Recently, more and more people have started to pay attention to the topic of cold wallets. The main reason is actually very simple—there have been far too many incidents of losing private keys or having coins stolen. A friend of mine, for example, lost an amount of assets due to poor management. After that, he completely lost confidence in hot wallets and switched to storing with a cold wallet.

Let’s briefly explain what a cold wallet is. In simple terms, a cold wallet is where you store your private keys on an offline device that is not connected to the internet, so hackers can’t get to them. It generally refers to hardware wallets, but paper wallets and USB wallets also count. In contrast, hot wallets are wallets stored on online devices such as smartphones and computers. They’re convenient, but riskier.

The working principle of a cold wallet isn’t complicated. First, generate a public key and a private key. The public key is your address and can be publicly used to receive coins. The private key is like a password—whoever has it can move your assets. Then there’s the mnemonic phrase, which represents the private key using 12 or 24 English words for easier memorization. After that, all of these are stored offline, physically isolated, which effectively helps prevent hacker attacks.

A few cold wallets that are relatively popular on the market include the following. Ledger Nano X is a product from the French company Ledger. It supports more than 5,500 types of coins, is priced at 149 dollars, and has a security level of CC EAL 5. Trezor Safe 5 is from the Czech Republic and supports more than 1,000 types of coins. It costs 169 dollars, and its security level is higher: CC EAL 6+. It also has a touchscreen. SafePal S1 Pro supports more than 30,000 types of coins and costs about 90 dollars, which makes it relatively affordable. It has a CC EAL 5+ certification.

When choosing a cold wallet, you mainly need to consider these aspects. First is security—make sure to choose one with strong encryption and multi-factor authentication. Second is compatibility—ensure it supports the coins you hold. Third is cost—everything from tens to hundreds of dollars is available, so you need to judge whether it’s worth it. Finally, consider user experience—a wallet with a user-friendly interface is more comfortable to use. This information is usually available on the official website, and you can also look at other users’ reviews.

The process of using a cold wallet is also not complicated in practice. If you don’t have a public/private key pair, generate one first using a cold wallet or a hot wallet. Then, when you need to make a transaction, connect the cold wallet to your phone or computer, enter your PIN to unlock, and initiate the transaction. After that, verify and confirm on the device. When the transaction is done, disconnect it, and the private key returns to an offline state. But remember: never connect to an unknown DApp—otherwise the cold wallet can also be attacked. In addition, although hardware wallets are designed to be drop-resistant and water-resistant, they should still be kept carefully. Ideally, back up your private key and mnemonic phrase on paper or a USB drive.

From the data, this market is growing rapidly. According to statistics, the number of crypto wallet users grew from 68 million in 2021 to 80 million in 2022. The hardware wallet market size was 400 million dollars in 2021 and is expected to reach 3.6 billion dollars by 2032. As more people enter this space, competition among cold wallets will become increasingly intense. This is actually good news for users, because manufacturers will continuously improve security, support more coins, and lower prices to win market share.

Overall, cold wallets are suitable for people who hold coins long-term, while hot wallets are better for people who trade frequently. If you hold a relatively large amount of assets, or you don’t need to move funds often, then a cold wallet is worth considering. The key is to choose a reliable product, learn how to use it correctly, and store it properly.