What is Cold Wallet?
A cold wallet, also known as a hardware wallet or cold storage, is a physical device that stores your bitcoin offline. Many resemble USB drives.
Understanding Cold Wallet
Taking your holdings offline protects them from hacking and online attacks, but you risk losing them. This type of storage has no backup; if you forget your wallet, you lose access to your investments. Cold wallets can also cost up to $200. (though there are definitely cheaper options).
While hacking is considerably more difficult with a cold wallet, it is still possible. DeCicco advises buying your hardware wallet straight from the manufacturer rather than secondhand, as the device may have been changed with in a way that makes it vulnerable.
If you intend to buy and store cryptocurrencies for an extended period of time, cold storage may make more sense. However, if you want to buy and trade cryptocurrencies, or if you’re not completely sold on bitcoin and think you might want to cash out your holdings after a while, a hot wallet — or even leaving it on an exchange — may make more sense.
Read related articles:
