The growing popularity of bitcoin and other cryptocurrencies has attracted the masses, including fraudsters and hackers. By the end of 2018, the amount lost to cryptocurrency scams and theft hit 1.7b dollars. These kinds of losses on the blockchain system are near impossible to recover. The network has no third parties, oversight or regulatory body to take action against the thieves or follow the money trail. Furthermore, digital footprints are quickly scrubbed off the network once the theft occurs, making it harder to track. Many platforms offering crypto finance services are vulnerable to attacks from hackers looking for a payday.
Therefore, to avoid losing your crypto investment to potential fraud, it is better to take caution and get a cold wallet. A proactive approach when dealing with your crypto assets is always the best move. One of the ways you can protect your bitcoins is by using cold wallets. What are they and why should you consider using them for your bitcoins? Here’s an in depth insight into cold wallets.
What Is a Cold Wallet?
Cold wallets are offline storage for cryptocurrencies. The wallet is not connected to the internet, which is the most secure way to store your bitcoin without exposing them to online risks. Cold wallets are safe from online threats like cyber attacks, hacks, and unauthorized accesses.
A cold wallet will store your private and public keys. The private keys shouldn’t be shared with anyone as they are a string of alphanumeric characters that give you access to your bitcoin. Whereas the public keys are like your account number, you share them with other people to deposit funds to your wallet. If you would like to use cold storage wallets for your cryptocurrencies, you have several options.
Benefits of Cold Storage Wallets
Keep Fraudsters and Hackers at Bay
Cryptocurrencies are purely digital, meaning anyone with advanced computer skills can manipulate them. People can hack the system and carry out transactions with your cryptocurrencies, or corrupt the order to change cryptocurrency ownership. Keeping your bitcoins offline and in cold wallets puts them out of reach and safe from potential crimes.
Suitable for Longterm Store
When you don’t need to use your cryptos for a while, maybe a month or longer periods, cold storage is your most reliable option. You keep your bitcoin stored without stress and worry about the rising cases of cyber hacks.
A cold wallet is the most reliable security system in the market. The hardware cold wallets enable you to create strong password/seed and recovery solutions in the event of a loss.
There are many cases of third parties conspiring to steal or compromise wallet ownership. A cold wallet takes away these worries as you’re the only one with access to your bitcoin. All you need is to find a way to store your device in a secure way to avoid losing it. You know where your bitcoin is, and you can keep an eye on it at all times
Easy to Monitor
Most online fraud can go undetected for a long time, and cryptocurrency owners may not get notified that something wrong has occurred. The crime is discovered long after coins have been missing making tracking and recovery much harder. Having a hardware device or any other form of a cold wallet makes it easy to locate and check on frequently. In the case of misplacement, you can take necessary action to restore the wallet, ensuring you don’t lose your bitcoins.
Suitable for Large Amounts
Small amounts of bitcoins can be stored in hot wallets, especially if you intend to use them within a short period. However, having large amounts in hot wallets puts you at higher risk as you become a target for fraudsters. That is why you are encouraged to get a cold storage wallet to protect your significant investments.
The rising popularity of cryptos will continue to attract crooks, and cold wallets are the best chance at security. Hacking and theft skills necessary are, at times, very basic skills, and can be done online by anyone with ill intention. Until the blockchain system is advanced to enhance security, offline storage is the most viable option.