What is a cold wallet and which one to choose?

Cold wallet is an offline storage for cryptocurrencies that protects private keys from hacking. There are hardware (Ledger, Trezor, Tangem), software, and paper options costing $50-$200. This article reviews the top 6 brands for secure storage of Bitcoin, USDT, and other assets.

What is the essence of a cold wallet?

Before discussing how to choose a service, let’s understand what a cryptocurrency cold wallet is. The main principle of cold storage is no internet connection. A cold crypto wallet does not support network access, which protects the stored private key from remote hacking.

It is important to understand: funds are not stored on the wallet itself but on the blockchain. The wallet holds private keys necessary to access and manage blockchain addresses. Only the user who can confirm the operation through a device with the correct key can use the cryptocurrencies.

This distinguishes cold wallets from hot wallets. Hot storage involves constant internet connection: private keys are online. This simplifies their use and allows operations from any connected device but reduces the security level of assets.

Most users turn to cold wallets for safe long-term storage of large sums. Such wallets cannot be used for smart contract interactions and are quite inconvenient for regular cryptocurrency transactions, but they provide a high level of protection valued by owners of large amounts.

Types of cold wallets

There are several types of cold wallets for different needs and levels of technical expertise:

Hardware wallets

The most common and user-friendly option. Several companies produce such wallets — for example, Tangem, Ledger, Trezor. These are physical devices that can look like a flash drive, card, device with a screen, etc. Control is exercised via control elements on the device (buttons or touchscreen) and auxiliary apps from developers.

Hardware wallets generate and store the user’s private keys on secure physical devices isolated from the internet. With auxiliary apps, hardware wallets can sign transactions offline and then transmit the signed transactions to an internet-connected device. This allows interaction with the blockchain without risking the security of your private keys.

Software offline wallets

Most software wallets are hot, but users of such services can easily figure out how to make a cold cryptocurrency wallet from a flash drive or another device. To do this, download a software wallet (for example, Exodus) onto a device without constant internet access.

This is a less secure option than using a hardware wallet, but the lack of internet connection increases the security of funds compared to hot storage.

Paper wallets

This is the simplest technical option: such wallets are a sheet of paper with the private key (QR code) printed on it. However, paper wallets have several disadvantages. Paper is not the most reliable material and can deteriorate over time. Paper wallets do not support seed phrases, making recovery impossible.

Deep cold storage

This method involves storing private keys not only offline but also with additional security measures — for example, in a safe or bank vault. This is the safest option but the least convenient for making transactions.

Advantages and disadvantages of cold storage

Crypto owners are interested in how to create a cold wallet for several reasons:

Advantages of a cold wallet

High level of security: No internet connection excludes remote hacking

Control over private keys: Non-custodial storage without intermediaries

Suitable for long-term storage: Ideal for large sums and investments

Protection from malicious smart contracts: Isolation prevents accidental approvals

However, such storage also has some disadvantages

Vulnerability to damage and loss: Physical device or paper can be easily lost

Inconvenience for frequent operations: No internet connection complicates transactions

High cost: Hardware wallets cost from $50 to $200

Requires technical knowledge: Beginners need time to learn

Top 6 reliable cold wallets

Ledger

Ledger offers compact devices like Ledger Nano and more advanced models with screens (Ledger Flex, Ledger Stax). The brand’s wallets support 5000+ coins and 50+ third-party software wallets. To fully use the device, install Ledger Live.

Ledger devices use a Secure Element chip (CC EAL6+). Access recovery is possible via seed phrase (12/24 words) and (optionally) Ledger Recover — a digital private key recovery service through identity verification.

Trezor

Trezor offers users convenient compact wallets supporting 9000+ tokens. There are also versions designed specifically for Bitcoin storage, which may be more convenient for Bitcoin users.

Wallets are equipped with a touchscreen for easy management and protected by a Secure Element chip. There is an option for remote reset in case of loss or theft. Backup options include Trezor Keep Metal for seed phrase recovery.

Tangem Wallet

Tangem Wallets look like plastic cards, valued for their compactness and portability. These cards contain chips that generate private keys upon account creation. A PIN code is used to protect funds.

A key feature of Tangem Wallets is the rejection of seed phrases. Access recovery, if needed, is done via backup cards. When purchasing, the user gets two or three cards: one acts as the main wallet, others as backup keys.

SafePal

SafePal is one of the most affordable wallets: models cost from $50 to $90. These are compact devices with a screen and buttons for easy management. Transactions are signed via Bluetooth or QR code scanning.

The wallet supports 100+ blockchains. Using the SafePal app allows working with DApps and NFTs, earning staking income via Binance Earn, trading currencies, buying/selling crypto for fiat.

Cypherock

Cypherock is a cold wallet that uses decentralization to protect the key. The key is split into five parts, one stored on the main device, and the remaining four on four cards. They are protected against physical hacking/damage and equipped with a Secure Element chip EAL 6+.

Cypherock supports 10+ blockchains and 9000+ coins. It requires the official (desktop-only app), a main storage wallet, and any of the four cards.

SecuX

SecuX offers several models: from touchscreen devices to compact cards. Wallets support 5000+ coins and are protected by a CC EAL5+ Secure Element chip. Besides standard crypto storage devices, the brand’s collection includes the first NFT wallet on the crypto market.

Recommendations for choosing a cold wallet

To select a good cold wallet for Bitcoin and other currencies, consider several factors:

Criteria for choosing a cold wallet

Security level: Ensure the device has protection against physical hacking, uses two-factor authentication

Supported cryptocurrencies: Wallets with more currencies are more versatile

Ease of use: If the wallet will be used for operations, ensure simple management

Price: Hardware wallets range from $50 to $200, find the optimal option

Additional features: Official apps may support conversion, trading, and other tools

Purpose of the cold wallet: secure storage. Make sure the device has protection against physical hacking, uses two-factor authentication, and other security mechanisms. It is important that the device supports the currencies you are interested in, including popular tokens like USDT.

How to create and use a cold wallet

Setting up cold storage for hardware device owners is quite simple. The process only requires creating a separate account on the device, with the security model isolating different accounts from each other.

Step-by-step guide

· Connect the device to a PC or smartphone and launch the official app

· Install a cryptocurrency app for the asset you want to interact with

· Create a new account for the selected crypto asset

· Save the recovery seed phrase in a safe place

· Set a PIN code for additional protection

· Send a test transaction to verify operation

By separating cryptocurrencies, the user protects important accounts with large coin reserves from accounts that can be used to approve malicious smart contracts.

For extra security, you can also split crypto assets between different hardware wallets, leaving one completely isolated from the internet. This means such a device will not be used to grant permissions to any smart contracts overall.

Cold wallet vs hot wallet: key differences

Hot or software wallets store private keys inside a device with an internet connection. Unfortunately, this scheme is associated with hacking risks. A device with internet access can contain malicious or spying software that can either reveal your private keys to an attacker or influence the device’s screen content and force you to sign an incorrect transaction.

At the same time, cold wallets are not afraid of malicious or spying software because they do not connect to the internet. They are also protected from malicious or hacked smart contracts, as such wallets are not used to grant permissions to applications and platforms.

In short, cold wallets are needed for long-term storage of crypto assets with the highest security level. Hot wallets are more suitable for regular small transactions and should not be used for storing large sums due to security risks.

Can USDT be stored on a cold wallet?

Yes, a cold wallet supports storing USDT and other stablecoins. Since USDT exists on multiple blockchains (Ethereum, Tron, Binance Smart Chain, and others), it is important to ensure that the chosen device supports the required network.

Most modern hardware wallets, such as Ledger and Trezor, support USDT on all major blockchains. This makes them a versatile solution for storing both volatile cryptocurrencies like Bitcoin and stable assets like USDT.

Storing USDT on a cold wallet is especially relevant for users who want to lock in profits in stablecoins without converting to fiat, while maintaining maximum security of funds. Offline storage protects against exchange hacks and hot wallet vulnerabilities.

Important security tips

Another reason hardware wallets are popular is the protection of private keys from loss or damage. Initial setup involves generating a secret mnemonic seed phrase, which allows restoring access to your accounts via an HD wallet from any manufacturer.

Accordingly, even if the device itself is lost, importing the seed phrase into a new hardware wallet will easily restore access to existing crypto accounts. But what if the hardware wallet falls into the wrong hands? It can also protect itself. For example, Ledger devices use a PIN code set by the wallet owner, required to unlock access.

Keep the seed phrase in a safe place, separate from the device itself. Never photograph it or store it digitally. Consider using metal plates to record the seed phrase for protection against fire and water.

Frequently Asked Questions

What is the essence of a cold wallet?

A cold wallet stores private keys without internet connection, protecting them from remote hacking. Funds are on the blockchain, but access is only possible through a device with the correct key.

What is the most reliable cold wallet?

Ledger and Trezor are considered the most reliable due to Secure Element chips (CC EAL6+), support for thousands of coins, and proven reputation. Tangem offers an innovative card format, and Cypherock uses decentralized key storage across 5 devices.

What is the main disadvantage of a cold wallet?

Main disadvantages: inconvenience for frequent operations due to lack of constant internet access, vulnerability to physical loss or damage, high cost ($50-$200), and the need for technical knowledge for proper setup.

Can USDT be stored on a cold wallet?

Yes, all modern hardware wallets (Ledger, Trezor, Tangem, SafePal) support USDT on major blockchains: Ethereum, Tron, Binance Smart Chain. Make sure the device supports the network you need.

How much does a good cold wallet cost?

Hardware wallets range from $50 (SafePal) to $200 (advanced Ledger Stax). Budget options provide basic security, while expensive models offer extended functionality, larger screens, and additional features.

How to recover access if the device is lost?

Most cold wallets use a seed phrase (12 or 24 words) for recovery. Import it into a new device to regain access to all accounts. Tangem uses a system of backup cards instead of seed phrases.