What is Cold Storage?

Cold Storage

Cold Storage is a wallet that is completely disconnected from the Internet. It is a synonym for cold wallet.

Since it is isolated from the Internet, it reduces the risk of theft due to hacking or unauthorized access.

On the other hand, those that are connected to the network are called hot wallets (web wallets). These wallets are less secure than cold storage wallets, but they are more convenient as they allow you to send money and make payments immediately.

Cold Storage Types

There are 3 types of cold storage (cold wallets) as follows

  • USB memory or external hard disk
  • Hardware wallets dedicated for cryptocurrency storage
  • Paper wallets

Commercially available USB flash drives and external hard drives are easy to get and inexpensive. Smaller devices can be lost, so be careful where you store them.

Hardware wallet is an external storage device dedicated to storing cryptocurrency. Compared to commercially available USB flash drives, the initial setup is easy. However, they are more expensive and cannot store data other than cryptocurrency.

Paper wallet is a method of storing cryptocurrency data by converting it into QR codes and printing them on paper.

Cons of Cold Storage

The disadvantages of cold storage are as follows

  • It malfunctions, making it impossible to read or write data.
  • There is a risk of theft or loss.
  • Paper wallets may become unreadable due to deterioration of the paper or ink. Or it will burn.

Summary

If you want to store Bitcoin and other cryptocurrencies for a long time, cold storage (cold wallet) is recommended.

If you use it frequently for money transfer or payment, hot wallet is recommended.

It is also recommended to use both cold wallet and hot wallet together.

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