To store a large amount of cryptocurrency, 2 methods are usually used:
A hot wallet that only works with a permanent internet connection. Both online wallets (crypto unit) and wallets of cryptocurrency exchanges ( Exmo, Binance, etc.), as well as payment systems like WebMoney, are considered hot.
What is a cryptocurrency cold wallet?
A cold wallet for cryptocurrency is primarily a package of tools in a USB drive, with which you can store information that is needed to access cryptocurrency that does not require a permanent Internet connection.
It is recommended to create a cold wallet if:
- You have a large number of cryptocurrencies that make up a considerable amount of money;
- You do not want to expose them to waste and purchased for long-term storage;
- You are not going to make frequent transactions.
Which cold wallet should you choose?
To buy a cold wallet, you need to consider the rating of cold wallets, as well as the features of each of them.
Ledger nano s
Ledger Nano S is by far the best cold wallet on the market. It’s simple and compact.
This cold wallet is a USB flash drive and connects directly to a computer or mobile phone via a USB port. Supports a dozen different cryptocurrencies, including Bitcoin. The key function of the wallet is seed recovery.
The price of such a wallet will be no more than $ 65.
The Trezor cold wallet is considered a pioneer among its counterparts. It looks like a small calculator with a screen. The protection of funds is provided by a pin code (of 9 characters) and a seed, which consists of 24 words.
Trezor is a cold wallet that syncs with your Android phone. Made of plastic and supports wallets like Multibit HD, Mycelium, and TREZOR Wallet.
The price of such a wallet is $ 99.
KeepKey’s cold hardware wallet is one of the youngest in the ranking. In terms of dimensions, it is the largest, so you can’t put one in your pocket.
Its protection does not differ from its counterparts; pin codes and seed are also used. In addition, each transaction will need to be confirmed on the screen. Supports 6 currencies.
The price of such a wallet will be $ 99 (while the starting price was $ 239).
A cold bitcoin wallet involves storing a key without having access to the Internet. It is more reliable and safe in case of intrusion. It is recommended for use if there are large amounts of cryptocurrency and if you need to provide them with storage for a long time.
The peculiarity of such storage of bitcoin is that in order to receive funds, it is necessary to enter a public key, and to withdraw them – a private key.
Bitcoin cold wallets are divided into the following types:
- A software wallet is a program that is installed directly on a computer. They are light and heavy. The lungs differ in that there is no need to download the entire blockchain to use.
- The mobile wallet allows transactions to be carried out using the phone. A highlight is a Coinomi application, which supports the cold storage of funds.
- The hardware wallet is small and has a built-in display. The best examples of such wallets are Ledger Nano S, Trezor, and KeepKey.
- A paper wallet means storing cryptocurrency using a printed key and address on paper. Funds are located outside the Internet, which protects them from outside interference.
After the cold storage software (Bitcoin Core) is installed, you should encrypt your wallet before using it. Without proper encryption, Bitcoin addresses can be hacked and stolen. Encryption is performed in this way:
Passphrase. In the application menu, which is in the upper left corner, select the settings (” Settings “), then click on ” Encrypt wallet “. A window will appear in which you need to enter a phrase consisting of 10 or more characters (or 8 or more words).
Before replenishing the wallet, you need to wait until the blockchain is fully loaded on your computer. The download may take about 1-2 weeks. Next, you need to do the following:
- Click on ” Receive ” located in the top menu and then select ” Request payment “. A window will open showing the bitcoin address and QR code.
- This address can be used to receive Bitcoin due to cold storage. To ensure higher reliability, it is better to check the correctness of transactions by depositing a small number of funds before sending a large one.
How do I use my wallet?
Now the wallet owner has access to the following options for storing Bitcoin without an Internet connection: using a .dat file or by exporting private keys. Each of them should be analyzed in more detail.
- It is necessary to disconnect the computer from the Internet and make sure that the action was completed exactly.
- Next, you need to run the program. 0 blocks and 0 connections must be displayed.
- Change the passphrase by going to the settings and clicking on ” Change passphrase “.
- Copy the wallet .dat file to external media. The file is located in the folder that was selected when loading the blockchain.
- Save the Bitcoin address in the .text document, and then transfer it to the drive. To get the address, you need to go to ” Receiving addresses “, which is located in the ” File ” section.
- You need to turn off the computer for 1-1.5 minutes. When using a laptop, you need to remove the battery.
- Turn on the computer and make a backup copy of .dat in several storage locations at once. Namely: send by email as an attachment, save to cloud storage and multiple external media.
Exporting private keys:
- Open the console after starting the program by going to the help section (“Help”).
- Export the key. To do this, you need to specify the wallet cipher with the command wallet passphrase “phrase” 60 (the number means the time for access in seconds).
- Transfer the key with the Dumpprivkey “bitcoin address” command.
- Copy the key. Put the key on paper, copy it to external media and cloud storage.
Installing a wallet is only half the task. It is necessary to learn how to use cryptocurrency correctly. The following ways are possible here.
- Install the application on the device that is used to import cryptocurrency from the wallet.
- Disconnect from the network and re-enter the program.
- Replace the .dat file with the document used to store Bitcoin.
- Connect to the Internet, wait for the blockchain to sync.
- List the required amount of cryptocurrency.
Using private keys:
- Install Bitcoin Core and exit.
- Disconnect the Internet connection and re-enter the program.
- Open help section and debug window.
- Specify the passphrase to decrypt the wallet by entering wallet passphrase “passphrase” 60 into the console.
- Transfer the key by entering the importprivkey command.
Disadvantages of cold wallets
Devices for this type of cryptocurrency storage are very reliable. However, they also have disadvantages. For example, there is a possibility of forgetting your PIN code or seed or losing paper media.
Also, not everyone will want or possibly pay up to $ 100 for such a cold wallet for storing ether and other cryptocurrencies.
How to protect a cold wallet?
To provide a greater level of protection for your wallet, you should follow these tips:
- Data on how much cryptocurrency is stored in the wallet, how and where, should be reported to the smallest number of people.
- It is worth using passwords such as multi-signature.
- Copies of private keys should be created, encrypted, and stored in multiple locations.
- Use as many tools as possible to increase the level of wallet protection (complex passwords, two-factor authentication).
It is important to remember that no amount of caution goes wrong. Therefore, you should not click on suspicious links sent by someone unknown from the computer storing your funds.
The information provided in this article will certainly help in choosing a cold wallet, ensuring its protection and safe use.