Bitcoin happen to be an extremely valuable asset that has gained immense popularity over the past few years. Now, if you’ve read about bitcoin you’ll know what treasures they are, and so, you’ve probably thought about buying them. But before doing that, you’re going to need a place to store them. That place is called a wallet.
Rather than actually storing your Bitcoin, it holds the private key allowing you access to your bitcoin address, which is your public key. Now, wallets can live on your computer or mobile device or a physical storage device or for that matter even on a piece of paper!
There are different kinds of cryptocurrency wallets. You can classify them into two types, online and offline. The offline wallets often called Cold wallets. They occasionally require access to the internet, just while making any transaction that you have requested. The offline wallets are among the safest wallets to store your coins. Here’s a look at a few types of offline wallets.
Offline (Cold) wallets:
The simplest wallet undoubtedly has to be the paper wallet. They are regular pieces of paper on which the private and public keys of your bitcoin address are printed. This is ideal for the long-term storage or for the gifting of bitcoin to someone. These wallets are more secure in that they’re not connected to a network. But, they are so much easier to lose.
With services such as WalletGenerator and BitcoinPaperWallet, you can easily create a new address and print the wallet on your printer. You can send a few coins to that address, and then store it safely or gift it to someone. It’s that simple.
The biggest advantage of the paper wallet is your keys are not accessible via the internet and hence they are immune to any viruses or hackers.
You will, however, need to take precautions while creating the wallet. Before generating the paper, make sure no one is watching you so that you can rule out the risk of spyware too. Once the wallet is set up, ensure you are able to run offline. That way you can disconnect from the internet before generating the keys. Lastly, use a printer that isn’t connected to the network.
It is very important to understand that you are printing valuable, private information on a piece of paper. Hence, it is absolutely necessary for you to take measures to protect that piece of paper. It is recommended to keep it in a place away from water or dampness, to avoid any general wear and tear. Some people prefer laminating it and storing it in a safe, a deposit box or entrusting it with a solicitor.
Hardware wallets are a rather unique type of Bitcoin wallet. The user’s private key is stored securely in this small hardware device. The device occasionally connects to the web to enact Bitcoin transactions. They are extremely secure, as they are usually offline and therefore not hackable.
However, they can be stolen or lost, along with the bitcoin that belong to the private keys that are stored in it. This has to be the safest way of storing your bitcoin. There have been no verifiable incidents of money being stolen from a hardware wallet. Not just that, they are immune to computer viruses as nothing can be transferred in plain text and in most cases, their software is open sourced.
Some large investors have chosen to keep their hardware wallets in secure locations such as bank vaults.
Trezor, Keep key and Ledger and Case are some notable examples of offline hardware wallets.
Unlike paper wallets that need to be imported to software at some point, hardware wallets can be used safely.
As long as you invest in an authentic device made by a trustworthy, competent manufacturer with a good reputation, your coins will be safe and secure.
Are these offline Bitcoin wallets safe?
Yes, they definitely are! But it depends on the version and format that you have chosen and how you decide to use it. Just because it’s offline doesn’t mean it is 100% safe. You still have to be careful. Storing your Bitcoin in a crypto wallet is one of the biggest and most important decisions to make. If you had regular notes and coins would you store it in a wallet with a hole?
Some wallets may have special features but will be less secure than others that don’t have those special features. Example: If I decide to use a paper wallet to store my coins, I can’t say, “Why doesn’t this wallet have a multi-sig functionality?”
The hardware wallet is the safest option there is, however, you must keep it in a safe and secure place because if you lose it, your bitcoin are gone. This can only be prevented if you have created a reliable back up. Taking risks about your wallet and being careless with your private keys or using an untested wallet are some of the major reasons why people lose out big time.
In the end, whatever option you go for, you have to be careful. Ensure that you backup everything, and only tell your near and most trusted ones where your backups are stored.