What is a Cold Wallet (Ledger) and How to Use It?
Cold wallets are offline wallets that are not connected to the internet. It is especially preferred for storing cryptocurrencies. We can think of cold wallets like USB memory. Therefore, the possibility of accessing the cold wallet online is very low.
Cold wallets work with compatible software on the user's computer. First, the transaction initiated online is transferred to the cold wallet held on a USB, hard drive, paper or other medium. Before being transmitted to the online network, it is digitally signed for protection.
Storing assets such as crypto money offline is one of the most reliable methods. It is very difficult to crack the security key determined in hacking and digital attacks. However, the lack of a backup of this form of storage causes loss of access to investments in case the wallet is lost.
What are the Types of Cold Wallets?
Cold wallets come in two different types:
- Hardware
- Paper.
Hardware Cold wallets, which look like USB sticks that you can see in many places, are hardware wallets. This variety is considered the safest option by most investors.
Cold wallets in paper form also enable individuals to keep their investments safe. These types of cold wallets are created through online sites. It is then downloaded to the computer and used. It has been stated that paper wallets are weaker in terms of security because they are online during these transactions.
How to Buy a Cold Wallet?
Since cold wallets are physical products, they can be purchased online. You can obtain a cold wallet from a reliable e-commerce site. Cold wallets usually have a USB-looking form.
Wallets in paper form can be obtained from various websites of the cryptocurrency exchange. After purchasing the cold wallet in paper form, it is necessary to save it as an HTML file on the relevant page. After the wallet is created, the page must be closed and the internet connection must be disconnected. The Bitcoin address must be created by following the instructions in the file downloaded to the computer.
How to Use Cold Wallet?
You can complete the installation of the cold wallet, which you will obtain from a reliable e-commerce site, with the instructions that come with it. You can invest cryptocurrency in a physical cold wallet with the key pair provided to you. The point to be considered at this point is that the installation of cold wallets of brands is different. You may need to install an application on your computer to activate the cold wallet you will purchase from some brands.
The security key given to you after the installation is completed is the account key with which you will log in to the cryptocurrency account. Therefore, the account key must be saved securely.
Cold wallets in paper form are created through cryptocurrency exchanges. If you choose this form, you will get a physical paper, but it is more risky to keep.
Why Should I Prefer Cold Wallet?
Cold wallets offer a more secure storage area compared to online wallets. Thanks to the key pair your cold wallet has, it is very unlikely that anyone will be able to access your investments if you physically lose your cold wallet or have it stolen.
Many people recommend using cold wallets. However, if the physical wallet is stolen, the user will not be able to access the cryptocurrencies in it, as there will be no backup of this wallet. At this point, as long as you are careful about the use of your cryptocurrency cold wallet, an external threat is unlikely.
This is not a shopping recommendation. I recommend that you research the relevant brand thoroughly before making your purchase.
