What Are Cold Wallets and Why Are They Crucial for Crypto Safety?
Crypto is growing and evolving, and we all know that. That's why the safety of digital assets should be higher. We all know security is the main concern while billions and millions of dollars flow daily through the blockchain network. There is one name that pops up which is "cold wallet," but it is important to understand what cold wallet is and why it is important.
Understanding cold wallets
Another name for a cold wallet is a cold storage wallet. This is a crypto wallet in which you can hold cryptocurrency, and it is completely offline. When I talk about hot wallets, they are directly connected to the internet, and cold wallets are specially made for privacy. You can keep your keys private, and that's the reason it is safe from online threats. There are hardware wallets, paper wallets, USB drives, and air-gapped computers to store crypto keys.
A simple thing that works here is not connected to the internet. That's the reason hackers can't even touch it.
Why Are Cold Wallets Crucial?
1. Immune to Online Hacks
A big reason to use this wallet is that they are offline and are not exposed to the internet, and you can save your crypto without using the internet, but when you need to transfer, you have to use the internet. so these wallets are offline and immunte from multiple hacks such as remote access breaches, phishing, keyloggers, malware and physing attacks.
2. Self-Custody and Control
Trust can be broken on decentralized exchanges because you are trusting a third party when you are storing your crypto there, but cold wallets give you full control. However, remember "not your keys, not your crypto."
3. Useful for Long-Term Storage
Wanna store crypto for the long term? If yes, then your decision is perfect because crypto will give you a win-win situation if you are planning to hold coins like Bitcoin for the long term. For that, using centralized exchanges is an idiotic thing. Cold storage means set and forget for years.
4. Less Human Error in Daily Use
With hot wallets, there are several risks such as phishing, slip ups, insecure key storage, ETC. Cold storage reduces this risk completely.
But They're Not Perfect...
Cold wallets are perfect to save yourself from hacking, but as I said, you are responsible for everything. What if you forget the recovery phrase or lose the hardware wallet? It is true that if you have a recovery phrase, then you can recover your account without that offline wallet, but what if you forget it? Also, someone can steal your wallet physically.
Conclusion
If you really care about your digital assets, then you must have a cold wallet because this is the smart choice, and the only thing you have to care about is the backup of your keys and storing your physical wallet in a secure place so that it can't be stolen or lost. So yes, these are the reasons that prove a cold wallet is a perfect and smart choice to hold your crypto, and you can hold your crypto for years without being too worried because it's the safest method.
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