Cold wallets are one of the useful tools for storing cryptocurrency. So what is a cold wallet? How to use cold wallet effectively? Let's find out more details with Phuc in this article.
What is a cold wallet?
A cold wallet or hardware wallet is an electronic device used to store private keys to open the storage of your virtual currency assets data in cyberspace.
It can be imagined as follows: All your virtual currency assets are stored in a safe (here, a Blockchain). To open this safe, you will need a key called a private key. The cold wallet is where that private key is stored. To increase the absolute safety of the private key, inside the cold wallet there will be a security chip called Secure Element. This helps protect your private key data from attacks by hackers or viruses.
Cold wallets are considered an extremely secure place to store private keys. Because it is separate from the internet and absolutely secure. Using a cold wallet, you always own your assets and no one can violate them without your consent.
Analyze the advantages and disadvantages of cold wallets
To use cold wallets effectively, you need to understand the pros and cons below:
Advantage:
Extremely high security and almost absolute safety.
The storage place is separate from cyberspace in offline form.
High convenience, because there is no need to verify your account like other online wallets.
Defect:
Not convenient for buying and selling transactions
High price: 1 cold wallet costs between 2 - 3 million VND or more.
Easily lost (dropped, stolen) when carrying it with you.
Types of cold wallets
Currently on the market there are many different types of cold wallets. Below are the 3 most popular and most used types of cold wallets.
Ledger Cold Wallet
Ledger cold wallet is the best cryptocurrency storage product at the moment, highly rated by user satisfaction. The wallet is firmly protected by the outer metal layer. The size is the same as a normal USB.
Some outstanding features of Ledger wallet:
Ability to store multiple coins such as: Bitcoin, Litecoin, Ethereum, Altcoins and other assets.
Ability to backup and restore data: asset data on the wallet will be backed up and restored when an incident occurs.
Intuitive display with modern Oled screen: Test and confirmation operations are clearly displayed on the screen.
The most used versions of Ledger cold wallets include: Ledger Nano S, Ledger Nano X.
trezor cold wallet
The Trezor cold wallet was launched in August 2014 by Satoshi Labs, as one of the world's first bitcoin cold wallets. Types of Coins that Trezor can store: Bitcoin, Litecoin, Ethereum, Dash Coin, Bitcoin Cash, Dogecoin,...
Outstanding features of Trezor:
Supports storing many different coins as mentioned
Ability to quickly set up in just 15 - 20 minutes.
Easy to use with simple operations like on a basic computer.
High security: Protect access to servers and administration pages. Passwords are encrypted, synchronized with private cloud.
Backup ability: Allows creating special character strings to restore data in case the wallet is lost.
Safepal cold wallet
Cold wallet Safepal is the first cold wallet brand invested by the world's largest exchange Binance. Safepal's interface is considered intuitive with many layers of security to help users store, transact, and exchange conveniently and safely.
Outstanding features of the wallet:
A variety of different coins on a single wallet.
High security: Store private keys externally and separately. If compromised or physically impacted, the wallet will initiate a self-destruct mechanism, erasing the keys to ensure your data and assets are not stolen.
Use entirely offline, without internet connection. The device communicates with the application via QR code.
Ability to transfer money and make transactions anytime and anywhere
Should I use a cold wallet?
Should you use a cold wallet or not is a question asked by many new virtual currency investors. Using a cold wallet is absolutely necessary when investing in virtual currency. Why is that?
Normally, storing virtual money on the trading system will be extremely convenient for buying and selling between parties in the fastest way. However, this is a potentially risky place because it is unsafe and has very poor security. If unfortunately, you lose your account or the system is hacked, you will lose everything and cannot get your money back.
Meanwhile, cold wallets are completely isolated from cyberspace. This helps greatly limit the risk of attacks caused by malware and hackers. Besides, cold wallets use an extremely high security lock system to help keep assets absolutely secure.
If the wallet is lost or someone picks it up, the data in the wallet cannot be stolen. Because if you want to log in, you will need a PIN code. Automatic reset mode after several incorrect PIN entries helps protect your virtual assets absolutely.
Thus, using a cold wallet is a good thing to do to ensure your cryptocurrency assets are absolutely safe.
Where to buy genuine cold wallet?
Currently, cold wallets are sold in many places on internet platforms or e-commerce sites. However, to buy the best quality wallet, you should choose reputable suppliers.
Buy genuine cold wallets from genuine suppliers: Usually each cold wallet brand has a genuine supplier website. For example, Ledger cold wallet will be available to you at the genuine website Ledger.com, etc. Be sure to choose the correct genuine website address to buy.
Buy on reputable e-commerce platforms such as Shopee Mall, Lazada Mall
Buy at genuine authorized dealers of the brand.
How to use cold wallet
Each type of cold wallet will have different installation and usage methods. Therefore, to know the most detailed and accurate way to use cold wallets, you should follow the instructions included when purchasing the device or information on the official website of each brand.
Below, Phuc will introduce how to use the most commonly used cold wallet today, the Ledger Wallet, so you can more easily visualize:
Start the wallet: Press and hold the button next to the usb port until the Ledger logo lights up. Then press the right and left buttons continuously so that the words "set up as new device" appear.
Enter PIN: Use the up and down buttons to select the PIN. Press 2 buttons simultaneously to confirm the PIN code
Store the recovery phrase: Press both up and down buttons to display the words “White down your recovery phrase” and press the right button. Save the recovery character sequence. Then enter the recovery character sequence to verify. When the screen displays “your device ready” it means the recovery setup was successful.
Press the right button, then press both buttons to start using the wallet.
Phuc has introduced to you the most complete and necessary information about cold wallets, advantages and disadvantages, as well as how to install and use them. Hopefully this article helps you gain more useful knowledge about cryptocurrencies to invest more effectively. Good luck!
