Although Bitcoin (BTC) remains the most prominent cryptocurrency with a market cap exceeding $870 billion and a single token price of more than $46,000 as of August 11, there are thousands of different digital tokens operating via decentralized platforms. Eighty-five of these, all known as altcoins due to the fact they are modeled after BTC but are not BTC, have a market cap of more than $1 billion.
As crypto trading and investing have increased drastically over the years, technology innovators have sought out ways to add layers of security to these transactions. This increased security is particularly vital as the regulatory framework of virtual currencies is murky at best, and those who have been victims of fraud generally have no recourse. Cryptocurrency wallets have emerged as a vital element of safeguarding these digital assets.
Some wallets are entirely based online, either via the cloud or on a user’s desktop. These are known as hot wallets. Cold wallets, in contrast, contain information such as the user’s private key and address and aren’t connected to the Internet. Also known as hardware wallets, they are physical devices that resemble USB drives.
Put simply, cold wallets are safer and more reliable than hot wallets because they don’t ever connect to the Internet. This means they can’t be hacked. Many of the more prominent sites and companies that offer hot wallets have in-house security measures, but these don’t always protect against hacking and scamming attempts. On the other hand, cold wallets are virtually impenetrable, and the codes they store can only be compromised if the holder gives them away or loses the device. Some cold wallets even ensure security when they’re plugged into a computer with a virus.
Ledger Nano X is one of the premier hardware wallets available for secure crypto transactions and storage. It’s made of stainless steel, so it is unlikely to be damaged easily, and it supports more than 1,500 cryptocurrencies. It can be managed via mobile device and has Bluetooth low energy (BLE) connectivity so that it can be used without a connecting cable. This doesn’t compromise security, however, as BLE only transfers public data; private keys and seed never leave the device. Should someone attempt to hack the Bluetooth connection, the Ledger Nano X’s Secure Element asks for the user’s permission before changes can be made.
Hardware wallets aren’t the only form of cold storage for cryptocurrencies. Similarly, users can print their public and private keys on paper and store them in a safe place. Known as paper wallets, these can feature a QR code that allows the user to scan and connect with a software wallet for quick transactions. Other less common options include sound wallets and deep cold storage.