Recently, more and more people around me have started paying attention to cold wallets. The main reason is that everyone has been getting more active on-chain, but the management problems of private keys and recovery phrases are truly a headache. There are simply too many cases of assets being stolen due to losing them, forgetting them, or managing them improperly—this is also why the demand for cold wallets has suddenly surged.

So what exactly is a cold wallet? Simply put, it means storing crypto assets on an offline device. It usually refers to hardware wallets, but it also includes paper wallets and USB wallets. Its core advantage is that the private keys are not connected to the internet, which can effectively prevent attacks from hackers and malicious software.

The working principle of a cold wallet is actually not complicated. First, it generates a pair of public keys and private keys. The public key is your wallet address—something you can openly use to receive assets. The private key is like a password, controlling all the assets in your wallet. Some people may have heard of recovery phrases; this is another form of the private key, usually consisting of 12 or 24 English words, mainly for easier memorization. Then, the cold wallet uses physical isolation to store these private keys offline—this is where its security comes from.

There are still quite a few cold wallet options on the market. I looked at some popular ones. For example, Ledger Nano X, a product from the French company Ledger, supports more than 5,500 types of cryptocurrencies, has a security level of CC EAL 5, and is priced at 149 USD. There is also Trezor Safe 5 from the Czech Republic, which supports more than 1,000 coins, with a security level as high as CC EAL 6+, and it also has a touchscreen; it costs 169 USD. In addition, SafePal S1 Pro is also a good choice—it supports 30,000+ types of cryptocurrencies, and is relatively cheaper at 89.99 USD.

When choosing a cold wallet, you mainly need to consider four aspects. First is security. After all, this is the core selling point of a cold wallet—you should look for products with strong encryption and multi-factor authentication. Second is compatibility: make sure it supports the coins you hold. Although most cold wallets support thousands of coins, it’s still important to confirm in advance. Third is cost: prices range from dozens to a few hundred dollars, so you should see whether the value for money is worth it. Fourth is user experience: different wallets have very different interface designs, so choosing one that feels comfortable to use matters a lot. Most of this information can basically be found on the official website, and you can also check real reviews from other users.

When using a cold wallet in practice, if you don’t already have a public/private key pair, you can generate one first. During transactions, you need to connect the cold wallet to your phone or computer, enter your PIN or password to unlock, and then initiate the transaction. After the transaction is initiated, you only need to verify and confirm on the device. Once completed, disconnect—the private keys and recovery phrases will return to an offline state. The reminder here is: don’t connect to unknown DApps casually; otherwise, a cold wallet can be vulnerable to attacks just like a hot wallet.

There’s also an important detail. Even though hardware wallets have features like drop protection, water resistance, and fire resistance, you still need to protect them well to avoid severe impacts. Once damaged, recovery is basically impossible. So after buying a cold wallet, it’s best to back up a copy of the private key or recovery phrase on paper or on a USB drive.

Compared with hot wallets, cold wallets store assets offline, so they have higher security but more cumbersome operation, and the cost is 50 to 500 USD. They are suitable for long-term storage. Hot wallets store assets online, are more convenient to use but have relatively lower security, and they are free to use—making them suitable for frequent trading. According to recent data, the number of global cryptocurrency wallet users has already reached around 68 million, and the hardware wallet market is also growing rapidly. In the future, we can expect more innovative products to appear. As competition intensifies, developers will continuously optimize security, support more coins, and lower prices—this is good news for users. So if you are someone who holds assets long term, now really is a good time to consider setting up a cold wallet.