crypto
How to store crypto in cold wallets
Introduction
Learn how to safely store crypto in cold wallets and protect your digital assets. Compare cold wallet against hot wallet options and glean the benefits of offline storage.
Moving your digital assets to cold storage is a foundational step in your self-custody journey. By taking your private keys offline, you create a physical barrier that helps protect your assets from the remote digital risks associated with internet connectivity.
Read on and learn how to go about cold wallet storage.
What is cold storage?
Cold storage is a method of holding cryptocurrency where the private keys —=– the digital codes required to authorise transactions – are kept entirely offline. While a standard wallet on your phone or computer is ‘hot’ because it stays online, cold storage uses an ‘air gap’ to ensure your keys are never exposed to a network.
Cold storage is really about self-custody. When you keep your crypto on a centralised exchange, the platform manages the keys on your behalf. In contrast, cold storage puts the responsibility and the control entirely in your hands. Only those with physical access to the offline keys can move the assets.
Core benefits of storing crypto in cold wallets
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Cold wallet vs. hot wallet: What’s the difference?
The main distinction between a hot wallet and a cold wallet is its relationship with the internet.
A hot wallet is a software-based tool that remains connected to the web, such as a mobile app, a browser extension or an exchange account. This connectivity makes it convenient for frequent traders who need to move assets quickly.
Cold wallets, however, are designed for the long term. By keeping the keys offline, they sacrifice the speed of instant transactions for a higher level of defense. Because the keys never touch an internet-connected device, the ‘attack surface’ for a remote hacker is effectively reduced.
To put it in an everyday traditional finance (TradFi) perspective, you’d keep a small amount of cash in your physical wallet for daily use (hot storage), but you stash the more important assets like gold or life savings in a bank vault or a home safe (cold storage).
Feature | Hot wallet (online) | Cold wallet (offline) |
Connectivity | Always connected to the internet | Permanently offline |
Primary use | Daily trading and quick transactions | Long-term ‘HODLing’ and large amounts |
Accessibility | High; accessible via phone or laptop | Moderate; requires physical device access |
Protection level | Vulnerable to remote hacks or malware | High; immune to remote digital attacks |
Cost | Usually free | Usually requires purchase |
Finding the right storage balance
Some find that a hybrid approach works best. You may choose to keep a small portion of your assets in a hot wallet – like the Crypto.com App or the Crypto.com Onchain – for easy access to trading and decentralised finance (DeFi) features. Meanwhile, the bulk of your long-term holdings can be moved to cold storage for peace of mind.
- Sign up to the Crypto.com App to start your journey into digital asset ownership.
- Explore the Learn Hub to read more guides on how to protect your assets and understand blockchain basics.
- Set up your wallet by considering the Crypto.com Onchain for a user-friendly entry into self-custody.
- Secure your future by transferring your assets to a method that fits your long-term protection goals.
Common types of cold storage
Hardware wallets | A hardware wallet is a dedicated physical device, often looking like a USB thumb drive. Its specific use is to store private keys and sign transactions offline. Even when plugged into a computer, the keys never leave the secure chip on the device. It’s one of the most popular forms of cold storage. |
Paper wallets | A paper wallet is a physical document containing your public address and its corresponding private key, usually in the form of a QR code. They can be immune to digital attacks, but they’re physically fragile. Paper can burn, fade or be misplaced. |
Air-gapped devices | Some users repurpose an old computer or tablet by permanently disabling its Wi-Fi and Bluetooth capabilities. By using specialised software on such offline machines, they can sign transactions and move them to an online device via a QR code or a microSD card. |
Metal backup solutions | While not a ‘wallet’ themselves, metal plates can be used alongside cold storage. Instead of writing your seed phrase on paper, you engrave it into stainless steel or titanium to protect against fire, water damage and physical decay. |
How to set up a hardware wallet
Setting up a hardware wallet may take anywhere from 10 to 20 minutes. While every brand varies slightly, most follow a standardised process to ensure your keys are generated safely.
1. Initialise the device
Connect your device to a power source or your computer using the official cable provided in the box. You’d start by setting a PIN code. This PIN is your first line of defense; it prevents someone who steals your device from accessing the interface.
2. Generate and record your seed phrase
The device will generate a random sequence of 12 or 24 words. This is your recovery (seed) phrase – the master key to your assets. Be sure to note it down and store it somewhere safe.
3. Verify the words
Most devices require you to confirm the words by selecting them in the correct order on the device's screen. This step confirms you haven't made a spelling mistake or recorded the sequence incorrectly. Once verified, the device is ready to use.
4. Bridge to an interface
To view balances or prepare transactions, you connect your hardware wallet to a software interface on your phone or laptop.
For example, you can connect a Ledger device to the Crypto.com Onchain desktop extension. This setup lets you manage your portfolio through a familiar app while keeping the actual ‘signing’ power locked inside the physical hardware.
Best practices for keeping your cold storage safe
Owning a cold wallet is only half the battle; the other half is how you handle it. Remember that there’s no ‘forgot password’ button in self-custody and your habits are your primary security layer.
1. Treat the seed phrase as the asset
If your hardware device breaks, you haven't lost your crypto. You can simply enter your 12- or 24-word recovery phrase into a new device to regain access. However, if you lose that phrase, those assets stay on the blockchain forever with no way to reach them.
2. The ‘never digital’ rule
This is where most people slip up. Never type your seed phrase into a computer, save it in a ‘secure’ cloud folder or take a photo of it. If these words ever touch a digital screen, it defeats the purpose of cold storage.
3. Verify on the device, not the app
Hackers can spoof a computer screen to show you a fake destination address. Always double-check the transaction details on the physical screen of your hardware wallet before you press the confirm button.
Plan for physical failure: Electronics can fail and paper can burn. Many users keep one backup of their seed phrase in a fireproof safe at home and a second copy in a separate, secure location.
Not your keys, not your coins
This phrase is a cornerstone of the crypto community for a reason. When you hold assets in a custodial environment, you are essentially holding a claim to that crypto. In cold storage, you hold the crypto itself.
While centralised platforms like the Crypto.com App provide vital convenience and features like 24/7 support, moving your long-term HODL positions to an offline environment ensures that you remain the sole authority over your wealth, regardless of what happens in the digital world.
FAQs about cold wallets
What happens if I lose my hardware wallet?
Your crypto is stored on the blockchain, not the device. As long as you have your 12- or 24-word recovery phrase, you can buy a new device and restore your entire wallet in minutes.
Can I still receive crypto if my cold wallet is unplugged?
Yes. Your public address is always active on the blockchain. You can send funds to your cold wallet address at any time; you only need the physical device when you want to send crypto out of that wallet.
Do I need a separate hardware wallet for every coin?
Most modern hardware wallets are multi-chain. A single device (and a single seed phrase) can typically manage BTC, ETH, SOL and thousands of other tokens simultaneously.
Is it better to use Crypto.com Onchain or a hardware wallet?
It depends on your goal. Crypto.com Onchain is suitable and convenient for daily DeFi interactions and swapping tokens. A hardware wallet is better for large amounts of crypto that you don't plan on touching for months or years.
Important information:
This article is for informational purposes only and should not be construed as financial or investment advice. Trading cryptocurrencies involves risks, including price volatility and market risk. Past performance may not indicate future results. There is no assurance of future profitability. Before deciding to trade cryptocurrencies, consider your risk tolerance.
Services, features, and other benefits referenced in this article may be subject to eligibility requirements and may not be available in all markets. They may also be subject to change at the discretion of Crypto.com.