Why use a cold wallet (What is a cold wallet)

Why use a cold wallet? Wallets are important mediums for storing private keys, and cold wallets are even more important in terms of security compared to hot wallets. Why should you use a cold wallet? Because the more coins held in cold storage, the more prominent the security issues become. Therefore, many cryptocurrency exchanges use cold wallets to store and protect their assets. With features such as multi-signature and anti-counterfeiting, cold wallets can effectively prevent users from being stolen or hacked, and can ensure the security of personal information and the privacy of transaction data.

We know that there are many security concerns regarding digital assets in the field of cryptocurrency. For example, what would happen if someone inserted their own Bitcoin address (such as Coinbase) through a third-party website or browser? It is actually a very complex problem: how do you ensure that you do not leak your password? This answer may also be a truth that many people want to know. However, for ordinary people, what needs to be noted is that although mainstream hardware wallets for digital currencies have started to emerge, such as laptops, smartphones, and various other types of wallet products, there have been some use cases. These hardware wallets are generally divided into three categories: 1. Contactless storage; 2. Dual offline backups. These two forms are mainly applicable for transfers between Ethereum or ERC20 tokens, and most devices are accepted through the internet. Usually, this method is not very compatible with the PC end; 3. Hard disks used to store personal emails and files. Among them, the most popular is Microsoft’s decentralized storage solution based on the IPFS network, the Cryptokitties project, which disperses resources in the encrypted space to several different chains and connects them together to achieve the ideal state of interoperability. It can also support other various applications, including Netflix, Google Play, and other games. Another point worth noting is that this hardware wallet not only has no physical damage hazards but also has extremely high security, especially for small payments.

What is a cold wallet

According to coindesk, a cryptocurrency hot wallet is called a cold wallet (cold storage) because it is secure. For ordinary users, they can transfer bitcoin and other digital assets to a cold wallet, but when they want to use it, they need a cold hardware device to store and manage these funds. Generally speaking, hackers or third parties will use your private key to sign and decode some transactions and then send them to hacker addresses. And if you want to use your wallet without a password, you must first contact the attacker via email to obtain information, password, or other sensitive data.