Cold storage and why it is safer for longer time holding

[Comeacross]

Dem get plenty thread about wallet in this forum including this [General] Bitcoin Wallets - Which, what, why? in beginners and help board but people are still asking about which wallet to use every now and then.

Make I talk true, some people no fit differentiate between COLD storage and HOT wallet. This is not about being a newbie or high rank, it's a bitter truth. So I go briefly brush Cold and Hot wallet and then proceed with why Cold storage is the ideal wallet for long time holding.

HOT wallet na wallet wey dey connected with internet. They are very convenient for day to day transaction. All those mobile app wallets like Trust wallet, Metamask, Rabby, Phantom etc na Hot wallet. Because dem generate seed phrase give you no mean say your coin is completely safe. Even your exchange wallet fall on this category and the risk na all the same because Phishing links, malwares or exchange hacks dey associated with Hot wallets.

COLD storage na the type wey dey keep your keys completely offline. The only time you connect this wallet to internet na when you wan sign transaction and na just briefly without exposing your keys to internet.

Why this COLD storage na the ideal for long time holding?

First and foremost na self custody. Cold storage gives you complete and true ownership of your coin. That "Not your keys, not you coin" you dey normally hear na cold storage dey talk be that.
Secondly, na for online hackers dey operate and your cold storage no dey active online. E mean say your coin is free from internet wahala. Dem no fit come your house come hack am na.
Thirdly, just the way banks dey freeze account if something happens or if you no use am for long, na so exchange dey freeze account too if dem suspect something fishy on your account or you abandon it for long time. But Nothing concern your Cold storage with anything wey you do. As far as you no touch am, e go dey no matter how long.
Lastly, hot wallets developers no dey tire with updates up and down. Dem go fix this problem today and fix that problem tomorrow and ask you to update your app to their latest version. Na through this process hackers dey get opportunities to chip in small thing and before you know fake version go surplus and wrong update will make your coin vanish. Cold storage no get all this wahala and you go sleep with your two eyes closed. Just make sure your keys are safe out there.

How many of us here dey use Cold storage? Because I know majority of us na Hot wallet we dey use thinking our assets is safe.

[Mhizlove]

Why be say many people dey use wallet na because say e dey more convenient and easy to use, cold storage on the other hand needs a little setup and discipline and I don't think alot of people has reach that kind level of seriousness with their coin. But people are supposed to change as their balance grows because hot wallet can save litte and for daily use, so if your primary coin is still online then you've not really protected it. You see cold storage no be about say e dey popular but about security conscious

[Coyster]

First and foremost na self custody. Cold storage gives you complete and true ownership of your coin. That "Not your keys, not you coin" you dey normally hear na cold storage dey talk be that.

That is not true. A non-custodial wallet is simply any wallet that the owner controls the keys. It could be a cold wallet or a hot wallet, it does not matter. Trust Wallet is an online wallet, but it is also a non-custodial wallet because its users control their keys. Another example is Electrum, it is on online wallet, but a non-custodial wallet.

Thirdly, just the way banks dey freeze account if something happens or if you no use am for long, na so exchange dey freeze account too if dem suspect something fishy on your account or you abandon it for long time. But Nothing concern your Cold storage with anything wey you do. As far as you no touch am, e go dey no matter how long.

You need to understand the difference between cold and online wallets and also non-custodial and custodial wallets. It is only when you use custodial wallets that you run the risk of your funds been frozen, and when you hodl stablecoins, which can be frozen in any wallet, irrespective of whether it is custodial or non-custodial.

Lastly, hot wallets developers no dey tire with updates up and down. Dem go fix this problem today and fix that problem tomorrow and ask you to update your app to their latest version. Na through this process hackers dey get opportunities to chip in small thing and before you know fake version go surplus and wrong update will make your coin vanish. Cold storage no get all this wahala and you go sleep with your two eyes closed. Just make sure your keys are safe out there.

This is not true. Hardware wallets are cold wallets and they do get regular firmware updates. Having said that, there is absolutely nothing wrong with regular updates in any crypto wallet. It fixes bugs, addresses certain vulnerabilities, improves/enhaces user experience, and so much more.

[Nathrixxx]

In summary, I will have to say this.

1. It is important that we know the various types of wallets we have in cryptocurrency and differentiate them in their category by knowing what a custodial and non-custodial wallet means.

2. The second aspect of wheat is that we have to make sure that our non-custodial wallets are open source and not closed source wallets.

[Frankolala]

Because dem generate seed phrase give you no mean say your coin is completely safe. Even your exchange wallet fall on this category and the risk na all the same because Phishing links, malwares or exchange hacks dey associated with Hot wallets.

Exchange isn't a wallet but an account. Hot wallet that is noncustodial like Electrum and blue wallet are very safe to use but the safety of your coins depends on you and not the wallet. People are using these hot wallets and manage the security aspects of their wallets properly. Though, cold storage wallet or hardware wallets are more safer.

COLD storage na the type wey dey keep your keys completely offline. The only time you connect this wallet to internet na when you wan sign transaction and na just briefly without exposing your keys to internet.

it depends on the kind of cold wallet that you are talking about because electrum cold storage wallet doesn't need you to connect it to the internet, you sign your transaction through a usb stick without internet. You use your watch only wallet to create unsigned transactions, broadcast signed transactions and track your transaction.

[Donk1]

Why be say many people dey use wallet na because say e dey more convenient and easy to use, cold storage on the other hand needs a little setup and discipline and I don't think alot of people has reach that kind level of seriousness with their coin. But people are supposed to change as their balance grows because hot wallet can save litte and for daily use, so if your primary coin is still online then you've not really protected it. You see cold storage no be about say e dey popular but about security conscious

Well, true talk. That said I believe folks often use hot wallets because they are convenient and while most hot wallets aren't that safe, I will suggest using Blue Wallet as it has features of both hot and cold storage.

​Basically to me that's the best app for storing Bitcoin, and majority of folks in this space make use of it.
Check out this link..... https://bluewallet.io/features/?hl=en-GB
That said as a crypto enthusiast one is responsible for being responsible. So yeah perhaps we should learn to take the security of our assets seriously.so yeah that's all for me...

[Moreno233]

The type of wallet you are using will depend on what you want to achieve. If your plan is to hold for a very long time, the cold storage is the way to go. It offers high security as it is not connected to the internet so hacking it will be a very tedious job unless the device was compromised from the side of the manufacturers.

On the contrary, hot wallet is connected to the internet and be hacked because it require to be connected to the internet. Those who access their Bitcoin regularly like those accepting Bitcoin as payment option. I'm in agreement with others that cold storage is mostly for long term holders but anyone can use it.

[Lembo69]

The type of wallet you are using will depend on what you want to achieve. If your plan is to hold for a very long time, the cold storage is the way to go. It offers high security as it is not connected to the internet so hacking it will be a very tedious job unless the device was compromised from the side of the manufacturers.

On the contrary, hot wallet is connected to the internet and be hacked because it require to be connected to the internet. Those who access their Bitcoin regularly like those accepting Bitcoin as payment option. I'm in agreement with others that cold storage is mostly for long term holders but anyone can use it.

Yes, I agree with you that cold storage is much safer. Because wallets that are connected to the internet are more vulnerable to hackers. Hackers try to access those wallets in various ways.

However, if someone can use it carefully, then it can also be good for him. The main reason for using cold storage is that it allows you to store and monitor your investments without the internet and the risk is relatively low.

Long-term investors usually prefer it more, because they do not want to take unnecessary risks for a long time. And investors are often more concerned about how to keep their assets safe than the market price.

So cold storage is considered safe, and if used correctly, it is a good option.

[Comeacross]

That is not true. A non-custodial wallet is simply any wallet that the owner controls the keys. It could be a cold wallet or a hot wallet, it does not matter. Trust Wallet is an online wallet, but it is also a non-custodial wallet because its users control their keys. Another example is Electrum, it is on online wallet, but a non-custodial wallet.

You're probably getting my message wrong. I didn't remember saying anywhere in my post that the likes of Trust wallet are not non custodial wallet or they do not allow users to control their keys. In fact, I even mentioned that the fact that they generate recovery seeds for  you does not mean your assets is completely safe with them. I said what I said due to their vulnerability to online attacks. Of course this shortfall does not disqualified them from being a non custodial wallet.

You need to understand the difference between cold and online wallets and also non-custodial and custodial wallets. It is only when you use custodial wallets that you run the risk of your funds been frozen, and when you hodl stablecoins, which can be frozen in any wallet, irrespective of whether it is custodial or non-custodial.

You're justifying my initial point here. I specifically mentioned exchange getting your account freeze here just the same way banks freeze account. So that point I raised was specifically talking about people that use exchange wallet as their means of storing their assets. I don't know about you but whenever I hear "holding for long time" the first thing that comes my mind is Bitcoin. So I'm talking about bitcoin and the point is your wallet can be frozen on exchange.

This is not true. Hardware wallets are cold wallets and they do get regular firmware updates. Having said that, there is absolutely nothing wrong with regular updates in any crypto wallet. It fixes bugs, addresses certain vulnerabilities, improves/enhaces user experience, and so much more.

Again, I never said there is something wrong with updates in my post. I said the regular update gives hackers the opportunity to issue fake update notifications which some people easily for and update the wrong file that make them lose their coins. Hardware wallets do get update but it's not as frequent as hot wallet does.

Thank you for the feedback.

[Churchillvv]

In summary, I will have to say this.

1. It is important that we know the various types of wallets we have in cryptocurrency and differentiate them in their category by knowing what a custodial and non-custodial wallet means.

2. The second aspect of wheat is that we have to make sure that our non-custodial wallets are open source and not closed source wallets.

Thirdly, always make sure that you have special wallet for bitcoin and then a wallet that is all cryptocurrencies compatible so you can be safer.

Some wallet are for bitcoin specifically so considering those wallet is what one might need as the fourth.

[Donneski]

Op before you ask your question, you suppose first understand say Cold Storage is mainly for holders who are long-term minded as well as stacking huge assets. You shouldn't expect someone worth less than $1000 worth of Bitcoin to use Cold Storage. Cold Storage is very safe and is the best method of storing bitcoin but when your assets no too big like that, using hot wallets isn't a bad idea of you ask me.

[Ambatman]

Cold storage gives you complete and true ownership of your coin. That "Not your keys, not you coin" you dey normally hear na cold storage dey talk be that.

Non custodial gives you control over a key not cold wallet perse
Some Hot wallet are custodial while some are non custodial
Some non custodial are close or semi closed source like Trust wallet.
I would like to clarify something the difference between cold and hot is that
Hot is connected to the internet
While cold isn't
Example of Hot Is electrum while Cold is Trezor
The reason cold is considered safer is that you escape the risk of falling victim via the internet
Like phishing or malwares.

[coinlary]

Secondly, na for online hackers dey operate and your cold storage no dey active online. E mean say your coin is free from internet wahala. Dem no fit come your house come hack am na.

Yeah true,  and they can just decide to sell your info to those that can carry out wrench account if they do.

As safe it might sounds it won't  beat physical  attacks. So as you're  thinking of Coldstorage,  learn to protect your details and also stay low without saying too much. No one will think of hacking you nor carryout a wrench attack if you have a profile that makes a lot of noise .

That is not true. A non-custodial wallet is simply any wallet that the owner controls the keys. It could be a cold wallet or a hot wallet, it does not matter. Trust Wallet is an online wallet, but it is also a non-custodial wallet because its users control their keys. Another example is Electrum, it is on online wallet, but a non-custodial wallet.

You're probably getting my message wrong. I didn't remember saying anywhere in my post that the likes of Trust wallet are not non custodial wallet or they do not allow users to control their keys. In fact, I even mentioned that the fact that they generate recovery seeds for  you does not mean your assets is completely safe with them. I said what I said due to their vulnerability to online attacks. Of course this shortfall does not disqualified them from being a non custodial wallet.

He didn't,  he didn't just add the right quote.
This is the quote:

HOT wallet na wallet wey dey connected with internet. They are very convenient for day to day transaction. All those mobile app wallets like Trust wallet, Metamask, Rabby, Phantom etc na Hot wallet. Because dem generate seed phrase give you no mean say your coin is completely safe

The part i bolded is contradicting your discussion about HOT wallet .

Non-custodial wallets are Hot wallets too(there could be exceptionsfor some which i don'tknow yet), it is just a choice when you choose to make it cold wallet depending on the type of setup you prefer. The wallets you mentioned can have some limitations  when you decide to use as cold since they are altcoins/shitcoins heavy but it doesn't  change any about other wallets Electrum, Sparrow functioning as Hot wallets and they willsuffer same fate as the ones you listed on same attack vec.

Trust wallet and co have other part/features that doesn't qualify  them as a true self-custody wallet anyway.

But hey! Your message was passed already.

[EL MOHA]

Op before you ask your question, you suppose first understand say Cold Storage is mainly for holders who are long-term minded as well as stacking huge assets. You shouldn't expect someone worth less than $1000 worth of Bitcoin to use Cold Storage. Cold Storage is very safe and is the best method of storing bitcoin but when your assets no too big like that, using hot wallets isn't a bad idea of you ask me.

There is no distinction to the use of cold wallet, there is no where it’s stated that only those having huge amounts of funds should use cold storage. I know people put this because of the amount that the cold storage wallet like hardware wallets are sold for, but let’s be clear they have good hardware wallet that cost less than $100 for that’s a better choice if that your $1000 is for long term or even short term. The amount might be small to some but not to others. So the idea of the cold storage should be prioritize irrespective of the amount.

Also cold storage isn’t about buying hardware wallet alone but also setting up a wallet in an airgapped device and this can be done with even devices worth less then $70 and f set up properly is better than any hot wallet storage

[Rhow]

In the case of crypto holding, an investor must be extremely careful in holding his assets. If he has to lose the assets earned after holding it, then there is no chance of profiting from that investment. In the case of crypto investment, the investor must have good knowledge of a few things. Especially regarding wallets. The holder should know the difference between a custodial wallet and a non-custodial wallet and why a cold wallet should be used. In which case it is safer for him to use it.

In the case of a custodial wallet, the investor should understand that he will not have the key to that wallet. That is, if someone keeps his assets on an exchange platform, it is a custodial wallet. On the other hand, when you keep your keys in your responsibility, it is a non-custodial wallet. We often see various exchange platforms being hacked, in this case it is never safe to keep your assets with others. That is why it is better to use a non-custodial wallet.

There are some investors who are interested in short-term trading, so the top class exchange platform is good, so the investor can complete his trading activities in a short time. If an investor tries to hold for a long time and holds a large amount, then of course, the best way is to store it in a Cold wallet. This way, the investor will be able to store his assets more safely. When a hacker doesn't have access to your information online, no matter what strategy they adopt, they won't be effective. Some of their common attacks, such as phishing, malware, and remote access, won't be able to do any harm to the wallet holder. Some investors are reluctant to use it because here you have to store your own assets, where naturally you have to take more responsibility, which seems stressful to some.

[ColdLava40]

COLD storage na the type wey dey keep your keys completely offline. The only time you connect this wallet to internet na when you wan sign transaction and na just briefly without exposing your keys to internet.

You don't connect your cold storage to the internet at all, not even briefly.

If you are using a cold storage preferably air gapped, you can have a watch only wallet to create transactions. Then take these transactions offline to be signed using by your cold wallet.

Finally you take them to your online wallet for broadcasting. The whole process can work offline. not everyone know how to do this and to some it's stressful. But what's much better, stressfull long process or pain of losing your money?

I don't have a cold wallet but if in the future I need one, I will learn how to setup an air gap device.

[Creeper0]

Hot wallet and cold storage generally depend on the usage. There are no two different types of applications here. You can also use a trust wallet as a cold storage, but it is not secure. You can even use Electrum as a cold storage and a hot wallet, there is no problem with that.

Basically, how and for what purpose we are using the wallet is the key. If you use any non-custodial wallet frequently or use it for lending purposes and always keep it connected to the internet, then it will be called a hot wallet. Although whether it is an Electrum wallet or a hardware wallet, it is not the main thing. A storage is called cold storage only when it is planned to be kept offline for a long time and it is not used for regular transactions.

Although cold storage trust wallet or MetaMask crypto wallet is not secure. Still, you can use these wallets as cold storage if you want, but since they are high risk, no one uses them as cold storage or it is not recommended to use them as cold storage.