Do you want to find secure storage for your digital assets?
This 2021 Cryptocurrency Cold Wallet Guide will explain the fundamentals behind cold wallets. It will also present different cold wallet storage devices, such as the Ledger Nano S vs. the Ledger Nano X.
After reading this guide, you will have a firm understanding of the digital wallet jargon, as well as the safest cold wallet option for you.
What is a Cold Wallet?
Hardware wallets are small devices that safeguard your private key from the internet. They are also known as “cold wallets” because they are not connected to the internet. Other types of wallets (e.g., Web and Mobile Wallets), also known as “hot wallets,” keep your private key exposed on the internet at all times.
Cold wallets decrease your exposure to the threat and malicious players that hot wallets are susceptible to.
There’s a saying in crypto markets, “not your keys, not your crypto.” Cold wallet’s primary advantage is private key maintenance and ownership. In other words, when you store cryptocurrency in a gold wallet, you have custodianship of your private key. With a cold wallet, you are the true owner of your private key, and as such, the true owner of your cryptocurrency.
Want to learn more about how to buy Bitcoin? Read Buy Bitcoin In a Couple of Minutes.
Other Types of Wallets
There are at least a half dozen other wallets. We do not recommend these wallet methods to store larger amounts of cryptocurrency.
Wallet types vary by several measures. One of the main factors that differentiate wallets is the degree of personal ownership to which users maintain over their private keys. Some wallets allow you to have complete control of your private key. Other types of wallets have key custody and take that control away from the user.
1. Paper Wallets
Paper wallets often come in the form of a QR code, usually printed on a piece of paper. Users can quickly scan the QR code and upload the instantly generated digital wallet’s alphanumeric key.
2. Mobile Wallets
Mobile wallets typically come in the form of apps on your smartphone. This wallet type is most often used by people that frequently use cryptocurrency for small purchases on everyday goods. The app owner can access the information contained within the application.
3. Web Wallets
With a web wallet, your private key is online by a third-party custodian. While this mode of storage offers mobile flexibility, it constantly leaves your private key in the control of someone else.
Are Hardware Wallets Necessary?
Yes, in most cases.
Hardware wallets are necessary if you plan on making a long-term investment. However, even if you plan to trade cryptocurrency on a short term basis, you may use other types of wallets.
The cold wallet serves like a highly secured door that hides an alphanumeric code, the private key. The only time that alphanumeric code appears is when the device is connected. The highly secure door can only be open during the time of connection.
One common misconception about cold wallets is that the device itself stores cryptocurrency. cold wallets only store a private key and they keep private keys on a separate device.
How to Buy a Hardware Wallet
Now that you understand the importance of a cold wallet, your next step is to purchase one at the best price. The most well-respected and popular cold wallet options include the Ledger Nano S and Ledger Nano X.
Both options are available in the Virtuse Shop and come highly recommended by our team.
The Ledger Nano S vs X
The difference comes down to battery, connectivity, screen size, and the device’s memory size. However, it really comes down to the amount of cryptocurrency you want to store.
For beginners, a Ledger Nano S is more than sufficient.
However, as you continue to accumulate, you may want to consider the Ledger Nano X, with the added convenience of mobile Bluetooth connectivity for signing transactions without the need for your laptop or computer.
Online storage options do not let you maintain full ownership of cryptocurrency. You do not possess your private key.
However, cold wallets are the top storage choice for cryptocurrency owners. They will allow you to maintain control over your cryptocurrency and sleep better at night.