Cryptocurrency is a hot topic in the investment world. Due to its high risk and speculative nature, digital currency investors often need a lot of planning and knowledge (or serious luck) to be successful.
Cryptocurrency wallets can act as invaluable advantages for serious investors. Learning about crypto wallets and deciding which ones are best for your investment strategy can give you a head start on a secure financial future. Read on to learn about hot and cold wallets, how to evaluate a cryptocurrency wallet, where to find the best cold storage wallets, and much more.
Choosing a Cold Wallet
1. What types of crypto wallets are there?
Cryptocurrency wallets are not like wallets used to carry your identification cards and credit cards and paper currency. It’s a digital wallet in form, not a physical one you hold. In simple terms, cryptocurrency is a digital currency that includes private keys that give the owner of the crypto the authority to access, trade, and sell it as needed.
Crypto wallets are digital wallets and are divided into two categories: cold wallets and hot wallets. Each type of wallet is responsible for organizing and keeping your private keys for your cryptocurrency investments secure and out of the hands of hackers or other investment thieves.
- A hot wallet is included and utilized on legitimate crypto exchanges–i.e., where you purchased the cryptocurrency in the first place. It’s connected to your online account and can only be accessed through your specific exchange when you are connected to the Internet.
- The only time a cold wallet is connected to the Internet is when you make a crypto transfer. Otherwise, it is a hardware wallet used to store your private key.
2. What is a cold storage wallet?
While a hot wallet covers software storage that keeps and protects your private keys online, a cold wallet is a type of hardware storage or cold storage that keeps and secures your private keys offline.
Cryptocurrency itself is digital or virtual, so it’s never physical coins or bills you can hold in your hand.
With a cold wallet, you’ll collect and secure the private keys you’ll need to access the crypto online.
In addition, keeping the private keys offline and stored in a cold crypto wallet, also known as a hardware wallet, adds an extra layer of protection against potential hackers or other software or Internet-related security issues.
3. What is cold storage for Bitcoin?
Bitcoin was founded in 2009, and for most analysts and investors alike, it’s considered the premier cryptocurrency. Since Bitcoin’s release, thousands of original new cryptocurrencies and copycats have followed, hoping to ride the Bitcoin wave of success.
Nonetheless, crypto investors know all-too-well that investing in Bitcoin can be full of ups and downs. Sometimes there are unexpected crashes and hacking issues. But Bitcoin has so far prevailed in an increasingly competitive industry. Much of that is due to serious investors’ high demand for the popular cryptocurrency option.
Its security measures, including an emphasis on keeping private keys safe, have also given crypto customers confidence in Bitcoin. Keeping the private keys for cryptocurrency offline is often the best way to keep your digital currency safe and secure.
A Bitcoin wallet is cold storage for such purposes. A cold wallet is the same thing as a cold storage device. They’re both hardware storage options for storing bitcoin and cryptocurrency keys on a desktop computer, a USB stick, or other hardware devices.
4. Are cold wallets safe?
Cybersecurity is always an issue, and hacking or password acquisitions are constant Internet-related concerns.
Cold wallets are small physical devices that connect to a computer or other mobile device via a USB connection. Offline, the hardware storage devices can store the private keys used to secure the cryptocurrency. When connected to your online account, the cold wallet can be used to transfer, sell, or use your crypto as needed.
Hot wallets are the standard for online digital crypto transactions. But while they’re convenient, they’re not always secure.
Most trading and exchange websites are covered for their own losses due to hacking or other online theft issues. But if someone else accesses your account, the exchange site isn’t necessarily responsible for any personal losses on your end.
Using a cold wallet lets you ensure your private keys are offline and your cryptocurrency is only online or accessible when you need or want it to be. Using an offline computer or another hardware device for storing crypto and bitcoin cash is more secure compared to a hot wallet.
Best Cold Storage Devices
1. What is the best cold storage wallet?
Unlike hot wallets that are included as part of the exchange service, cold storage wallets are usually not free or part of a giveaway–although that does occasionally happen.
Many crypto cold wallets come with a hefty price tag for their size and purpose. But they are tech devices and meant to store keys to help with your financial planning and monetary goals.
In other words, if you want an excellent cold wallet that’s going to stand the test of time and truly keep your private keys offline until you’re ready to use them, you’ll need to be willing to shell out anywhere between $50 and $200–or even a little more. But you also definitely want your cold storage to be incorporated with your specific exchanges and support your chosen cryptocurrency.
But how do you know which are the best cold wallets for crypto storage? Some of the most trusted and popular hardware wallets are:
- KeepKey: KeepKey is a no bells/whistles block-style cold key perfect for beginners. At $50, this cold storage option can be an excellent solution for those getting their feet wet in cryptocurrency compared to other hardware wallets. KeepKey supports seven blockchains and holds up to 40 coins or tokens.
- SafePal: At the same price as KeepKey, SafePal offers a few more bells and works well for dabblers and intermediate investors. SafePal supports 21 blockchains and can hold over 10,000 tokens.
- CoolWallet Pro: CoolWallet Pro is the most advanced CoolWallet version, surpassing the S model in supported blockchains and coins. At $150, CoolWallet costs more, but it is battery-supported and works well for serious traders who need access to higher coin amounts per transaction.
- Keystone Pro: Keystone Pro takes security to the next level with 100% Air-gapped QR code communication and a self-destruct mechanism for those who are extremely serious about their cryptocurrency transactions. The Pro model costs around $170, supports over 1000 blockchains, and is one of the best crypto cold wallets on the market.
- Trezor T: Trezor T is the most expensive cold wallet on this list at around $200. Like other popular hardware wallets, it supports a larger number of coins and blockchains. The Trezor Model T stands out primarily due to its smaller size and touchscreen, which adds an extra level of security. Just connect it to your computer via a USB cable and the Trezor Model T cryptocurrency cold wallet will help keep your coins safe and secure.
- Ledger Nano: The Ledger Nano may be the top hardware wallet for any level of crypto investor. Ledger Nano comes in two styles–Ledger Nano S and Ledger Nano X. Ledger Nano S costs $59, installs up to three apps, supports up to 5,500 coins or assets, and connects via USB. The Ledger Nano X costs $159, can connect to 100 apps, holds the same amount of coins or assets, but connects via Bluetooth so that you can use it separately anywhere.
2. Is the Coinbase wallet cold storage?
No, the Coinbase wallet is not cold storage. Coinbase is one of the top cryptocurrency exchanges, and the site is always trying to stay on top by introducing and offering new ways to keep its customer base focused on the fun side of investing.
Coinbase offers hot wallets (online wallets) for keeping crypto investments organized and secure on the exchange.
Coinbase has also released the Coinbase Wallet app, which can be downloaded to any digital device. It’s free to register and use, and offers an added level of security that a regular online wallet may not have. However, it is still a digital or hot wallet since it’s hosted online, and you’ll need a constant connection to the Internet to use it.
Tip: Sign up for Coinbase through Swagbucks and get a $30 new user cash bonus.
3. Are cryptocurrency wallets essential for serious investors?
Investing in cryptocurrency may feel like you’re on a wild rollercoaster ride one day and watching paint dry the next. This volatile investment option is a long game for most serious investors, and some analysts strongly recommend having only 5% of your overall investments as crypto and never investing more than you can afford to lose. However, many people ignore these investment suggestions and wind up with a lot of cryptocurrencies, all of which need to be tracked regularly.
Hot wallets may be fine for the average crypto investors who just like to dabble and make a little extra money here and there or trade crypto on the same exchange. However, hot wallets are often not enough for serious investors who consistently focus on growing their cryptocurrency portfolios or making considerable gains in the crypto market.
If potentially losing your crypto investments or earnings can significantly damage your financial security or investment goals, then yes, you need to consider crypto wallets for offline storage.
Conclusion on Best Crypto Wallets and Cold Storage Wallets
Some of the best crypto wallets and cold storage wallets are listed above. If you’re interested in ramping up your cryptocurrency game, be sure to visit the company websites and explore their offerings. And remember, any crypto cold wallet you choose will provide much more security and protection for your public and private keys than a hot wallet.
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