Cryptocurrencies attract millions of investors with their potential, decentralisation and promise of high returns. But along with the opportunities come risks. Hacking attacks, phishing schemes and other threats leave digital assets vulnerable, especially if they are stored on online platforms.
The concept of cold storage, or storing cryptocurrency in complete isolation from the internet, is not just a technical precaution; it is a fundamental step towards understanding and recognising the real value of what you hold. Cold wallets don't just protect your investment, they emphasise your decision to be a responsible and informed participant in the cryptocurrency revolution.
Why a USB stick?
The flash drive can be used as a “cold storage”, which means storing cryptocurrency offline, without an internet connection. This significantly reduces the risk of losing funds due to hacker attacks, malware and other online threats.
1. Preparing the Flash Drive:
Selecting a Flash Drive: It is recommended that you use a new flash drive that you have not used before.
Formatting: Perform a full formatting of the flash drive before use to eliminate possible threats.
Secure OS: Ideally, use a secure operating system designed for privacy and security.
2. Installing the Wallet on a Flash Drive:
Selecting a software wallet: Download and install the wallet software for your desired cryptocurrency on a flash drive. For example, Electrum for Bitcoin.
Setup: After installation, launch the wallet and go through the setup procedure. Don't forget to protect it with a password.
Backup Phrases: Most wallets have what is called a “Seed-phrase” or backup phrase (usually 12-24 words). These words will allow you to restore your wallet in case you lose access to your flash drive. Write them down on paper and keep them in a safe place.
3. Cryptocurrency Transfer to Wallet:
Open your wallet on your flash drive and find your public address.
Make a transaction to this address from your main wallet or exchange.
4. Storage and Safety:
Offline: Always store the USB stick offline. When you are not using it, unplug it from your computer.
Physical safety: Store the flash drive in a safe place, protected from physical damage, heat, and water.
Duplication: Consider backing up the contents of the flash drive to another physical medium.
Encryption: Use encryption software such as VeraCrypt to encrypt your flash drive. This is an extra layer of protection in case the flash drive is lost or stolen.
Storing cryptocurrency on a thumb drive is a practical and relatively safe method to protect your assets from online threats. However, it is important to make regular backups, update your wallet software, and monitor the physical integrity of the device. Following simple security rules will help ensure that your valuable assets are safe.
What is a hardware wallet?
A hardware wallet is a physical device specifically designed to securely store private cryptocurrency keys. These keys never leave the device, making it one of the safest ways to store cryptocurrencies offline.
1. Advantages of Hardware Wallets:
Security: No internet connection reduces the risk of hacking and information leakage.
Isolation: Private keys are stored in isolation and never leave the device.
Versatility: Many hardware wallets support a variety of cryptocurrencies.
Interface: User-friendly interfaces that make it easy to manage assets.
2. Popular Hardware Wallets:
Ledger Nano S and Ledger Nano X: Some of the most popular hardware wallets that support multiple cryptocurrencies.
Trezor One and Trezor Model T: These wallets also have a good reputation among the community and support a lot of altcoins.
KeepKey: Another device with a large screen for ease of use.
3. How to Start Working with Hardware Wallet:
Setup: After purchase, connect the unit to your computer and follow the on-screen instructions to set up the unit.
Backup Phrases: During setup, you will be provided with backup phrases (usually 12-24 words). These words allow you to restore your wallet to another device. Be sure to write them down and keep them in a safe place.
Set PIN Code: Set a PIN code for added security.
Cryptocurrency Transfer: Send cryptocurrency to the public address provided by your new hardware wallet.
4. Safety Tips:
Updates: Check and install updates for your wallet regularly. This will help ensure maximum security.
Backups: Keep your backup phrases in a safe and secure place. Without these phrases, you may lose access to your funds.
Physical Security: Although hardware wallets are protected from hacker attacks, they are still susceptible to physical theft. Keep them in a safe place.
Hardware wallets provide one of the safest solutions for storing cryptocurrencies, combining ease of use with a high level of security. If you are planning to invest or have already invested in cryptocurrency, consider purchasing a hardware wallet as an investment in the safety of your assets.
