🔸What is a cold wallet?

Cold wallet in English is "Cold Wallet", which means an "offline wallet" that is not connected to the Internet. It stores assets such as cryptocurrencies and NFTs in an offline physical device USB, such as withdrawing assets from an account and locking them in a safe. middle. The advantage is that it is stored in a personal wallet, which is safer; the disadvantage is that there is a purchase cost, and the transaction requires USB authentication, which is a cumbersome process.

🔸Why use cold wallet: Stay away from risks

Cryptocurrency investors all know that using cold wallets is the best way to protect crypto assets. Regulation of the cryptocurrency industry has not yet been implemented, and there is no guarantee that there will not be a black swan event like the bankruptcy of FTX.

Before the regulation of the cryptocurrency industry has been implemented, centralized exchanges cannot effectively protect their own assets. Although centralized exchanges can give you interest with high annualized returns, once a systemic crisis occurs, they have A cold wallet is very important.

🔸Why are cold wallets safer?

Cold wallets allow users to hold their own cryptocurrency assets and perform transfers from other wallets without interacting with any smart contracts or external resources.

Most threats of cryptocurrency theft come from the Internet, and cold wallets are not connected to the Internet, so they can stay away from digital threats and prevent assets from being stolen. Compared with hot wallets, the main difference between the two is that hot wallets are connected to the Internet, while cold wallets are not. This means that cold wallets can prevent unauthorized access and network attacks.

🔸How are cryptocurrencies stored in cold wallets?

Selecting the option to receive cryptocurrencies will generate an address to which cryptocurrencies can be sent for storage in a cold wallet. Cold wallets achieve security by using private keys to sign transactions in an offline environment. Therefore, after any transaction is initiated, it will be temporarily transferred to the USB

🔸Why is it recommended to use cold wallet?

Many disturbing events occurred in the cryptocurrency market in 2022, from market crashes to institutional explosions to the bankruptcy of the FTX exchange.

This makes investors more aware that centralized exchanges cannot effectively protect our assets before the regulation of the cryptocurrency industry is perfected. Although centralized exchanges may offer high interest rates, a heavy price will be paid in the event of a systemic crisis.

Cold wallets can provide greater security and control, and help us avoid the risks of centralized exchanges. For those who invest in cryptocurrency, whether you are holding it for a long time or trading it for a short period of time, it is recommended that you put your infrequently operated cryptocurrency assets into a cold wallet. Therefore, it is very important to have a cold wallet!

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