The FTX emergency has left numerous crypto clients thinking about how they ought to store their crypto resources. Although major crypto firms rushed to declare they were not influenced by the debacle, it is still not clear how far the FTX virus will spread.
This is the reason why crypto users ought to truly think about keeping their resources in self-guardianship. Different from custodial wallets, cold wallets put sole liability on you. You’re fully in charge of your assets, no crash or mismanagement by any firm can affect you.
According to Investopedia:
“A cold wallet is used offline for storing bitcoins or other cryptocurrencies. With a cold wallet, also originally known as cold storage, the digital wallet is stored on a platform not connected to the internet, thereby protecting the wallet from unauthorized access, cyber hacks, and other vulnerabilities that a system connected to the internet is susceptible to.”
Cold storage wallets are viewed as the most secure method for keeping digital assets. Although there are various kinds of cold wallets, Ledger and Trezor are the predominant ones in terms of cold storage. Trezor offers two models: the $213 Trezor Model T and the $67 Trezor Model One. Ledger also offers two different products: the Ledger Nano X, for $160, and the Ledger Nano S Plus, for $85.
All four of these wallets support a range of different blockchains, cryptocurrencies, and NFTs (though you will need a third-party application to view NFTs if you’re using Trezor).
How to get started
It is pertinent to buy your cold storage wallet directly from the manufacturer. After the purchase, the first step is to plug your cold storage device into your computer, download the software provided with your cold storage wallet, then you would be given a seed phrase or backup code. Importantly, keep this code offline and safe( somewhere where it won’t be lost or accessible by others).
Different types of cryptocurrencies need their own wallet. So you have to create a new wallet for each type of crypto you are trying to store. To access the device, you’ll have to set up a pin. Once you have a pin, you’ll be able to add your crypto to your cold storage wallet by clicking receive, which will show you your cold storage wallet’s address.
After that, go to the exchange where your crypto is stored, log on and send the digital assets to the address of your cold storage wallet. Keep your cold storage somewhere safe and have it at the back of your mind that if you lose it along with your seed phrase, your money can’t be recovered.
Notably, If you lose your hardware wallet, but still have your seed phrase, you can buy another hardware wallet and access your assets.
As recent events have indicated, there’s a good reason to follow the words of crypto’s favorite parlance: “not your keys, not your coins.”
Cold wallets may initially seem intimidating, but it’s worth the time and effort. It might be a little risky knowing that if you misplace this device along with the seed phrase, there’s nothing you can do, but at least you have full custody of your assets, unlike when your digital assets are tied to an exchange.
Cold wallets offer a way for users to store and access their assets safely under their own care without the fear of facing an insolvency crisis, withdrawal freeze, or legal process.