Hello, guys in this post we will learn about crypto wallets and which is the best method to store your bitcoin hot & cold storage. After reading this blog you have a clear idea about crypto wallets: hot & cold storage methods. And able to store and use your cryptocurrencies like bitcoin in a safe and secure manner
Before we start a small disclaimer
This post is just for information purposes. Do not consider it as investment advice. We are not responsible if you gain or lose something using this information.
First, we are going to learn about Hot and Cold Storage bitcoin:
Cold storage refers to that storage method where no internet connection is made to store your bitcoin. Like paper wallets or some hardware device like pen drives, memory cards, or any kind of storage device which stores your private and public key of your bitcoins.
Cold storage is the best option for those who want to invest for the long term in bitcoins or those who don’t use bitcoins daily.
This could be preferred as your regular wallet where you put your hard cash to buy groceries or daily needs products. Same as a regular wallet you can store some bitcoins or any other cryptocurrency in your wallets to purchase or send bitcoins to your peers.
Bitcoin makes it easy to share values among users. But it’s risky if you lose your private key. Oh! You don’t know about private keys. Let’s learn about private and public keys.
This key is responsible for all bitcoin transactions you make using your hot & cold wallets. This is a long string that has numbers, capital, and small letters. This can not be guessed by anyone.
The private key is used to restore your bitcoins and see your previous transactions. Do not share your private key with anyone.
Public keys are generated by private keys. Which is used to receive and send your cryptocurrency like bitcoin. Don’t worry no one can know about your private key using your public key.
Root key or seed phrase
Seed phrases are collections of different words which are used to restore your all private key. Or you can say that you can backup your whole wallet using this seed phrase and your password.
You have to write down this seed phrase somewhere on paper or in the form of a text. If you lose or corrupt your wallets you can restore your wallet using these key seed phrases and your password which you set.
Pro Tip: remember your password and key phrases and store them securely. I lost my crypto because of my laziness in not storing them correctly.
Now, let’s learn about mobile, web, and software wallets. These all are examples of Hot storage.
These are very popular and easy-to-use crypto-wallets. Users can install them using google play store or the Apple app store. Using your mobile wallets you can send and receive your cryptocurrency very easily.
I’m using wazirx exchange to store my crypto coins. There are more charges than usual but it covers up when the value of crypto coins increases. You can also use stand-alone crypto wallets for every crypto coin. But they are not secure and you have to remember and have to regularly check your all crypto wallets.
But in a platform like wazirx you can manage all crypto wallets you want to use in one place and you don’t have to worry about your private key. And the security of your crypto coins or passwords. To explore more sign up for wazirx here.
Web and software wallets
These wallets are very helpful if you use cryptocurrency as a trading option. But they are not helpful if you want to scan a QR code to send money. You have to use wazirx mobile wallets for sending and receiving cryptocurrency using QR code easily.
Pro Tip: do not store lots of BTC or any cryptocurrency which you can not afford to lose. There are lots of ways to lose all your crypto coins so be careful.
If you don’t have extra money so please don’t use crypto coins. It is not considered your primary source of buying and selling goods and services.
Let’s learn about Cold Storage
Some devices like pen drives which can be used to store your private key, public key, and seed phrase can be called cold storage. Which are not directly connected to the internet or accessed by anyone other than yourself.
These devices refer to hardware wallets. These are special designs to store all your cryptocurrency credentials like a private key, password, etc.
You can use other hardware wallets to store your large amount of cryptocurrency. Because these are not connected to the internet like your mobile, web, or software wallets.
And these hardware wallets have the latest technology and cryptography techniques to store your cryptocurrency securely. On the other hand, your mobile or web wallets can be hacked by hackers.
If you lose the drive or somehow it’s destroyed. So, you can restore your crypto using your password and seed phrase. Which are special words that are used to restore your cryptocurrency wallets.
So, Another example of cold storage is paper wallets. Where you buy a large amount of cryptocurrency. And they give you a paper where your wallet’s public and private key both exist.
This can be easily destroyed or stolen from you. And you have to pay all your cryptocurrency at once.