How to use cold storage to secure bitcoin, crypto

If all the recent upheaval in the crypto market has you on the verge of selling, there is another option worth exploring. Cold storage can protect your digital assets by taking them offline and storing crypto in a digital wallet. Since these digital wallets are not connected to the internet, they are less prone to hacks.

The recent downfall of FTX is a good example of why it pays to keep some, or all, of your cryptocurrency in cold storage. When your crypto is on an exchange, like FTX, you can only access these assets if the exchange is able to distribute your funds to you. If the exchange gets hacked or mismanages funds, your money could be gone.

The disadvantage of cold storage is that your assets are less liquid and more difficult to act quickly, as you have to go through various protection steps to access your funds.

If you’re interested in moving your crypto to cold storage, here’s how to get started.

There are a number of cold storage wallets you can buy to get you started. Not all cold storage wallets support all tokens. Here are some of the most popular options.

Ledger

Leger has two cold storage wallets on the market: the Ledger Nano S Plus which costs $79 and the more expensive Ledger Nano X.

Depending on the model you get, these devices can either be connected to your computer with a USB cable and an iOS or Android enabled mobile device, or with Bluetooth functionality.

It supports over 5500 types of cryptocurrency. It is worth noting that Ledger experienced a hack in 2020, where 1 million email addresses were leaked, but no crypto assets were stolen.

Trezor

The Trezor has an entry-level model that costs $72, as well as the Model T that costs $213.

The $213 cold storage wallet is similar to the Ledger Nano X, except it lacks Bluetooth functionality. This is on purpose, as some are concerned that Bluetooth could be vulnerable to hacks. It is also compatible with a browser, desktop OS and it is supported by Android. However, there is no support for iOS.

Elliptical

Instead of using USB or Bluetooth connections, Ellipal’s Titan wallet uses QR codes and starts at $119.

This device supports over 10,000 types of tokens.

It is important to buy your cold storage wallet directly from the manufacturer. The last thing you want to do is end up with a device set up with a known password, designed to scam you.

1. Connect the cold storage device to the computer.

2. Download the software that came with the cold storage wallet.

3. You will be given a start phrase or reserve code. It’s best to keep this code offline and safe, somewhere it won’t be lost or accessible to others. Write it down on a piece of paper and put it in a safe.

4. Each type of cryptocurrency (such as bitcoin, ethereumor tether) needs its own wallet. Follow the instructions to create a new wallet for each type of crypto you are trying to store.

5. To access your device, you must set up a PIN code.

6. Once you have a PIN, you will be able to add crypto to your cold storage wallet by clicking receive, which will show you the cold storage wallet address.

7. To remove your cryptocurrency from an exchange, log into the exchange and send the digital assets to your cold storage wallet address.

Keep your cold storage in a safe place and remember that if you lose it along with the seed phrase, your money cannot be recovered. If you lose your hardware wallet but still have your passphrase, you can purchase another hardware wallet and access your assets.

It’s a bit risky knowing that if you misplace this device along with the seed, 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.