I recently noticed an interesting phenomenon: many people are starting to pay attention to the security of cold wallets, especially after experiencing several exchange scandals. In fact, the concept of a cold wallet is still quite unfamiliar to beginners, so I want to share from my perspective what a cold wallet really is and why it’s worth your attention.

First, let’s briefly explain the basic concept of a wallet. Cryptocurrency wallets are not like bank accounts that actually store money; they are digital carriers used to store, send, and receive virtual assets. A wallet has three core elements: private key, public key, and address. Among them, the private key is the most critical because only the person with the private key can access the assets in the wallet, so it must never be leaked. The public key is used by miners to verify the wallet’s identity, and the address is your “location” on the blockchain, which you can share with others to receive assets. Simply put, a wallet is like a passport in the blockchain world, representing your identity in the virtual space.

Wallets are mainly divided into two categories: hot wallets and cold wallets. Hot wallets are connected wallets, including exchange wallets, browser plugins (like MetaMask’s fox icon), and mobile apps. The advantage of these wallets is that transactions are very convenient, but the downside is that because they are always online, they are at higher risk of being hacked. Especially with centralized exchange hot wallets, although they are nominally yours, control actually resides with the exchange. The FTX bankruptcy incident illustrates how big this risk can be.

In contrast, cold wallets use offline storage, keeping private keys on physical devices like hardware wallets or USB drives, only connecting to a computer when needed for transactions. The benefit of this approach is greatly reducing the risk of hackers stealing private keys. Even if the cold wallet itself is lost or damaged, as long as you remember your private key and seed phrase, you can still recover your assets, because the assets are actually stored on the blockchain; the cold wallet is just a tool to read and operate them.

Currently, well-known cold wallet brands include Ledger, Trezor, and CoolWallet, with prices ranging from about $100 to $250. These cold wallets support over 1,000 to tens of thousands of tokens, including NFTs, and also offer staking and DeFi features. However, when purchasing a cold wallet, be sure to order directly from the manufacturer’s official link, and upon receipt, verify that the packaging is intact to avoid being compromised by malicious software.

Regarding wallet selection strategies, I recommend having both types. Using a hot wallet for daily transactions is more convenient—you can open accounts on exchanges or install MetaMask. But for long-term holdings, especially during market volatility, storing assets in a cold wallet is much safer. According to data from Glassnode, after the FTX collapse in 2022, approximately 450k Bitcoin were transferred from exchanges to cold wallets, reducing the exchange-held Bitcoin proportion to below 12%. This indicates that investors’ awareness of self-custody is increasing.

If you’re choosing a cold wallet, I think you can decide based on your budget, the number of tokens you hold, and your usage habits. CoolWallet supports a Chinese interface and can connect via Bluetooth with a mobile phone; its card-like design is lightweight and portable, making it a good choice for users in Taiwan. Overall, in the face of market uncertainty, storing your assets in a cold wallet is indeed a safer approach.