The popularity of bitcoin has been increasing every day, and thus many people want to trade and invest in bitcoin. Bitcoin has obtained a special position in the cryptocurrency world compared to other cryptocurrencies. However, before investing in bitcoin, it is mandatory to know much about bitcoin. One of the most asked questions about bitcoin is What is Bitcoin Cold Storage?

People want to keep their coins safe and secure. Due to this, they often search about the storage facilities. The use of the proper storage helps the users protect their secret code, which requires to access their bitcoins. A growing number of people are looking to keep bitcoin secure and safe. But, they do not know that bitcoin cold storage is a reliable solution. You will get to know in-depth about bitcoin cold storage on this page. It helps you understand how vital storing bitcoin in cold storage is.

Overview – What is Bitcoin Cold Storage?

  • Cold storage indicates various non-digital and physical methods of holding bitcoin tokens off of the internet in the cryptocurrency world. Although cryptocurrency is the digital currency, users still need to access these physical methods to store the vital details to use and trade the coins.
  • For experts’ eyes, the cold storage method is considered the best. Now, the question comes to your mind – What is Bitcoin Cold Storage? Cold storage methods are highly preferable to hot storage methods. It is because hot wallets are more susceptible to being hacked.
  • Hot wallets are also digital cryptocurrency wallets accessible in desktop and online forms. It has the potential to hold any cryptocurrencies. It also includes the less mainstream types of coins. In many cases, it helps you to store the coins for free.
  • Contrary to this, cold storages are physical devices, which assist you to keep your coins entirely offline. In simple words, cold storage in the crypto world refers to the physical objects you will store in your cryptos.
  • The devices you access to store coins are often encrypted with special security codes to safeguard your coins. In addition, you can still access those coins at any time. Other than cold storage, these devices are known as cold wallets.

What are Bitcoin Cold Storage and its major types?

In the previous section, you have understood – What is Bitcoin Cold Storage? Different types of cold wallets are accessible in the crypto world. So, it is essential to remember that not all wallets support all kinds of cryptos. You have to search and find the perfect fit for the coins you purchase. Here are the major types of cold storage.

Paper Wallets

Paper wallets often involve the printer and computer, which is entirely disconnected from the web. Users are required to download the paper wallet generator before disconnecting the internet.

After that, you have to generate the bitcoin address, private key and public key. Next, you have to print the paper wallet and delete the downloaded files. Finally, you can send crypto to every wallet.

Deep Cold Storage

It takes the idea of cold storage to the next level. It can be helpful in assets, which someone plans on leaving untouched longer or indefinitely. It needs a recovery phrase to access the stored keys and coins. Users need to keep the recovery phrase on paper or in a safer place to avoid mishaps.

Hardware Wallets

This wallet helps to store the private key but not on paper. It allows you to keep the keys on a small secured hardware device. These devices look like small USB devices. It would help if you connected them to your personal computer or other devices.

Then, download the program or visit the official page with which the hardware wallets interact. The wallet leaves only the transaction data, not the private key.

What is bitcoin cold storage, and when to use it?

What is Bitcoin Cold Storage? It is the offline destination to store your bitcoins safe and secure for a long time. However, many traders and investors do not know when to use the cold wallet. Due to confusion, they often put their keys and coins at risk. Here are the situations in which you have to consider the offline wallet (cold storage).

  • When you have to store a large amount of bitcoin and prioritize the security
  • Want to protect your coins yourself instead of trusting the third party application or service
  • When you prefer privacy is more important than anything else in the crypto world
  • You do not wish to use the storage often or access it anywhere and anytime
  • When you are ready to pay for the hardware to store your coins
  • Storing the bitcoin in cold storage renders you huge flexibility and security. You can utilize the USB drive or other offline data storage solutions. It helps you to store the coins in a safe place.
What is Bitcoin Cold Storage, and how to set up the cold storage for the bitcoin wallet?

Even though online wallets are convenient to store bitcoins and transfer funds in and out of the wallet anytime, cold storage is the safest option. You can store your bitcoins offline away from the internet in the cold wallet.

It is beneficial when you have an ample amount of bitcoin. Storing these valuable coins in the right destination gives you peace of mind. Here is how to set up the cold storage for your bitcoin wallet to keep the coins in safer hands.

Paper Wallet

One of the easiest and simplest ways to take your bitcoins offline is accessing the printer and paper. To do so, you will require a site that lets you create offline bitcoin addresses such as bitaddress.org. Once you have reached the right destination, you must follow these steps to generate the bitcoin paper wallet.

  • Navigate to Bitcoin.com paper wallet or Bitaddress.org page as per your needs
  • You have to save the page locally to your device as the HTML file.
  • Now, close the page and then disconnect your device from the web.
  • It is time to open up the saved version of Bitcoin.com or Bitaddress.org paper wallet.
  • For creating the new bitcoin address, you have to follow the instructions on the page.
  • Once you have the QR codes or pair of keys, you must print the page. Then, you should ensure your printer is not connected to the web for additional security.
  • Now, you can utilize the new QR code or public address to transfer the bitcoins from another online storage.
  • Keep in mind that the printed page is a valuable piece of document for your crypto investment. You have to store the printed page in the fire-proof and water-proof container to ensure its safety.
Bitkey

Even though a paper wallet is the best security measure, it is not safer than a clean operating system. It is always better to save the coins in the hardware (device). When you search for such a wallet, you often end up at Bitkey, a free bootable Linux distro.

It allows you to write to the CD-ROM or USB drive. In addition, it helps you to run live from the computer’s memory, and thus you can eject the disc or driver when it is running. It also has an in-built network, wireless managers and printer. It helps you in all the necessary bitcoin purposes. Compared to accessing existing OS, creating the paper wallet with Bitkey is hugely safer. Here are the steps to create the bootable CB/USB with Bitkey.

  • Navigate to the Bitkey site to download the OS image
  • Tab on the download button and obtain the 64-bit version
  • Select between CD-ROM and USB. CD-ROM is safer as they are read-only by default. On the other hand, USB sticks without write protection and thus removed after boot.
  • You can burn the CD with your favourite program and access the utility to write the Bitkey ISO to the USB drive.
  • Then, boot into Bitkey by accessing your device’s advanced boot function.
  • Upon successful boot, you can access Bitkey to develop the paper wallet and access Electrum client to develop the offline wallet.
What are the benefits of cold storage?

The cold storage is highly portable, which mean you have your bitcoins wherever you go. So, you do not worry about the safety of the cold storage. Apart from being portable, these physical storage forms are discreet. So, compromising security is not a problem anymore.

Since hot wallets are online and digital, they are vulnerable to hacker attacks. But, cold storage prevents this problem. It offers the added layer of protection from scammers and hackers. It also has the potential to complete the transaction with trusted traders.

Bottom Line

So, you are now aware of What is Bitcoin Cold Storage? The advantages of cold storage tell you how safe your coins are when stored offline. Due to this, think and decide before preferring the specific wallet to store your bitcoins.