Cryptocurrency Cold Storage: Everything You Must Be Aware Of
The Cryptocurrency cold storage is the best option for people wanting to store and access their cryptocurrencies offline and for a longer timeframe.
Typically people expect a rigid sense of security when it comes to storing your assets. Be it digital or physical, the goods and money of all sorts need to be in good hands. Based on the same concept, Cryptocurrency storage has evolved where the most reliable security systems can be called “Cold Storage”. In this article, we will travel through the critical points of cryptocurrency cold storage - especially what it means, methods, mediums and drawbacks, and last but not least, some cold wallets that you can opt.
What is Cryptocurrency Cold Storage?
The term ‘cold storage’ refers to the preservation of the cryptocurrencies offline. It can be said that they are usually a more secure option and proves its efficiency while dealing with a considerable amount of Cryptocurrency.
So, where do you keep your Cryptocurrencies or where does the cold storage let you store your Cryptocurrencies? The answer is “Cold Wallets”. The cold wallets also termed as the hardware wallets, are considered as one of the best tools evolved for safeguarding the cryptocurrencies. This is due to the offline asset storage and also because it is put physically into the hands of the owners. The cryptocurrencies that are stored in the cold storage or cold wallets are not susceptible to phishing, hacking, and other similar damage that results in the loss of digital assets. Additionally, they are the ideal wallets if you plan for long term storage.
An extension to the cold storage is the “deep cold storage” that works exactly like the regular cold storage wallets (in the offline mode). The only difference is that the deep cold wallets utilize a method that makes the coin retrieval from them a lot more strenuous than the deposits. The reason? Retention of safety and prevention of robbery or theft.
Methods of Cold Storage
There are a couple of methods to store your Cryptocurrencies that include the keeping of Bitcoins:
- On a USB drive or similar kind of data storage medium in a secured place.
- On a paper wallet, which is an obsolete storage method that performs by bearing a single private key and the Bitcoin address written down on a piece of paper.
- By utilizing an offline hardware/cold wallet for Bitcoin, like Trezor.
Mediums and Drawbacks of Cryptocurrency Cold Storage
There are specific potential issues with cold storage methods. However, these issues can be mitigated. The private keys and/or its backup seeds are pretty vulnerable to being lost because of their storage methods. Here are some of the conventional cold storage mediums along with noteworthy weaknesses.
Paper Wallet :
If The Cold Storage Details Exist On A Piece Of Paper In Writing, Then Anyone Can See It, Or The One Wrote It Has Handwriting Pretty Close To Unreadable. Any Of The Errors In The Transcription Can Lead To Errors On The End Product. Additionally, The Paper Is Susceptible To Damage Like Rotting, Burning, Tearing, Or Can Be Damaged Through The Smoke.
Paper Wallet in Print :
The Paper Wallets That Come In The Printed Format Has Similar Weaknesses As The Paper Wallets Along With Some Other Issues Such As - It Would Always Require A Printer, You Have To Trust The Printer On The Internet Connection Ultimately Including Memory And Wi-Fi.
Paper Wallet in Lamination :
It also comes in weaknesses similar to the usual paper wallet. Lamination is also prone to cuts, punctures and degradation. The punctures and degradation permit moisture to seep into the paper leading to deterioration. Laminated paper can get burnt and could be susceptible to damage via smoke. The fire-proof or the fire-resistant boxes can save the paper for a limited period in a small house fire, but the same paper can get wet while extinguishing it.
Digital Storage :
On a digital storage platform like computers, it can crash and can make the data recovery expensive if it occurs frequently. The restoration of data is still possible even if the computer has been abandoned. It is also possible after multiple overwriting attempts along with the physical damage. The magnetic field located on the traditional hard disk drive can corrupt data and physically shatter it down. Diverse types of accidents can result in the loss of data, and computers can face many kinds of ongoing threats. External hard disk drives are suitable for the storage counting to just a few years.
Finally, we come to a conclusion where you might ask about the cold storages that you can opt. Well, amongst many some of the most trusted cryptocurrency cold storage wallets are Ledger Nano S, Trezor Model T, Keepkey, Coldcard and Bitfi DMA-2.