Are Cold Storage Coins Safe?

on October 20 at 05:48 AM
Cryptocurrencies are hot commodities but there is always some risk. A recent security breach at KuCoin exposed $281 million worth of crypto assets to hackers. Luckily, most of the funds were restored. Another major security breach affected Japanese cryptocurrency exchange Bitpoint, which lost $32 million in user funds.

When storing cryptocurrency, the best option is to use a cold storage wallet. A cold storage wallet is not connected to the internet, and therefore has a lower risk of being compromised. These offline wallets are also known as hardware wallets. Cold storage wallets are best for larger amounts of coins.

Using a cold wallet requires additional security measures. The private keys in hot wallets need to be protected. A stolen private key can lead to the loss of your bitcoins or altcoins. It’s important to back up your private keys and seed/recovery words before storing your funds on a cold wallet. Cold wallets are generally more secure than hot wallets, but they require more time to set up. In addition, they are less convenient, which is a downside.

The other option is to use a paper wallet. This is a great option if you don’t want to risk losing your coins. However, it’s important to note that a paper wallet can be easily lost, damaged, or burned. Furthermore, a paper wallet’s ink can deteriorate. Having a recovery seed ensures your funds are still safe even if your hardware wallet fails.

Besides cold storage, you should also be aware of the possibility of losing your cryptocurrency in digital currency exchanges. Though they are convenient, they’re not as safe as a cold storage wallet. Hot wallets are also vulnerable to hackers. Some exchanges will offer a separate hot wallet for their users so it’s easy to transfer crypto back and forth.

In addition to cold storage, you should make sure that your wallet is compatible with the cryptocurrency you plan to store. This option requires a higher level of technical knowledge than a cold wallet. Lastly, you should make sure that you’ve chosen a trusted exchange if you’re serious about cryptocurrencies. Coinbase is a good choice, and they hold 994,904 bitcoin in cold storage, which is close to $11 billion, though it has decreased since last year.

The Cold Storage Coins app is the best place to track the value of your collection. It’s also easy to redeem your coins. However, the security seal is very difficult to remove, so you may need to clean the coin’s surface before scanning its QR code. WD-40 works well for this.

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