What is Cold Wallet and Why do We Need It?
Every cryptocurrency wallet is based on the blockchain technology. There are online (hot) and offline (cold) wallets, the difference is in the way a wallet counteracts with the chain of blocks. Exchange traders are familiar with online wallets as every exchange service has it. These wallets function like a client service for the user to access the cryptocurrency blockchain stored online. The Coin Shark will tell about the second group of the wallets today.
Cold wallets operation principles
Cold wallet won't help with a bruise or thirst on a hot day. The purpose of such a wallet is storage of the cryptocurrency assets. The users get a secure way of storage and at the same time agrees on less convenient work process. The reason is that a cold wallet downloads the whole cryptocurrency blockchain to the user's device and constantly synchronizes with the common chain of blocks. Cold storages counteract straightly with the blockchain, without any mediator-services which increases safety. However, one has to pay some price and this price is convenience.
Cold wallets download the whole blockchain to the user's device which indeed demands gigabytes of free memory. Thin wallets were created to solve this problem. These wallets store blockchain on the wallet server and a user installs a client-program that connects his or her device to it.
Who needs cold cryptocurrency wallets?
If you are a trader then you have to sell and buy cryptocurrency in a short space of time.In this case one needs a high-mobility service. The best choice will be exchange online-wallets. Otherwise,if you want to store some sum for some period of time and you believe in Internet-robbers then the best choice would be to transfer cryptocurrency to cold storage. Cold storages are difficult to hack if you keep your eyes on the device and keep your private key safe.
The best cold wallets for cryptocurrency storage
Bitcoin cold wallet, ethereum cold wallet, Stellar, Ripple, Dash, Litecoin - almost all virtual currencies have their own offline wallets. However, there are also many multicurrency services. One of the most popular cold storages are Electrum, Exodus, JAXX and others. There are also hardware USB-wallets, for example cold wallet Ledger. The use of such a wallet keeps your cryptocurrency assets even more safe from the outside environment.
Subscribe to The Coin Shark news in Twitter: https://twitter.com/the_coinshark