What is cold storage?
Cold storage is a method of storing your cryptocurrencies securely offline. All crypto currency wallets consist of 2 keys; a public key which is your receiving address for people to send funds to you, and a private key which is used when you send funds to somebody else. If anybody else has access to your private key, they have free access to send funds to any address they wish, potentially cleaning out your wallet. There are a number of cold storage methods, but in essence what they do is store your coins, private & public keys and everything else related to your wallet offline and disconnected from potential hackers.
Wallets are simply the pairing of randomly generated encrypted codes, a public (receiving) address and a private (sending) address. As long as you keep the private key safe, nobody but you can spend, use or store your coins. It sounds complicated, but it’s actually incredibly simple.
Different cold storage methods:
Hardware wallet: Hardware wallets store your coins in a USB drive wallet. They are specifically made for holding cryptocurrencies, and every day being updated to support more and more alt coins. They’re favoured by long time holders, and therefore stored completely disconnected from the web and any kind of network which could be hacked. Users simply plug the USB drive into their PC whenever they need to send of receive funds. If you are serious about investing in cryptocurrencies it is highly recommended that you invest in a hardware wallet as this is the most secure method of storing coins along with paper wallets but has far more practical uses than a paper wallet.
Click below for a list of popular Hardware Wallets.
Paper wallet: Wallets can be created in paper format. They are perhaps the safest way to store because they’re entirely offline, however if the keys happen to be lost or damaged, which paper is susceptible to, your coins could be lost forever. If you’re going to go down the paper wallet route, it is highly recommended to make multiple copies, but do keep in mind that if anyone finds it, they have total access to clean you out.
Creating a paper wallet is simple.
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