How a Cold Storage Wallet Helps You Enjoy the Crypto Nomad Life More
What Is a Cold Storage Wallet and How Does It Work
In the crypto world, there are two main types of wallets:
Hot wallets —web, mobile and desktop. These are connected to the internet
Cold wallets —hardware and paper wallets. These are not connected to the internet
What all these wallets have in common is that they are associated with a set of public and private keys of a particular cryptocurrency owner.
Public keys work similarly to a bank account number or an email address and are associated with a unique wallet. To make a transaction, the sender and receiver of crypto need to share these public keys with each other.
Private keys, on the other hand, are a string of alphanumeric characters available only to the owner of the cryptocurrency, allowing them to access their funds and sign transactions. Protecting these private keys is critical to maintaining ownership over your crypto.
Here is where the difference between hot wallets and cold wallets comes into play — connection to the internet makes wallets more vulnerable to cyber-attacks. Unauthorized individuals could gain access to your private keys and, ultimately, your cryptos.
With cold storage wallets, however, the private keys are generated and kept in an offline environment. This feature makes them a more secure way to store your precious coins.
Cold wallets can be either paper wallets or hardware wallets.
As a crypto nomad, carrying around a piece of paper that can be damaged or easily lost is not practical. Instead, a hardware wallet is a better option. Let’s see why!
Why You Need a Hardware Wallet as a Crypto Nomad
You already know that the crypto stays on the blockchain and not on the wallet itself. A hardware wallet then is a plug-in device, in most cases similar to a USB stick, that stores your wallet’s private keys.
This cold storage wallet option is more popular than paper wallets, as it is easier to carry around without fear of damage. Plus, it benefits from the manufacturer’s customer support.
Depending on your needs, you can:
Store your crypto on this type of wallet — you simply send your coins from the hot wallet through which you got your crypto in the first place to your hardware wallet’s public address.
Send crypto to another address — you initiate the transaction online by connecting the device to the internet, then you sign the transaction offline using your private keys. Afterward, the transaction is sent to and validated by any node connected to the network.
As you can see, using a hardware wallet is pretty straightforward and intuitive. However, the main takeaway here is that while you initiate the transaction online, you sign it offline. What makes a hardware wallet the most secure option for you to store and use your cryptos while traveling is the fact that your private keys don’t come in contact with any server connected to the internet.
With a hardware wallet, you won’t worry about how secure your internet connection is or fear that you can’t access your cryptos when you need to pay for your next flight.
Pros and Cons of Cold Wallets vs Hot Wallets
For many crypto nomads, using a combination of hot and cold wallets is a common way to go about this. They use hot wallets for small amounts of cryptos and cold wallets to store larger ones.
However, this is an overly simplistic approach. So to help you in your decision, I’ve put together a quick comparison of both these wallets for you to check out.
Cold wallets
Hot wallets
✅ they keep your cryptos safe —a hardware wallet secures your assets against cyber-attacks, phishing sites, and malware
✅ they can work with multiple blockchains and support over 1000 cryptocurrencies
✅ you can store all your cryptos on the same wallet
✅ they are portable and convenient
✅ some wallets let you trade directly rather than transferring the crypto to an exchange
🛑 they can be somewhat expensive —their price ranges from $50 to roughly $200
🛑 transferring cryptos to and from a hardware wallet can be more tedious
✅ they are more popular than cold wallets
✅ you can get them for free
✅ they can hold any crypto you wish
✅ easy to transfer cryptos to and from hot wallets
🛑 they are more vulnerable than cold wallets —regardless of the security precautions taken, being connected to the internet makes them prone to hacking
🛑 they run on centralized servers that can slow down transactions when there are too many of them happening at once
🛑 in the case of web wallets provided by exchanges —you don’t fully control your cryptos, since you don’t have access to your private keys
Get Yourself a Cold Storage Wallet
Now that you know what cold storage wallets are and how they ensure your cryptos stay safe during travels, you can make an informed decision.
Just keep in mind that being able to access your crypto safely from anywhere in the world is such a treat! So if your goal is to take your security to the next level, opt for a Trezor wallet. It will give you the peace of mind that your cryptocurrencies are within your control anytime, anywhere.
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