The safest way to store your cryptocurrency is in a cold storage wallet. Cold storage wallets come by many names and have been around since crypto began. They are a secure type of storage for your cryptocurrency private keys that is not connected to the internet. You can either create a cold storage wallet on your own or buy a device that will store your private keys for you. In this blog post, we discuss different cold storage wallets, why you need them, and the three leading choices on the market today!
What are cold storage wallets?
Cold storage wallets are just a secure place to store the private keys to your cryptocurrency offline – not connected to the internet.
Your private keys give you access to your cryptocurrency on the blockchain. You need your private key any time you want to complete a crypto transaction (sell, send, stake it etc). Your private key is used to digitally sign your transaction. This means that if someone else has access to your private keys, then they can easily steal your cryptocurrency. They would do this by using your private keys to approve a transaction that sends your cryptocurrency to a different public address.
Cold wallets keep your private keys in an offline environment. They also let you sign any transactions in that same offline environment so that your private keys are never exposed to the internet.
Keeping your cryptocurrency in cold storage – not connected to the internet – is the best way to keep it safe from being hacked and stolen. Hacking and theft of cryptocurrency is one of the biggest risks to the security of your crypto today.
Different types of cold storage wallets
You can store your crypto in cold storage via a few different means:
- Paper wallets
- Crypto software wallets (in offline mode)
- Hardware wallets
Let’s take a look at each…
Paper wallets
This is where you print out your public address for a particular cryptocurrency (for example Bitcoin) as well as the private keys for it. You then store the print out in a safe place offline – like in a safety deposit box or other secure location.
if you want to go down this route, you can use this site – bitaddress.org – to generate your paper wallet.
Before you use this private key generator tool, make sure you are in a secure operating environment (someone could be looking at your screen). Using something like Unbuntu might be the way to go. You should also make sure that your printer is offline. It’s a good idea to test everything before you go ahead and generate your private key.
Because it’s tricky to get right, this method of cold storage is not popular. We don’t recommend paper wallets as you need to be somewhat tech savvy to generate them securely. If anything happens to the paper your private keys are printed on, it would be hard for you to recover the crypto stored on it. It’s also not user friendly and not very accessible.
Crypto software wallet (offline)
You can also store cryptocurrency in cold storage using an offline version of the crypto software wallet. A software wallet is also called a desktop wallet. You can download these wallets offline and store them securely on your computer until you need to access them again. They are user friendly but not as convenient as hardware wallets. This is because many can’t to connect with other devices like smartphones, tablets etc.
Armory is a popular desktop wallet. It’s regarded as the most stable and secure because private keys are kept in an offline computer and only the person with access to the physical location of your machine can steal your crypto. Users have total control over their secret key.
Another popular desktop wallet is Exodus. These software wallets allow you to store your crypto in ‘offline mode’ but you can’t transact with them when offline.
Crypto hardware wallet
You can also store your cryptocurrency in cold storage using a crypto hardware wallet. A hardware wallet is a small USB sized device that stores your private keys and lets you send and receive crypto. The main benefit of a hardware wallet is that it’s much easier to use than paper wallets – all you do is plug in the hardware, create a pin number, make sure you have your recovery phrase stored somewhere and go!
A crypto hardware wallet is definitely the best way to go if you are looking for cold storage. This is because hardware wallets offer the best offline security. They also offer increasing convenience to transact your crypto and interact with third parties like DeFi protocols in a secure way.
If you’re looking for a hardware wallet it can be difficult to tell the difference between top brands on the market. You’re going to need to know which has the best security features, which to use with your mobile phone or desktop computer, and which coins each device supports. That’s why we’ve done the research and ratings for you, right here!
In the meantime, let’s look at the top three cold storage wallets on the market.
Top three cold storage wallets
Ledger Nano X
Ledger Nano X is one of the most popular hardware wallet on the market and our pick for top cold storage wallet.
The Nano X is super easy to use and has many customizable features that make it user friendly for anyone. This device can store 100 different cryptocurrencies at once and supports a list of up to 1800 coins and tokens.
You also have peace of mind when you buy the device that you are receiving the real deal in the mail because Ledger offers a software device validation check when you’re setting it up. No other hardware wallet that we know offers this. Ledger also has a great native app – Ledger Live that allows you to monitor, manage and transact your crypto in tonnes of different ways. You can also connect to third party providers for more options.
Trezor Model T
Trezor Model T is the gold standard cold storage device from Trezor and another popular hardware wallet. It offers two factor authentication features that are not available with the Ledger hardware wallets. It’s also one of the best cold storage wallets for security and has a user friendly interface that makes it easy to use for anyone looking for an offline crypto solution.
Trezor doesn’t have the full featured app that Ledger Nano X has. To try to overcome this, Trezor has teamed up with software wallet provider Exodus. If you use both together you can get the security of a hardware wallet with the simplicity and user-friendly design of a software wallet (Exodus). You can use a Trezor to overcome all software wallets’ security problems while Exodus gives you the nice user experience while managing your crypto assets.
Ledger Nano S
Ledger Nano S our third ranked hardware wallet, and best budget option. Ledger, the makers of the Nano S claim it is the most sold hardware wallet in the world! This cold storage device has a sleek user interface and is one of the best ways to keep your cryptocurrency safe from being hacked for around half the price of the Nano X.
So how does the Nano S compare to the Nano X from Ledger? For one, it’s cheaper. This is because there are some trade-offs compared to the premium Nano X wallet. Firstly, the Ledger Nano S only connects to your phone via cable. The Nano X on the other hand has both Bluetooth and cable connectivity. Secondly, Ledger Nano S supports the same diversity of coins as the Nano X, but you can only store up to 6 at once. This is why it’s the budget option. Lastly, the Nano S doesn’t have Bluetooth connectivity like the Nano X.
If you just have some Bitcoin and want somewhere safe to hold it, the Nano S is a top choice cold storage wallet. Check out our choice for best ‘Bitcoin only’ wallet here.
It’s important to find the best hardware wallet for the way you use cryptocurrency. You don’t want to pay for bells and whistles you don’t use! To find the best wallet for you, check out our full review of each of these wallets here. We review the pros, cons, pricing and features that differentiate each wallet.
The importance of diversifying your crypto storage
The thing about cryptocurrency is that you are your own bank. You need to make sure you have the best security in place for your investments. If anything does happen, such as hack or theft of your hardware wallet, it’s best to make sure you don’t lose everything. The solution is to diversify your asset storage across different cold storage wallets. Use multiple hardware wallets and store them in different locations.
Why cold storage wallets are not the only security you need
Cold storage wallets are not the only security you need for your crypto assets. You should also make sure you have a metal storage wallet for each hardware device you own. A metal storage wallet is where you store your 12 word recovery phrase for your Bitcoin or Ethereum.
We recommend the Billfodl metal storage wallet to securely store you recovery phrase. If you want to see our complete Billfodl review, check it out here. Once you have your metal storage wallet set up, make sure you keep it in a separate location to your hardware wallet.
Your metal storage wallet is your last line of defence. With a metal storage wallet, you can always recover your crypto should anything go wrong with your cold storage wallets.
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