Cold Wallet

A Cold wallet refers to a cryptocurrency wallet that does not have an internet connection. When not in use, cold wallets are not connected to any unsecured network or internet connection. This is the reason why they are generally considered safer and more secure.

Mostly, it is seen that investors keep their cryptocurrencies on the exchange as it is the easiest way to hold your coins. However, some prefer a more secure option. These wallets find their usage in such cases, as they provide greater safety to your coins.

Cold wallets are affordable and they keep your crypto funds safe and secure from various threats including hacks, phishing, and other attack vectors that can result in permanent loss of your tokens.

The demand for cold wallets is even greater in businesses like cryptocurrency exchanges that have custody of their customers’ funds. Since these businesses store the coins of hundreds of thousands of users in a centralized way, they are more likely to be targeted by hackers. Thus, separating most of the stored reserves from the Internet or any other unsecured network is the best way to protect them from such attacks.

Cold wallets are available in different forms. The two most popular forms are paper and hardware wallets.

Paper and Hardware wallets:

A paper wallet is a piece of paper having the private key of the wallet and the public address printed on it. The private key is used to access and send the funds stored while the public address is used to receive cryptocurrency. Paper wallets usually include QR codes that can be scanned with the help of a smartphone. A hardware wallet is a physical electronic device that can be accessed when plugged into a computer.

Cold wallets and Hot wallets:

An alternative to a cold wallet is a hot wallet. Hot wallets are those cryptocurrency wallets that are connected to the internet. These include wallet apps and wallets provided by top crypto exchanges. Cold wallets are generally considered more secure than hot wallets.

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About author
Disclaimer

Ashish believes in Decentralisation and has a keen interest in evolving Blockchain technology, Cryptocurrency ecosystem, and NFTs. He aims to create awareness around the growing Crypto industry through his writings and analysis. When he is not writing, he is playing video games, watching some thriller movie, or is out for some outdoor sports. Reach me at [email protected]

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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