Have you ever asked yourself if you need a cold wallet?
Almost every serious crypto investor in the world would have had the same question that pops up in their mind: "Do I need a cold wallet"? The answer is yes! Every serious investor needs one, the question is more about when?
With all the risks and malicious threats that dangers your crypto daily, every crypto investor should get a cold wallet to protect their assets. However, if you are only investing a few hundred dollars, it might not be reasonable to buy one just yet. Most people will start by accumulating a fair amount of crypto until they feel it is risky not to upgrade their security.
If you are one of those investors that already want to upgrade your security, here are the main reasons you should get a cold wallet.
Full Custody of Your Assets
The famous term "Not your keys, not your coins" has been widespread on the internet ever since cryptocurrency became popular. It is a term to encourage people to switch from keeping their assets on exchanges to wallets instead.
Exchanges are called custodial wallets (Centralized wallets). When you store your crypto inside an exchange, your crypto becomes part of that exchange, they will hold the coins for you. The only thing that gives your access to your assets now becomes the username and password to log in to the exchange.
The risk arises when the exchange is down or when it stops its services. When that happens, you cannot log in to the exchange to access your coins. If the exchange stops its services permanently, all your coins are lost.
As exchanges are large online websites that hold a lot of money, they are the target of hacking. Billions worth of cryptocurrency are being stolen from exchanges every year and if the coins you entrusted to the exchange get stolen, you will never get them back.
On the other hand, wallets are called non-custodial wallets (decentralized wallets). They connect directly to the blockchain and do not need a separate entity to govern the asset. When you create a new account on a wallet, you will receive mnemonic words. These are a set of words derived from the private keys. What it does is that it allows you to recover all of your cryptocurrency in that account, anytime, anywhere. It gives you full control and full ownership of your assets as long as you hold on safely to the mnemonics.
Cold wallets, unlike any other wallets, are special because they are air-gapped. What it means is that it is fully offline, at all times. There is no connection port or electronic element that lets it connect to networks, the internet, or other devices.
Hot wallets (APP wallets) or hardware wallets are not air-gapped because they rely on wifi, cellular, USB, and Bluetooth connections. These connections are loopholes that allow hackers to hack inside the wallet or install malware to steal information.
Air-gapped security provides the most comprehensive and absolute connection to any kind of online threat because it eliminates any connection point that a hacker can access the wallet through.
Another advantage of air-gapped is that it does not let any information slip out. Sometimes, hackers can install malware into the device before you even create an account or deposit any crypto. Once you created an account and deposit crypto, the malware would broadcast your private keys to the hackers whenever it has a chance to get online. However, if your wallet is air-gapped, the malware will never be able to broadcast any private keys to anyone.
Possibility of Having a Backup
As explained above, every time you create a new account on a wallet, you will receive mnemonics. This will allow you to recover your whole account anywhere and at any time. You can recover the same account using mnemonics, even if you switched to another wallet brand. It is a very versatile solution and works directly with the blockchain.
Essentially, the mnemonics can be treated as a backup for your account. If you ever lose your wallet or if the wallet company chooses to stop its services, you can use the mnemonics to recover all of your assets onto a new wallet.
Due to how important the mnemonics are, given that they can recover a whole account, it is very crucial to keep the mnemonics as safe and private as possible. People use tools like Steel Wallets to keep their mnemonics safe in metal, so they can keep it secure for many years without wear and tear.
A steel wallet we recommend is the ELLIPAL Mnemonics Metal. It is 100% made of metal, lightweight, and easy to set up.
Recommended Cold Wallet
If you feel that you are at the point where you must increase your security, we recommend one of the best cold wallets on the market: The ELLIPAL Titan Mini.
The ELLIPAL Titan Mini is a lightweight, small, yet very sturdy and secure cold crypto wallet. It is fully made out of metal and it is air-gapped. It also has a large touch screen that helps you navigate the wallet intuitively.
If you are looking to take your security to the maximum level while still looking cool, be sure to check out the ELLIPAL Titan Mini.