Hot and Cold Crypto Wallets Explained

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A cold wallet, otherwise known as a hardware wallet or cold storage, is a physical device that keeps your cryptocurrency completely offline. Many look like USB drives or small phones. 

Taking your holdings offline helps protect from hacking and online attacks, failing exchanges and bankrupt clearing houses. Cold wallets also can cost up to $200 (though there are definitely cheaper options). The Beauty of Cold Storage wallets is if you lose it, you can simply purchase another one (Does not even have to be the same manufacturer). Put in your 24 word unique pass phrase and BINGO!  you are back in action. 

Be Careful, although a cold wallet makes hacking much more difficult, it’s still a possibility. Some tips:

• Make sure you buy your hardware wallet directly from a manufacturer instead of secondhand, directly off  their website.
• Do not click on links to buy them from social media posts or any other advertising unless you are sure they are legitimate.
• We have an affiliate program with the best brands on the planet, if you use our links, we make a few cents to continue our mission to "Spread the Bitcoin word". - Costs you no more, and helps us to help you.
• We have found the biggest risk to forever lose your Bitcoin or other crypto are (We have some solutions within our information pages right here.
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Loss of your private key (unique 24 word pass phrase) 

• This affects you if someone has stolen or seen your private key and they can "Empty your accounts" Just like if someone gets your bank account pin number... OR.... your physical cold storage device gets lost or corrupted and you cannot retrieve it.

Ways to mitigate this risk.

• Do not store your pass phrase online (even in your computer, phone or laptop) or in a last-pass, robo-form password saving account etc as it is a massive risk.
• Do not take photos or store it on your phone.
• Make more than one copy of the passphrase and store it in a very very safe place.
• Encrypt your pass phrase using our "Cypher tag system" - this means that if someone does come across your encrypted pass phrase (cypher-tag) they simply cannot used it as it is just a bunch of meaningless numbers. - only you have the password to unlock the encryption.
• Set up a Multi-Sig wallet. This is like having a bank account say with 3 people that have signing rights to withdraw funds from your bank and 2 or three have the "Quorum", which allows your funds to be transferred out of your account. (one single person cannot remove the funds as it needs "Multi Signatures" to release the funds.
• You can also contact us for a consulting session either in person or over Zoom, Teams etc...for more information so that we can help your plan the best approach moving forward based on your knowledge (we can assist you all the way through the process.

Physical damage to your cold storage wallet (either software or physical - flood, impact, fire etc.

• If you have your pass phrase, you are golden! If not, your crypto is history (think of it like a Spanish galleon full of all your gold and treasure... sinking into the deep deep web ocean forever, even if some one finds the ship. it is locked and lost forever. 

"Surely you have heard of the guys  that searched an entire dump for a laptop that had hundreds for Bitcoins on it from 2012 when BTC was only work $180USD - see below for the current value today - as of 28th April 2023 it is worth $29,265 USD per BITCOIN. The more adoption it has,  the more it goes up in value as there are only 21million in total, but it can be divided down to 8 decimal places, which makes it very flexible for trading good and services to one another."

Cold storage can make more sense if you plan to buy and hold cryptocurrency for a long period of time or are setting up to buy on a monthly, weekly or fortnightly frequency (Dollar Cost Averaging-DCA) After all, the average.... YES the AVERAGE return on investment is over 200% over the last 13 years. Compare that to any other investment like property is 10% and all the others like gold, silver oil etc, pale in comparison.

If you’re looking to buy and trade, or are not totally sold on cryptocurrency and think you might want to cash-out your holding after a little while, then a hot wallet — or even leaving it on an exchange — can make more sense. The risk with this approach is your keys are held by the exchange and as we know the FTX $9Billion but .. .resulted in hundreds of thousands of people lost thier hard earnt investment to one of the biggest Ponzy like schemes in recent history. They even fooled high profile  "SAAVY" investors. 

We suggest not to take the risk if you want to sleep well.

Most exchanges allow you to purchase cryptocurrency right after signing up, and it’s held in a wallet on the exchange — meaning finding an additional wallet is not necessary. But moving it to a hot wallet or more-secure cold storage can offer more security. 

In general, experts agree it’s probably OK to leave your crypto on the exchange if you’re using a mainstream exchange like Coinbase and have a relatively small amount of crypto within your broader investment portfolio. So when should you consider using a wallet?

“Move it if you can’t sleep at night because you think you’re going to lose it,” says Shane Weastell, the founder of Westy Crypto, a crypto education service provider, New Zealand. “That’s an individual thing.” 

If you’re constantly worried about your holding being stolen or exposed to fraud, and more security would give you peace of mind, then a cold wallet might help you feel more secure. 

Yes, Since cold wallets are offline devices, not connected to the internet, they are considered more secure than hot wallets. But there are other trade-offs to consider. 

If you worry about keeping track of a physical item like a cold wallet, then you may be better off with a hot wallet. 

Hot wallets can also offer a more user-friendly experience and are often connected to cryptocurrency exchanges, making transferring your holding simpler than using a cold wallet.

Both forms of wallets are generally considered more secure than storing crypto on the exchange where you buy it, but as with any investment strategy, there are many factors to determine what makes sense for you. 

For an investor holding a few hundred dollars on a major exchange like Coinbase, it’s probably OK to leave it on the exchange. For investors holding thousands of dollars worth of crypto, the extra security of a wallet might bring extra peace of mind.

The following hardware wallets are not listed in order of preference. You should take stock of your own personal needs first in terms of security, support, and platforms. 

For example, do you want your wallet with you every day, firing it up on the beach or at a restaurant, or do you want to keep it in a vault at home? Do you just want to store some Bitcoin and 

ETH for the grandkids or do you want to stake Solana and buy up the hottest new projects on the Fantom ecosystem? Therefore, do your research on all of them and pick what works best for you. 

Also, I’d like to clear up a very common misconception about owning a hardware wallet. 

As electrical devices, you should ensure your cold wallet is stored safely, securely, and in the right environmental conditions (e.g. not too humid). 

However, if your cold wallet gets lost, stolen, or damaged, your funds are OK (unless you have exposed your key or seed). The device only stores your “access codes” (for lack of a better word) and should protect them from unauthorized access with tools like a secure element or encrypted Bluetooth (where the wallet and phone must be within 10m from each other for example). 

In case your hardware wallet stops working, simply restore access to your funds by using your recovery seed to create a new wallet (either on a new cold wallet or hot wallet). It’s as simple as that. 

The Ledger Nano X is Ledger’s second-generation model of cold storage and is integrated with the Ledger Live platform to help you safely store and trade Bitcoin, Ethereum, and over 1800 other coins and tokens. 

It was market-leading Ledger’s first Bluetooth-powered hardware wallet. A small LED screen and two buttons allow you to navigate the menus and enter words and characters. All transactions initiated through Ledger Live require confirmation from the device. 

Unlike most devices, including the affordable and super-popular Ledger Nano S, which require being plugged into your device, the best-selling Ledger Nano X connects with your IOS or Android device via Bluetooth. Your seed phrase is protected on the device, thanks to a PIN being necessary to use the device as well. 

Please note that Ledger (established in 2014) has a bit of a history of being targeted for software-based phishing attacks and data breaches, so be very careful when dealing with correspondence or phone calls claiming to be from them. 

Apart from that, there are a few good reasons why France’s Ledger sells the most hardware wallets, such as a well-earned reputation for excellence, an EAL6+ secure element, affordability, and massive coin support.

Ellipal Titan doesn’t use Bluetooth or USB technology to connect to a mobile app or computer, but rather uses air-gapped hardware wallet security. Air-gapped security refers to having a device completely separated from other devices or systems. 

The Ellipal Titan accomplishes this unique security feature by communicating through QR codes to sign transactions. 

This safeguards your device from all WiFi, Bluetooth, and cellular attacks. If all of these security features fail, the last resort of security to preserve your stored coins and tokens is to activate its anti-tamper self-destruct feature. 

This will preserve your Bitcoin holdings by deleting its stored private key to your account, allowing you to recover your coins later with your written down seed phrase at a later time. If you would like a doomsday-prepping level of security, or simply as much peace of mind that your Bitcoin is safe, then the Ellipal Titan could be your preferred option of cold storage.

SafePal S1 is the first hardware wallet backed by the world’s biggest exchange Binance (which is also involved with Trust Wallet). 

The S1 (which is currently experiencing some pandemic-induced stock shortages) uses a completely air-gapped (offline) signing mechanism and doesn’t use any WiFi, NFC, USB, or Bluetooth technology and safety measures like an EAL5+ secure element, self-destruct mechanism, and true random number generator. 

It supports a wide array of currencies and offers good value for users who don’t want anything too fancy. 

Safepal is similar to Ellipal (both are air-gapped) but supports fewer assets at this time.

Keystone comes with 3 Models Available; Essential, Pro and Ultimate available to choose from to suit all budget needs, the lowest model has the basics, the pro and ultimate have fingerprint authentication and more.

· IOS & Android management capabilities

· PSBT Multi-signature Support for Bitcoin

· QR code scanner for ease of Buy and Sell options.

· Pin, Pattern & Fingerprint 2 factor Authentication.

· Off Grid Battery mode option. 

· CON: ONLY SUPPORTS 10 COINS

The different models have different features so choose based on your needs and price range. One cool feature that this wallet supports it PSBT Multi-signature for added security. Check out their website above.