There are many unique aspects that make blockchain technology and cryptocurrencies attractive, whether it’s the decentralization aspect, the ability to revolutionize payments, or the fact that data passed on the blockchain cannot be changed.
But that doesn’t mean that blockchain technology doesn’t regularly face cyber threats and attacks. Just like regular money, cryptocurrencies are vulnerable.
This is why safety is paramount. You can store your cryptocurrencies in an online digital wallet, but an even safer way is to use cold storage, which basically means taking your cryptographic key information that allows you to transact and access your cryptocurrencies offline. There are several types of cold rooms. Let’s take a look at the different options.
1. Hardware wallets
Hardware wallets are probably the most common type of cold storage. They basically look like an advanced flash drive that allows you to store your private keys offline and portable. You need to plug hardware wallets into devices to access your key.
But a hardware wallet is much more than just a storage device. In a hardware wallet, your private key is basically built into the device, so when you go to send or approve a crypto transaction, instead of copying the key or even having to display it on screen, both can expose yourself. to potential attacks, all you have to do is click a button in the wallet.
Hardware wallets can also store and work with many different types of blockchains and there are programs that allow you to trade directly from your wallet instead of first transferring assets to some sort of online digital wallet. .
Hardware wallets are definitely one of the safest ways to store your crypto assets, but there is some risk involved. For example, if you forget your PIN to log in to the wallet or lose the physical wallet altogether, you will usually have a recovery phrase that you can use to retrieve your private key to access your funds from another wallet. But if you forget or lose that phrase, then you’re in trouble. Many tokens have been lost due to lost recovery phrases. Hardware wallets aren’t always cheap either, but are overall one of the best options for cold storage.
2. USB key
If you can’t afford a hardware wallet, you can use a traditional USB drive to store your private cryptographic keys, but it won’t be as secure as a hardware wallet. USB sticks cannot enable one-click transactions. They are practically only useful for storing your private key offline. I would only suggest using a thumb drive as a temporary solution.
3. Paper wallets
Putting your private key or a QR code on paper and storing it somewhere is a very rudimentary form of cold storage – and not a good one at that. Think about how many papers you have misplaced, damaged or forgotten in your life. I would say a flash drive is a better option than a paper wallet.
4. Sound Wallets
If you like spy movies and have a little extra cash to spend, a solid wallet might be the cold storage option for you. A sound wallet allows a person to save their private key on a CD but in an encrypted way so that another listener only hears noise when they go to play the CD. Users can then decrypt the key using a spectroscope app. This is a cooler but more nuanced cold storage solution.
5. Deep cold storage
Deep cold storage continues the spy thriller theme. Basically, you’re taking your cold storage method and making it even harder to access, literally. An extreme example would be to dig a hole and bury your cold storage. It becomes much more difficult for an attacker to steal your cold storage device if they have to dig six feet into the ground. Another method may be to split your private key into several parts, put each part on a flash drive, and then put each flash drive in a different safe in a different bank branch, say in seven separate locations. One on each continent please. This seems to me a less practical approach, but to each his own.