Original English text: https://www.nervos.org/zh/knowledge-base/what_is_a_cold_wallet_(explainCKBot)
Cryptocurrency, as a digital currency or virtual currency, is independent of the central bank and relies on encryption technology to manage the minting of tokens and the verification of transactions. This revolutionary monetary concept debuted way back in 2009 with the creation of Bitcoin, marking the beginning of a new era in finance.
The concept of a “wallet” is an integral part of the cryptocurrency ecosystem. A cryptocurrency wallet is a digital tool that allows users to store, send and receive digital currencies securely. Similar to a traditional wallet, it stores your assets, except these assets are in the form of digital tokens, or “coins.” These wallets are protected by cryptographic security measures to ensure the safety of the digital assets held.
Get to know cold wallets
In the world of cryptocurrency wallets, you may often hear the term “cold wallet.” A cold wallet, also known as a hardware wallet, is a device that securely stores a user’s private keys, the encrypted data that allows users to access their cryptocurrency. A cold wallet is an offline device that is not connected to the Internet, which gives it significant advantages in terms of security.
There are two main types of cold wallets: hardware wallets and paper wallets. Hardware wallets are similar to USB devices that can store a user's private keys securely offline; paper wallets are physical printed versions of the user's public and private keys. Both types of cold wallets provide a high level of security by keeping users’ private keys offline and protected from potential online threats.
The importance of cold wallets in the cryptocurrency world cannot be overstated. They provide a secure way to store digital assets, effectively protecting them from potential threats associated with internet connectivity, such as hacking and malware.
Cold Wallets and Cryptocurrency Security
In the world of cryptocurrency, security issues are of paramount importance. Given the digital nature of these currencies, they are vulnerable to a variety of online threats, including hacking and theft. This is where cold wallets come into play, they provide a powerful solution to these security issues.
Cold wallets improve cryptocurrency security by storing users’ private keys offline, away from cyber threats. This is in stark contrast to “hot wallets”. "Hot wallets" are wallets that run on a computer or mobile phone and can communicate directly with the Internet, making them susceptible to many risks. While hot wallets offer convenience, especially for users who trade frequently, they cannot match the level of security provided by cold wallets.
From a security perspective, comparing cold wallets to hot wallets is like comparing a physical vault to a pocket wallet. Pocket wallets offer convenience, while vaults offer added security. Likewise, hot wallets are suitable for daily transactions, while cold wallets are a safer option for storing large amounts of cryptocurrencies.
Set up and use a cold wallet
Choosing the right cold wallet is the first step to safely storing your cryptocurrency. Factors to consider include the wallet’s security features, ease of use, price, and compatibility with different cryptocurrencies.
Setting up a cold wallet involves multiple steps, including device configuration, setting up a PIN, and recording a mnemonic phrase. The mnemonic phrase is an important part of a cold wallet and can be used to recover assets if the wallet is inaccessible.
Keeping your mnemonic phrase secure and stored offline, regularly updating your wallet software, and enabling your wallet's security features (such as two-factor authentication) are also very helpful in using cold wallets safely.
使用冷钱包的潜在风险和缺点
While cold wallets are a big step forward in cryptocurrency security, they are not without potential risks and drawbacks. One of the main risks associated with cold wallets is losing the wallet or forgetting the mnemonic phrase. Since cold wallets are offline and have no connection to a centralized network, losing the wallet may result in the permanent loss of stored cryptocurrency. Cold wallets do not have a “forgot password” option, and there is no customer service phone number for help. Therefore, the responsibility for protecting the wallet and mnemonic phrase lies entirely with the user.
Another risk is physical damage or theft. Cold wallets are physical devices and as such can be stolen, damaged, or lost, resulting in the possible loss of stored cryptocurrency. This risk is particularly relevant to paper wallets, which can be easily damaged by water or fire.
Additionally, while cold wallets can protect against cyber threats, they are not completely foolproof. There are reports that sophisticated cybercriminals may exploit vulnerabilities in wallet software or hardware, although this is relatively rare.
To reduce these risks, users should store cold wallets and mnemonic phrases in a safe place, preferably multiple locations. Regularly backing up your wallet will also help prevent the loss of your cryptocurrency. Users can also consider tamper-proof and waterproof hardware wallets, which provide an extra layer of security.
Summarize
In summary, cold wallets play a vital role in keeping cryptocurrencies safe. They provide a safe and reliable method of storing digital assets, protecting them from various threats that exist in the online world. While cold wallets come with their own risks, these risks can be reduced as long as users use them carefully and take appropriate precautions.
As the cryptocurrency world continues to evolve, secure storage methods such as cold wallets will grow in importance. Therefore, understanding what a cold wallet is and how it contributes to cryptocurrency security is crucial for anyone involved in the digital world.
【注】目前已经支持 Nervos CKB 的硬件钱包有：
1. Ledger
2. SafePal
3. imKey
