Ether has vastly outperformed bitcoin since both cryptocurrencies bottomed out in June 2022. Ether’s top gains came as investors anticipated a major upgrade to the ethereum blockchain called “the merger.”
If all the recent turmoil in the crypto space has you on the verge of selling out, there is another option worth exploring. Cold storage You can protect your digital assets by taking them offline and storing your crypto in a digital wallet. Since these digital wallets are not connected to the Internet, they are less susceptible to attack.
The recent fall of FTX is a great example of why it pays to keep some or all of your cryptocurrency in cold storage. When your crypto is on an exchange, like FTX, you can only access those assets if the exchange can distribute your funds to you. If that exchange gets hacked or is mismanaging funds, your money may be gone.
The downside of cold storage is that your assets are less liquid and more difficult to trade quickly, since you have to go through several protection steps to access your funds.
If you’re interested in moving your crypto to cold storage, here’s how to get started.
Types of cold storage wallets
There are a number of cold storage wallets you can buy to get started. Not all cold storage wallets support all tokens. Here are some of the most popular options.
Leger has two cold storage wallets on the market: the Ledger Nano S Plus, which costs $79, and the more expensive Ledger Nano X.
Depending on the model you get, these devices can connect to your computer with a USB cable and an iOS or Android-enabled mobile device, or with Bluetooth capability.
It supports more than 5,500 types of cryptocurrencies. It’s worth noting that Ledger experienced a hack in 2020, in which 1 million email addresses were leaked, but no crypto assets were stolen.
Trezor has a basic model that costs $72, as well as the Model T that costs $213.
The $213 Cold Storage Wallet is similar to the Ledger Nano X, except it doesn’t have Bluetooth capability. This is intentional, as some are concerned that Bluetooth could be susceptible to attacks. It is also compatible with a web browser, a desktop operating system and is compatible with Android. However, there is no support for iOS.
Instead of using USB or Bluetooth connections, Ellipal’s Titan wallet uses QR codes and starts at $119.
This device supports more than 10,000 types of tokens.
It is important to purchase your cold storage wallet directly from the manufacturer. The last thing you want to do is end up with a device that has been set up with a known password, designed to scam you.
1. Connect your cold storage device to your computer.
2. Download the software provided with your cold storage wallet.
3. You will be given a seed phrase or a backup code. It’s best to keep this code offline and safe, somewhere where it won’t be lost or accessed by others. Write it down on a piece of paper and keep it in a safe.
4. Each type of cryptocurrency (such as bitcoins, etherealeither tie) you need your own wallet. Follow the instructions to create a new wallet for each type of crypto you intend to store.
5. To access your device, you will need to set up a pin.
6. Once you have a pin, you will be able to add your crypto to your cold storage wallet by clicking receive, which will show you your cold storage wallet address.
7. To withdraw your cryptocurrency from an exchange, log into the exchange and send the digital assets to your cold storage wallet address.
Keep your cold storage in a safe place and remember, if you lose it along with your seed phrase, you won’t be able to get your money back. If you lose your hardware wallet, but still have your seed phrase, you can purchase another hardware wallet and access your assets.
It’s a bit of a risk knowing that if you misplace this device along with the seed phrase, there’s nothing you can do, but at least you have full custody of your assets, unlike when your digital assets are tied to an exchange.