To store money and spend it, you need a wallet. Strictly speaking, bitcoins themselves are not stored anywhere, but the purpose of a wallet is to store digital keys that provide access to a Bitcoin address and the ability to sign transactions.
Remember that cryptocurrency transactions cannot be undone, so if you plan to deal with electronic coins, you need to have a secure Bitcoin wallet.
Crypto wallets store users’ public and private keys (conditional user ID) while providing an easy-to-use interface for managing crypto balances. The public key is available to all users. It is an address in the blockchain that allows you to receive transactions. A private key is a kind of digital signature of the wallet owner, confirming the ownership of your public key.
Digital currency wallets can be divided into two main groups, depending on how the assets are stored:
- Hot (online) wallets;
- Cold (offline) wallets.
Secure storage of crypto is the first thing every user who comes to this market should take care of. And is cold crypto wallets that are considered the safest option for storing digital currency. But it is also important to understand how they work and how to use them properly.
Let’s take a closer look at the best crypto cold wallets and learn about them below.
What is a Cold Wallet?
A cold crypto wallet is a wallet that stores private keys offline, off the Internet. This type of wallet is considered more secure than online wallets, as they are less vulnerable to cyberattacks and hacker attacks.
As you know, everything that has access to the Internet sooner or later can be hacked. Therefore, the best way to protect your assets is to use cold cryptocurrencies without access to the network. In most cases, this refers to hardware cryptocurrencies, usually in the form of a flash drive. They generate public and private keys and then store them on the device itself. Well, operations with currency become possible only when such a “flash drive” is connected to a computer.
How a Cold Wallet Works
By keeping crypto in your wallet, you have full control over your funds. You can send and receive currency without relying on third parties. In addition, you can choose a wallet that fits your needs and preferences, such as a hot wallet for frequent transactions or a cold wallet for long-term storage.
Cold cryptocurrencies are usually presented in the form of a miniature device resembling a flash drive. The physical format of the vault increases security. Such a wallet can be placed in a safe deposit box or bank vault.
Here’s how it works:
- The user transfers coins to the crypto wallet.
- Afterward, the device is disconnected from the network. The wallet stores the coins offline. This approach ensures that no one can access remotely.
Such cold storage wallets use a multi-stage security system. For example, a PIN code will be required to log into the device. In case the user forgets the password, or if the crypto-wallet is stolen and needs to restore access to the assets, a special key (seed phrase) will be required.
Typically, it consists of a set of words that the system asks you to write down when activating your device. Seed phrases should also be kept in a secure place because access to it will allow another person to take possession.
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Cold Wallet and Security Issues
However, any type of wallet or storage method has its vulnerabilities. There is a specific set of guidelines to follow in order not to lose your money. These can range from general rules for storing cryptocurrencies to specific examples of additional protection for your hot or cold wallet.
Actually, security is the first thing you should pay attention to when choosing a local cryptocurrency wallet. The chip is responsible for the safety of the device and data. The newer its generation, the higher degree of protection it offers. In addition, the latest versions of gadgets have additional security mechanisms. For example, in Trezor T there is a security standard Shamir Backup, which is responsible for the encryption of data.
And here SafePal S1 offers a mechanism of signing with an air gap: the management of the wallet is carried out by scanning QR codes, which can be seen on the smartphone screen. At the same time, the gadget is not connected in any way to the mobile device, because the device can be compromised. Finally, SafePal S1 has built-in sensors, which launch a self-destruction mechanism, if someone opens the device.
Another essential detail is the ruggedness of the case. The best cold cryptocurrency wallet is one that is difficult to damage, including physically. Preferably, it should be made of strong plastic or metal. Some Ledger models have metal parts, and Trezor T is made of reinforced plastic. But the Trezor One and SafePal S1 are considered less reliable in terms of durability.
Best Crypto Cold Wallets
Each year there is an extensive review of the best hardware wallets available on the market. To make a choice, we review the best hardware wallets on the market in terms of overall security, functionality, cost, and supported digital assets – including coins, tokens, and NFTs.
Ledger Nano X
Ledger’s second-generation cold crypto wallet supports over 1,800 coins and tokens. This brushed plastic and stainless steel device is slightly larger than an ordinary flash drive (72 x 18.6 x 11.75 mm) and weighs about 34 grams. It has a battery capacity of 100 mAh and supports multiple interfaces. The wallet can be connected to your computer with a standard USB cable or to Android- and iOS smartphones via Bluetooth.
To start using Ledger Nano X, you need to specify a PIN code and a 24-word Syd phrase, which will become the private key of your wallet. As with other cold wallets, as long as you keep the private key safe, you won’t lose your crypto assets even if you lose your wallet.
Such wallets allow you to sign transactions when they are connected to your computer or mobile device. The rest of the time, however, they remain physically inaccessible to attackers. Up to 100 different applications can be installed on Ledger Nano X, including Bitcoin, Ethereum, XRP, and over 5,500 tokens. It will cost you $149 to purchase.
Trezor Model T
The Trezor Model T supports more than 1,800 coins and tokens, allowing you to make transactions through the Trezor Suite. This can be done either through a web application or locally, using your computer. For obvious reasons, the latter method is much safer.
The Trezor Model T reminds almost all of an ordinary old-school stopwatch with dimensions of 64 x 39 x 10 mm. It has its screen and can connect to your computer with a USB cable, and offers a microSD card slot if you want to add encrypted storage directly to your hardware wallet.
The main drawback of the model, however, was the lack of Bluetooth support. Although the issue is quite debatable. Yes, Bluetooth would have greatly expanded the possibilities of crypto-wallet applications, but at the same time, it would have become another loophole for intruders.
CoolWallet Pro
The cool wallet works following the configuration of a hardware wallet for cold storage. Thus, Coolwallet uses private keys to store and protect cryptocurrencies. The public key is also used in the Coolwallet wallet blockchain.
Coolwallet works on mobile devices, including smartphones and tablets. It is compatible with iOS and Android apps for its management. It is also possible to manage wallets from a mobile device with a Bluetooth connection.
The cool wallet can be taken anywhere and stored in your wallet along with your credit card. The cool wallet allows users to transfer crypto assets from one wallet to another. Users can also manage and track their funds at any time.
Generally, Coolwallet operates globally and provides the ability to invest in the market at any time. However, wallet card delivery is not available in all countries.
To confirm transactions, the user must press a metal dome button on the wallet. Without it, no transaction is valid, and this action also helps prevent illegal transaction attempts.
KeepKey
As an alternative to the previous cold wallets, I can also recommend KeepKey. This device allows you to store more than forty of the most popular tokens. It has a pretty nice design and small size, which will allow you to always take the wallet with you. The only thing is that you will have to carry a USB wire as well at all times.
Using KeepKey, as usual, starts with setting the initial phrase, consisting of 12 words. It will also be used to restore your wallet if the device is lost. Additional protection is provided through a PIN code, and all transactions will need to be confirmed separately on the wallet itself.
The appearance of the cold wallet KeerKeuWallet is owned by ShapeShift, which is a DeFi cryptocurrency exchange. This will allow you to integrate the device without problems and quickly make transactions, if, of course, you are a user of this very exchange. Of the disadvantages of KeepKey is the limited number of supported tokens, so make sure that all the ones you need are present before buying.
Ellipal Titan
Ellipal Titan is a hardware wallet that uses offline QR codes to sign transactions from Bitcoin, Ethereum, and many other cryptocurrencies. Unlike most hardware wallets, the device cannot be connected to external devices via USB, Wi-Fi, or Bluetooth. This ensures maximum protection of the user’s private keys. Another feature of the device is a large touch and color display, which displays all important information.
Ellipal is equipped with a secure Allwinner A64 chip and a 1400 mAh battery that can power the device for up to 259 hours! The sealed housing of the device is made of solid metal, which protects against unauthorized access. All you need to use – is generate or restore an existing wallet with a mnemonic phrase (BIP39), download the official Ellipal app for iOS or Android, and mark the desired portfolio currencies. Exporting public addresses to the app is done with a single tap through your device.
Conclusion
A cold wallet is the safest way to keep your cryptocurrency. But for all its safety, it is not a convenient way to store cryptocurrencies. Therefore, many advanced users prefer, so to speak, a hybrid way to store coins, using a hardware wallet for main savings and a hot one – for momentary expenses. And, in our opinion, this is the surest way to secure your savings.
The best cold wallets for cryptocurrency can be found just above. For those who do not want to spend money to buy a full-fledged hardware wallet, we advise you to remember the “grandfather” methods of storing important information (in our case – private keys) on paper. Well, a more modern way to store them can be a computer or smartphone without Internet access.