The Best Cold Wallets
17 Jun, 2022
Digitalization affects all aspects of life, including finance. If banking applications and access to credit and debit cards through apps are familiar to everyone, the situation with the world of cryptocurrencies is more complicated. Decentralization and a lack of strict regulation encourage users to pay more attention to the security of their assets. So now, crypto wallets have come to their aid.
Hot and cold wallets are used to protect and safeguard your cryptocurrency funds because without these anybody can hack your computer, you can get a virus, or somebody can snatch your phone, so then you just lose control of everything. We would analyze both software and hardware wallets to keep your funds safe and help you to pick the best cold wallet to take advantage of the opportunities offered by different types of them.
Importance of a Crypto Cold Wallet
From a security standpoint what a cold storage wallet does is that it puts your security key, or your private recovery phrase, onto the hardware device and it keeps it there.
So anytime that you need to write a signature or sign up for a transaction it will encrypt that signature and send it to your computer. The passphrase always stays on the device, and even if your computer is hacked with malware, there will never be any secret passphrase on your computer. It will be impossible to intercept or steal. It is safer than keeping your private keys on an internet-connected device like a phone or browser extension. What is more, the producers make the hardware wallet packaging tamper-proof, so you have to essentially rip through the packaging because it’s a part of the precautions that these companies take. Some packages or devices inside it have hologram seals on the side, so you can be sure that it has not yet been opened.
Hot Wallet vs Cold Wallet
What you essentially need to know is that there are two types of crypto wallets. Online or hot wallets and hardware or cold wallets. Both of them work as the storage for your cryptocurrencies but include various specific features. Let's see how they differ from each other.
What Is a Hot Wallet
Hot storage is considered hot because it can be accessed instantly from any device with an internet connection. They allow you to instantly buy or sell coins and tokens without the need to perform additional actions. Your funds can be stored on the desktop or mobile online wallets and in mobile applications. Hot wallets are convenient for the constant use of financial assets, as they speed up the processing of transactions. The most popular online wallets are Trust Wallet, Huobi Pro, Metamask and Exodus. Since hot wallets are connected to the internet, there is a risk of hacking and theft. This happens regardless of the level of protection, so there are always security vulnerabilities.
What Is a Cold Wallet
Cold storage wallets are used for the long-term storage of your cryptocurrency assets. They are less convenient for making active regular operations with tokens, but they are much more reliable in terms of security. Hardware wallets are basically small USB sticks or cards that keep your password and recovery phrase offline.
Consequently, neither hackers nor malware have access to your finances. The most well-known cold wallets include Ledger, Trezor, CoolWallet and Safepal.
The Best Cold Wallets You Should Know About
So now that you have decided on your type of wallet you would like, let's look at them in more detail.
Ledger Nano X
The Ledger series wallets support decentralized finance, as well as multiple wallets and PINs. Ledger Nano X supports Bluetooth, so you can connect it to your computer or use the app and interact with your phone. The wallet contains a 100mAh battery. Another feature is that it has more memory, so if you wish, you can install applications to interact with a large number of blockchains. Ledger Nano X also supports a USB-c port, whereas the Ledger Nano S uses a micro USB.
Other peculiarities include the ability to restore the wallet in case of loss or destruction, two secure chips (ST33J2M0; STM32WB55), and CC EAL5 certification level. It is compatible with smartphones based on iOS 9+ and Android 7+ and computers based on Mac OS 10.8+, Windows 7+, Linux, and Chrome OS. Ledger Nano X has included a Ledger Live software wallet, which is useful to manage your funds.
It is important to note that the Ledger series wallets interact with the Metamask wallet, so you can connect them to your computer and then use them to approve transactions, send funds, interact with contracts, and so on. Hence, you'll be able to take advantage of all of the decentralized finance tools and platforms for earning yield, staking, etc.
Ledger Nano S
Ledger Nano S is believed to be perfect for beginners. It is cheaper than its elder brother Nano X, but it supports the same number of tokens as Ledger Nano X, namely, 30+ cryptocurrencies and 1250+ tokens of the ERC20 standard. The list of supported crypto assets is constantly updated.
Using the Ledger Nano S you will be able to interact with everything that Metamask supports like Binance, Ethereum, Polygon Magic, Phantom, Moonriver, etc. Additionally, it has enough memory for one or two additional applications to support, for example, Bitcoin or Cardano.
Ledger Nano S does not support Bluetooth, that is, with the model S, you'll have to plug it into your laptop. The wallet is equipped with a small OLED display, as well as buttons for personal physical confirmation of each operation. It has a nice metal case, which additionally protects the screen from scratches and other damage. The crypto hardware wallet has a dual architecture of ST 31/STM32 chips, which provides the highest protection of private keys.
Trezor Model T
The other leader in hardware wallets is Trezor. It’s one of the most secure hardware wallets for cryptocurrency, developed by Satoshi Labs. There are two models of Trezor Wallets. Trezor One has a small monochrome screen with two-way navigation buttons, meanwhile, Trezor Model T has a larger touchscreen.
The sticker seal for the Trezor T is attached to the device itself, which provides an additional level of security against tampering before delivery. Model T gives a 12-word recovery phrase, which is enough for qualitative protection.
If you want to use your coins with DApps, you can link your Trezor up to Metamask or Exodus software wallets. As a result, you can get the benefit of a hardware wallet for more security, but also spend your coins and swap them, if you want. So, you have access to the DeFi features that enable online wallets.
CoolWallet Pro is a second-generation hardware wallet from the manufacturer CoolBitX. It is made in the form of a credit card, is very compact, and weighs only six grams. It does not have a user interface (except for the power button). To interact with the wallet, you need a smartphone with the CoolWallet application.
CoolWallet offers an encrypted Bluetooth connection for iOS and Android devices. The security element protecting the private keys of the Pro complies with the EAL 6+ standard.
CoolWallet Pro supports Tron, Cosmos, Polkadot, Bitcoin, Ether, Litecoin, Ripple, Stellar, BNB, USD, ERC20, BEP20, and TRC20 tokens, as well as DeFi protocols, NFT collectibles, and DApps.
Safepal S1 is the only wallet invested in by Binance, the largest exchange in the world. It has totally integrated its app within the Safepal app, so the user interface is more complex. The company uses it to help you set up a Binance account so that you can transfer funds back and forth between the hardware wallet and your exchange wallet, and then make trades and interact with the Binance ecosystem.
The Safepal S1 hardware wallet has a camera on the back. This camera is used to scan barcodes which are displayed on your phone as the process for approval. It is entirely AirGaped, so it doesn't have Bluetooth or a wire connection. It just uses the camera to make the connections, and your secret passphrase always remains on the hardware device and never leaves it.
Safepal S1 combines a standard microcontroller for routine operations, a secure EAL 5+ chip for storing private keys, and a built-in AIS31 random number generator. The device works through the Safepal App available for iOS and Android devices.
Which Is the Best Cold Wallet?
Ledger Nano X is the #1 Top Pick, it is considered the best cold crypto wallet 2022. It provides support for a huge number of digital assets (5,500+ cryptocurrencies), the device is pretty easy to use, mobile and computer friendly, and reliable. According to modern experts, Ledger Nano X is the most secure hardware wallet.
Trezor Model T is the second most popular hardware wallet, which uses network-isolated authentication methods and offers an extremely secure offline storage. It can store more than 1,800 different cryptocurrencies. The only criticism against Trezor T is the small touch screen, which makes it difficult to type on.
A cold, or hardware, wallet for storing cryptocurrencies is a small physical device on which your password and recovery phrase are kept. With the help of such a device, you get access to your funds, which are stored in the blockchain. Since the passphrases are offline, the risk of hacking and data loss is minimized. As long as your private keys are kept private and stored on your device, then no one is able to steal your coins or reload your wallet using your information.
Ledger Nano X is estimated to be the best hardware wallet, however, you can always compare the devices and their availability in your region and choose the one that suits your goals best. Your choice may depend on whether your wallets support decentralized finance and whether you need tools for interaction, for example, with Metamask or Binance.
What Is a Hardware Wallet?
Hardware wallets are small devices that keep your password and recovery phrases offline. They are also known as cold storage wallets and are used for the long-term and highly-protected storage of your cryptocurrency assets.
How to Use a Hardware Wallet?
The use of a cold wallet depends on your model. According to the general rules, sometimes you need to connect the device to the computer with a wire, sometimes through a wireless Bluetooth connection and QR-codes scanning. For example, Safepal S1 or CoolWalllet will require a smartphone app. Overall, instructions are necessarily attached to each of the options.
How to Transfer Crypto to Hardware Wallet?
There are several steps you need to take to transfer crypto to the hardware wallet for the first time:
Purchase a hardware wallet
Run the software on your device, mind the instructions to your model of the wallet
Set a PIN code for your cold wallet
Get an application that will allow you to access your funds and the history of transactions
Try whether it works by sending or receiving crypto assets.
What Happens If You Lose Your Hardware Wallet?
Don't worry about it. The beauty of the blockchain is that your funds are stored in a decentralized manner anyway, and the wallet gives access to them. As long as you have a recovery phrase, nothing will happen to your funds. If you have lost or broken your device, you will need to buy or install a hot or cold wallet compatible with the previous one and input your recovery seed. This way you will get access to your assets.