Types of Crypto Cold Wallets
Cold wallets keep your digital assets offline. Discover the different types with their benefits and disadvantages to make an informed decision before investing.
Josiah Makorion August 22, 2022.
A cold wallet is a physical vault that keeps your digital assets offline, as opposed to a crypto hot wallet which is an online vault. While storing your assets offline minimizes online attacks significantly, most cold wallets lack backups—if you lose your private keys, you may lose access to your assets completely.
Also, ensure that you purchase this type of crypto wallet directly from the manufacturer instead of dealers since it might be compromised and vulnerable to attacks.
There are two types of cold wallets:
As the name implies, a paper wallet is a cold wallet that requires users to write down or print their private keys on a piece of paper, including QR codes for easier access. This makes it hard to hack a paper wallet as no third-party has access to your private keys.
However, you can easily lose or misplace the paper containing your private keys. Paper wallets also consume more time when making transactions and require more technical knowledge to operate.
A paper wallet is integrated into the software to facilitate crypto transfers from blockchain to the public key printed on the paper wallet. Therefore, you must have some assets in a software wallet before transferring them to the public address shown on the paper wallet.
Popular paper wallets include MyEtherWallet, Wallet Generator, and Bitcoin Paper Wallet.
If you prefer a modern solution, hardware wallets guarantee secure private key storage in multiple formats. These wallets often resemble USB devices and are always offline unless plugged into a gadget.
As such, hardware wallets are one of the most secure types of cold wallets. You approve transactions using private keys offline and only connect to the internet to upload transactions into a blockchain. The device requests transaction information and verifies it itself—no third party is involved. Therefore, hardware wallets are ideal for users with a good amount of crypto holdings and long-term holders.
Hardware wallets can just be expensive to acquire—prices range from $30 to $300.
Popular hardware wallets include Ledger Nano S, Ledger Nano X, and Trezor Model One.
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