What is a Cold Wallet?

A Cold Wallet is a type of cryptocurrency wallet that is isolated from the internet, used to store private keys and assets. Compared to hot wallets (such as mobile apps or browser extension wallets), Cold Wallets are not always connected to the internet, making them nearly impossible to be hacked remotely. Common forms of Cold Wallets include:

• Hardware Wallet: such as Ledger, Trezor and other dedicated devices
• Paper Wallet: Write the private key or mnemonic on paper.
• Cold Storage USB: Store wallet information in a USB without a network.
• Isolated Computer: A machine specifically used for generating and signing transactions offline.

Why are cold wallets becoming increasingly important in the crypto world?

“Not your keys, not your crypto” is a motto for almost every veteran player. You may have experienced smooth trading on centralized exchanges, but when the market is volatile and platforms face issues, you realize that only the Wallet where you control the private keys truly holds your assets. The Cold Wallet thus becomes one of the safest choices.

Introduction to Common Types of Cold Wallets

1. Hardware Wallet

The most mainstream form of Cold Wallet currently, specifically designed as a cryptocurrency hardware device. Common brands:

• Ledger Nano X / S Plus: Supports over 5500 types of crypto assets, managed through Ledger Live.
• Trezor Model T: Open source, supports hardware PIN and anti-phishing protection
• Keystone, SafePal, Ellipal: Stronger isolation layer design, supports Air-Gap operation

Advantages: Extremely high security, suitable for storing large assets in the medium to long term; Disadvantages: Slightly high price, need to get used to the operating process.

2. Paper Wallet

Write down your private key or recovery phrase on paper, or use a tool to generate a paper wallet that contains the private key and QR code. It is completely offline and does not interact with any devices.

Advantages: Low cost, no electromagnetic interference; Disadvantages: Paper is easily damaged, and if lost, it cannot be recovered.

3. Cold Wallet computer / USB device

Some players use formatted USB drives or specific offline computers to generate and sign transactions, and then broadcast the transactions using other devices. This is common in the Bitcoin community.

Advantages: Completely customizable control, secure and controllable; Disadvantages: High operational threshold, must avoid human errors.

Cold Wallet vs Hot Wallet

A Cold Wallet is a completely offline wallet, and its greatest advantage lies in its extremely high security. Since a Cold Wallet is not directly connected to the internet, it can effectively prevent online risks such as hacking attacks, malicious links, and phishing websites. It is very suitable for storing large amounts of assets or for holding cryptocurrencies for the long term. Although using a Cold Wallet requires additional devices (such as hardware wallets) or operations (such as offline signing), this kind of “complexity” is a necessary cost to ensure asset security.

In contrast, a hot wallet is a wallet that is always connected to the internet, such as a mobile app or browser extension (like MetaMask, Trust Wallet). Its advantages include flexibility and fast operation, making it particularly suitable for participating in daily on-chain activities such as DeFi, airdrops, NFT minting, or GameFi. However, since hot wallets are continuously connected to the network, the security risks are relatively higher. If the device is attacked, assets may be stolen overnight.

For investors with a large asset position and long-term holdings, a Cold Wallet would be the best storage choice; whereas for players who need to trade frequently and participate in on-chain interactions, the convenience of a Hot Wallet will be more suitable. The ideal approach is to use both Hot and Cold Wallets together: the Hot Wallet handles operations and interactions, while the Cold Wallet is responsible for asset storage, achieving the best balance between efficiency and security.

Cold Wallet Usage Guidelines and Security Recommendations

1. Always back up your Seed Phrase
   Make sure to write down the 12 or 24 mnemonic phrases in two or more copies and store them in a fireproof, waterproof, and secure location.
2. Avoid taking photos and uploading to the cloud
   Taking photos = exposure, cloud = easy to leak, insist on offline backup
3. Do not buy second-hand Wallets.
   All hardware Wallets must be purchased brand new and initialized by the user.
4. Enable PIN or biometric protection
   Even if the device is stolen, it can provide a layer of protection.
5. Use official brands and official websites
   The first step to protect your assets: Don’t save a little money by buying counterfeit goods.

Summary

Cold Wallets provide a more secure way to store cryptocurrencies, suitable for users who prioritize asset security and do not trade frequently. Although they have poorer trading convenience, their outstanding security is their biggest advantage.