is absolutely nothing! Hot wallets, being online and less secure, cannot match the excellent protection that cold wallets offer. Imagine why. These cold wallets are considered the most secure because hackers need physical access to your device and know your PIN or password associated with it.
If you’re keen to delve deeper into the topic, check out my article on hardware vs software wallets for all the interesting details.
Is a cold wallet right for me?
The answer lies in your personal needs and preferences. If you prioritize the security and protection of your cryptocurrencies over convenience and online accessibility, a cold wallet may be the right choice for you.
But what do we traders do? Well, in my case, I have a hot wallet for trading and a cold wallet to safely store the majority of my assets for the long term.
Are there really that many risks?
I don’t mean to scare you, but if I were you, I’d be careful. In fact, here’s what I do to stay on the safe side:
- I use a cold wallet for most of my funds.
- When I connect it to my computer, I always create a safe environment.
- I never leave my assets on the stock exchange, only what I need for trading.
Just look at the news this year for “exchanges and hacks” or try searching for “cryptocurrency theft.” It’s amazing how many cases have happened. You never know when your exchange might be in trouble (hopefully not).
Well, that’s it! Cold wallets are a safe haven for your cryptocurrencies, providing you with the highest level of security in this wild crypto world. Be smart and safe, and keep those precious digital assets locked away!
Crypto Adviser is a recommended site to learn about these and other valuable cryptocurrency tips.
Types of cold wallets
There are two main categories of cold wallets that you should know about: physical cold wallets and paper cold wallets. Both types are physical devices, but there are some key features that you should be aware of:
Cold Storage Hardware Wallets
These are the physical devices on which you can store cryptocurrencies.
It consists of:
- General address: This is the address you will use to receive or send cryptocurrencies from an exchange, for example. You can share this address with others.
- Secret key: This is the key you will use to access and control your funds. Only you should know this private key, and you should not share it with anyone. It is private and sensitive.
Within cold hardware wallets, there are two types to distinguish between:
- Electronic wallets: These devices are usually USB-like. They offer advantages such as LED displays and easy connectivity when it comes to sending cryptocurrencies. However, they also require regular updates and are more susceptible to physical damage from shocks, water, or other hazards. Some of the most popular of these devices are Ledger, Trezor, or Keepkey.
- Non-electronic wallets: These wallets usually come in the form of cards or metal plates. Because they are analog, they are usually more secure because they do not include a software system. Additionally, depending on the choice you make, they can be more or less resistant. Examples of this include Material cold wallets, which are resistant to fire, shock, and hackers.
How to use a cold wallet
Using a cold wallet may seem complicated at first, but once you understand the basics, it becomes very simple. Let me explain how you can use your cold wallet’s private and public keys and how to send and receive bitcoins using your cold wallet in simple terms.
The private key is an essential part of your cold wallet because it allows you to access and control your cryptocurrencies. As I mentioned, you should keep this private key in a safe place and not share it with anyone.
On the other hand, the public key is used to receive bitcoins into your cold wallet. You can share it with others so they can send you bitcoins.
How to send cryptocurrencies from cold wallet?
To send Bitcoin from your cold wallet, simply enter the recipient’s address and the amount you want to send into the app or software associated with your cold wallet. Then, confirm the transaction and follow the on-screen instructions to complete the process.
How to receive cryptocurrencies in my cold wallet?
To receive bitcoins into your cold wallet, share your public address with the person who wants to send you bitcoins. Once the transaction is made, the bitcoins will be sent to your address and will be safe in your cold wallet.
Always remember that you should keep your private keys in a safe and secure place.
Best cold wallets
Now, let’s take a look at a list of the best cold wallets on the market. I’ve provided a brief summary of each one, highlighting their most important features. Additionally, I’ve included the most positive and negative user reviews.
1. Materials
Material has proven to be one of the most respected companies specializing in cold wallets, especially if your main concern is security. Their metal panels are not only resistant to theft and hackers, but also to floods, shocks, and even fires.
These products are designed for the non-tech savvy, making them easy to use and ideal for beginners. The company also offers free step-by-step personal assistance.
Material is a company registered and fully regulated by the Bank of Spain. It is known as the most secure cold wallet in the world.
From their website, you can:
You can buy the board and store Bitcoin directly on it.
Positive user comments:
“Finally, a 100% secure Bitcoin wallet.”
“Indestructible.”
“The easiest to use wallet with the highest level of security.”
Negative User Review:
“very expensive.”
(This is the only negative review on Amazon.)
You can find more reviews here.
2. Tresor
Trezor is a cold wallet that is very popular among users. It comes in a USB form factor and features an LED display, making it easy to use and intuitive. Additionally, it is compatible with many cryptocurrency apps and services.
Trezor is developed by Satoshi.labs, a secure company that is constantly audited.
Trezor supports a wide range of cryptocurrencies (1000+) across its different models.
Positive comments:
“Highly recommended.”
“Anonymous and safe.”
“easy to use.”
Negative comments:
“tampered with.”
“Don’t buy. I’ve been hacked at least twice.”
You can find more reviews about Trezor here.
3. Cape Key
Keepkey is an open-source e-wallet, making it more transparent and secure. It includes various security measures, such as PIN protection against unauthorized use.
It is compatible with nearly 40 cryptocurrencies and has a sleek design.
Remember that it is essential to keep this e-wallet updated.
Positive comments:
“So simple that even middle-aged people can handle it.”
“The real security of Bitcoin.”
Negative comments:
“Totally old.”
“The launch page does not support users from Spain.”
“It’s… okay, but it needs improvement.”
You can find more reviews of Keepkey here.
4. Ledger
Ledger is one of the most popular cold wallets on the market. Like Trezor, it comes in a USB design and supports over 1,000 cryptocurrencies and over 1,500 tokens.
Ledger uses various security measures, including a hardware-based random number generator, a code, and a password phrase. However, Ledger is not open source, so you cannot examine the code to ensure its security.
Although Ledger hardware is not immune to hacker attacks, it is much more secure than storing your private keys on a computer or mobile device.
It is worth noting that Ledger faced significant criticism from its users last year due to its new phrase retrieval service.
Positive comments:
“The best value for money option for a hardware wallet.”
“Security and multi-wallet functionality.”
Negative comments:
“It stopped working with minimal use.”
“Too complicated to use.”
You can find more reviews about Ledger here.
What happens if I lose my cold wallet?
It depends on the type of wallet.
Cold wallets are designed to transfer cryptocurrencies, and a thief can’t access your cryptocurrency unless they also have your recovery phrase. The recovery phrase is a 24-word word used to generate your private keys. If you lose your recovery phrase, you’ll lose access to your cryptocurrency as well.
However, if you keep your recovery phrase safe, you can still access your cryptocurrencies even if your wallet is stolen. In this case, you will need to purchase a new wallet and enter your recovery phrase. Once you do this, you can access your cryptocurrencies as usual.
In the case of a non-electronic wallet, it is supposed to be kept securely and not transferred. The idea is to keep your funds for the long term. If you lose it without taking any precautionary measures, you will lose access to your funds.
To wrap it up…
As you can see, there are many risks associated with cryptocurrencies. For this reason, I personally recommend choosing a cold wallet over a hot wallet, although the latter is convenient and necessary for trading purposes.
When choosing between different cold wallets, you should take your needs into consideration. Some wallets offer a higher level of security than others. In my opinion, if security is your primary concern, Material is the way to go. If you prefer a user-friendly and elegant design, Keepkey might be the right choice for you. And if you need support for a wide range of cryptocurrencies, Trezor and Ledger are reliable options.
Always remember to do your research and read user reviews before making a decision. Cryptocurrency security is of utmost importance, and your choice of wallet can make a huge difference in protecting your funds.
That’s it! I hope this information helps you navigate the world of cold wallets with confidence and style. Feel free to ask if you have any other questions!
