The most important question when buying a cold wallet is not about whether it is worth the money, whether is it easy to use, or does it support my favorite coins. The most important question is: is it safe?
This leads to the most asked question of all: "Can my cold wallet get hacked?"
The simple answer is NO. Cold wallet companies have spent fortunes on researching and developing the most secure features to include in their devices and making sure that they can not be hacked. However, technology improves rapidly every day, there is no guarantee that it will never be hacked.
Nonetheless, cold wallet owners (or soon-to-be owners) need to understand the security that these devices provide and how they can effectively protect you from getting hacked.
The word "Cold" with wallet comes from the fact that the wallet is offline at all times. In comparison to the "Hot" wallet, which is always online, like a mobile APP wallet.
Cold wallets are designed to not be able to connect to any network or other equipment. When you take a look at the design of these devices, you will not see any USB ports, Bluetooth elements, or Wifi dongles. Even if you try, there is no way you can connect them to a network because it is designed to prevent that. We use the term "Air-gapped" to describe the ability to be fully isolated and not be able to connect to anything.
Air-gapped devices are something that hackers are most afraid of. Hackers rely on an internet connection or USB connection to get inside the wallet and steal information. When it comes to air-gapped devices, there is no pathway for them to take advantage of, making it not possible for hackers to complete the hack.
Even if the device has already been installed with malware beforehand (for example: if the manufacturer has malicious thoughts), the malware would still be useless. This is because there is no gateway for the malware to broadcast out whatever information it had stolen.
This is the opposite of another kind of wallet device known as a hardware wallet. Although these devices, although they are offline most of the time, they still need to be connected to an online device to carry out transactions. The connection comes in the form of USB, Bluetooth, NFC, or Wifi.
In a famous study done a few years ago on the famous hardware wallet Ledger Nano S, the hacker successfully accesses the account through a USB connection, proving that these connections can be a threat.
Nonetheless, even if air-gapped make a cold wallet incredibly secure, talented hackers can still disassemble the wallet to attack it directly. This leads to another protection feature that some cold wallet provides.
Wallets like ELLIPAL have one of the most well-known protection features against physical hacking. This is mostly known as the anti-tamper feature.
What the anti-tamper feature does is that it detects any attempts of physical hacking, such as any violent attempts to crack the screen from the wallet or open the casing. These tremors will let the anti-tamper feature know that there is an attempt to hack the wallet going on and it will automatically "self-destruct" the wallet. The wallet won't explode but it will delete every data you have on it and it will make the wallet not usable ever again. Not only does this prevent the hacker from getting access to your crypto, but it also prevents you from using a wallet that has already been hacked.
Am I Fully Protected?
After reading about features like Air-gapped security and Anti-tamper protection, you may feel like cold wallets are the most secure place to secure your crypto. This is true, but that does not mean you should let yourself go completely.
There are still many ways that your crypto can be stolen. One of the most common ways people get their crypto stolen is through phishing or theft of the Mnemonics (Recovery seeds). Mnemonics are a set of words given to you by the wallet whenever you create an account. This set of words is unique only to you and can be used to recover your wallet at any time. As the name suggests, it is the backup of whatever asset you have.
The importance of mnemonics is immeasurable and wallet companies always let the users know to protect them safely. However, oftentimes, people lose their crypto because they are tricked to give their mnemonics away. Some get their mnemonics stolen from their homes. The best way to protect your mnemonics is simply to lock it up somewhere safe and never show it to anyone but yourself.