<span style="font-weight: 400">Cryptocurrency has grown in popularity in recent years. <a href="https://www.cryptoknowmics.com/news/bitcoin-to-become-the-21st-century-gold-says-deutsche-bank">Bitcoin</a> is the most well-known, valuable, and well-established virtual currency. For a variety of reasons, cryptocurrency is preferred over traditional currencies. They are easy to use, with low fees, no government regulations, and complete control. </span>

<span style="font-weight: 400">Cryptocurrencies are a popular and decentralized option, but they also pose a security risk. It is the responsibility of the owner to keep them secure. A new generation of software has emerged that looks for the digital wallet where virtual currencies are kept. If your cryptocurrency is lost or stolen, there is no one to contact. </span>

<span style="font-weight: 400">Many crypto enthusiasts who are concerned about security have turned to <a href="https://www.cryptoknowmics.com/glossary#cold-wallet/cold-storage">cold storage</a> to keep their coins safe.It is widely used by major cryptocurrency exchanges as well as some of the most successful companies operating in the space behind the best cryptocurrency stocks.</span>
<h2><b>What is cold storage in Cryptocurrencies?</b></h2>
<span style="font-weight: 400">When cryptocurrency is not in use, it is kept in cold storage. Every cryptocurrency wallet, whether it is for Bitcoin or another cryptocurrency, has a private and public key. Cold storage helps to protect your crypto assets against hacker and malware attacks. </span>

<span style="font-weight: 400">If a thief attempts to steal the hardware, you can prevent him from gaining access to your funds by creating a PIN code. You can even get your money back by entering a backup code or recovery phrase.</span>

Here's an example:<span style="font-weight: 400"> </span>

<span style="font-weight: 400">Bitcoin typically allows for instant withdrawals. To reduce the risk of an intruder stealing the entire reserve and breaching security, the operator keeps the bitcoin reserved in cold storage, which means that it is not present on the webserver or computer. As a result, the operator only keeps a limited amount or the desired amount on the webserver.</span>
<h3><b>Advantages of Cold Storage: </b></h3>
<ul>
 	<li style="font-weight: 400"><span style="font-weight: 400">It is an excellent location for storing large amounts of coins for an extended period of time.</span></li>
 	<li style="font-weight: 400"><span style="font-weight: 400">It can keep money away from the webserver, keeping it safe.</span></li>
</ul>
<h3><b>Disadvantages of cold storage:</b></h3>
<ul>
 	<li style="font-weight: 400"><span style="font-weight: 400">There is a chance of external damage as a result of carelessness, but it is recoverable if you have a recovery seed.</span></li>
 	<li style="font-weight: 400"><span style="font-weight: 400">For beginners, setting this up can be a daunting task.</span></li>
 	<li style="font-weight: 400"><span style="font-weight: 400">When compared to an online exchange, this is not ideal for quick and daily transactions.</span></li>
</ul>
<h2><b>Best Cryptocurrency Cold Storage Options</b></h2>
<span style="font-weight: 400">The following are some of the most popular cold storage options:</span>
<h3><b>1. Hardware Wallets for Cryptocurrency (safest)</b></h3>
<span style="font-weight: 400">A hardware wallet is an electronic device that uses private keys that are stored offline to sign transactions. It also allows you to recover your funds if the device is damaged or lost by using a backup seed key. Hardware wallets are the most secure cold storage option for cryptocurrencies, but they are not cheap.</span>
<h3><b>2. Paper Wallet</b></h3>
<span style="font-weight: 400">Paper wallets are an offline way of saving cryptocurrencies. It involves printing the public and private keys on a piece of paper. These printed keys are in the form of QR codes. Every time you need to make a transaction or exchange, you can do so by scanning the code. Since you are storing the keys with you away from the web server, there is the least possibility of it being stolen.</span>

<span style="font-weight: 400">It is imperative to note here, that paper wallets are not well-suited for transmitting funds partially. For transferring or spending partial funds, the private key of your paper wallet shall have to be imported into a desktop wallet. Some paper wallet providers offer tamper-proof designs to increase security. Paper wallets are completely safe from malware, viruses, and hacks due to their offline nature.</span>

<span style="font-weight: 400">After setting up the paper wallet, you need to ensure that the website code can be run in offline mode. Once the paper has been printed, you can place it in a sealed plastic folder, laminate it, or store it safely in a bank vault.</span>
<h3><b>3. Cryptocurrency Storage on a USB Drive</b></h3>
<span style="font-weight: 400">One of the simplest ways to cold store your coins is to use a USB drive as a cold wallet. You can use this to export and save your private keys to a USB drive. However, this option has drawbacks, as anyone with access to your USB could gain access to your crypto coins.</span>
<h3><b>4. Desktop Wallets </b></h3>
<span style="font-weight: 400">Desktop wallets are clients that can only be accessed through your computer. In an offline environment, they can be used to export files containing encrypted private keys. The private keys are stored offline on your machine in these pieces of software. However, you are online while receiving or sending funds through them.</span>
<h2><b>Digital (hot) wallet vs. cold storage wallet</b></h2>
<span style="font-weight: 400">A digital wallet, also known as a hot wallet, is another type of crypto storage that is connected to the internet. Here are some key differences between cold and hot wallets:</span>

<b>Security:</b> <span style="font-weight: 400">Cold wallets are more secure than hot wallets. Although hot wallets can provide a high level of security, their online nature means they are vulnerable to hacking.</span>

<b>Convenience: </b><span style="font-weight: 400">Hot wallets are more useful. They enable you to quickly send and receive cryptocurrency, whereas cold wallets sacrifice speed for security.</span>

<b>Cost: </b><span style="font-weight: 400">The vast majority of hot wallets are completely free. The most common type of cold storage is hardware wallets, which typically range in price from $50 to $150. However, because crypto keys can be stored on paper, free cold wallets can be created.</span>
<h2 id="11" data-changed="false" data-paragraphid="177"><strong>Wrapping Up</strong></h2>
<span style="font-weight: 400">Some people prefer to keep the majority of their cryptocurrency in cold storage while using a hot wallet for smaller amounts and day-to-day trading. Given how critical it is to keep your cryptocurrency safe, cold storage is a viable option worth considering. A hardware wallet is a relatively inexpensive one-time purchase, particularly if you intend to make a significant investment in cryptocurrency.</span>

<span style="font-weight: 400">Those who have decided that crypto is a good investment often use a combination of hot and cold storage to get the best of both worlds.</span>

&nbsp;

What is Cold Storage in Crypto?

Bitcoin is the most well-known, valuable, and well-established virtual currency.

Kishan is a blockchain and crypto enthusiast, crypto investor, trader, and marketer with 3 years of experience in the crypto and blockchain space. He is passionate about cryptocurrency as an emerging technology and is heavily involved in the fast-growing fintech space. Hence one of his favorite quotes is an old saying which goes, "No research without action, no action without research".

What is Cold Storage in Crypto?

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