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Cold storage is a method of protecting crypto assets—here’s why many crypto investors are using it.
After purchasing bitcoin, ether or another cryptocurrency, you can store it in two types of crypto wallets: hot or cold storage. A cold wallet is a hardware device that stores the private keys through which you access your crypto. Because cold wallets are offline, they are protected from online hacks and other security risks. In contrast, hot wallets are digital wallets that are always connected to the internet, giving investors easy and quick access if they want to sell or transfer their coins.
Crypto investors can use hot and cold wallets for different purposes. Cold storage wallets are best used for long-term storage, while hot wallets are useful when making trades. Frequent traders may find it an inconvenience to carry and plug in their cold (hardware) wallets each time they want to trade, but the worrying increase of scams makes them attractive.
Example: “I’m moving my crypto to a cold storage wallet so that my crypto can’t be hacked online.”
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