In the crypto world, hacker attacks and scams are constantly evolving and becoming more sophisticated, making it essential for everyone to learn how to protect their digital assets effectively.
In the decentralized world of blockchain technology, the safest and most effective way to keep crypto assets is by using a cold wallet, also known as a hardware or offline wallet. This specialized electronic device stores the private key of a crypto wallet offline, making it difficult for hackers to attack and ensuring the security of your crypto assets.
To better understand why a cold wallet can protect your crypto assets, let’s start with some basic knowledge:
Own your private key, own your assets.
Decentralization is one of the core concepts of blockchain technology. It gives you the freedom to control your own assets without any government or institutional intervention, it also means you have the responsibility to manage your assets. In the blockchain mechanism, when you can master your private key, no one can take away your crypto assets.
Although centralized institutions like exchanges provide convenience to crypto users, recent events such as the collapse of the second-largest FTX exchange and the subsequent collapse of other centralized institutions highlight the risks of relying on centralized platforms. Therefore, returning to the original intention of decentralization in blockchain may be the best solution.
Public key, private key, and recovery phrase.
In the decentralized world, how can you manage your crypto assets? A decentralized crypto wallet, also known as a Web3 wallet, is the ideal tool for the job! Most Web3 wallets now support receiving, sending, trading, and even interacting with smart contracts for various crypto or NFTs.
With a Web3 wallet, you have a public key and it allows you to receive crypto assets into your wallet. On the other hand, the private key of your Web3 wallet is like a password that grants access to your crypto assets, enabling you to access the crypto assets in your wallet and even transfer all the assets directly. Therefore, the private key must never be disclosed. As the private key is presented in a more complex way through algorithms, the recovery phrase can help you retrieve the private key.
Basically, it’s essential to keep your private key and recovery phrase secure and never share them with anyone, as they are the keys to your wallet.
Why cold wallets are so important.
There are various types of Web3 wallets available on the market, such as popular ones like MetaMask and TrustWallet. These wallets are typically categorized as hot wallets, or software wallets. Hot wallets are usually in the form of a software application installed on an internet-connected computer or mobile device, where users’ private keys are stored on a device that is always connected to the internet. This makes them vulnerable to hackers, who can easily exploit vulnerabilities and steal private keys, turning them into easy targets for malicious software attacks.
In contrast, a cold wallet stores users’ private keys in a hardware device that is not connected to the internet. When a user needs to execute a signature verification or transaction, they must turn on the physical cold wallet and go through an authentication process. A cold wallet does not transmit private key information to the connected device when interacting with applications on a computer or mobile device. Therefore, as hackers cannot access physical cold wallets located near users, it ensures the security of their crypto assets.
How to choose a cold wallet.
The most crucial function of a cold wallet is to safeguard users’ private keys. The CoolWallet Pro is equipped with a military-grade EAL 6+ certified security component, providing users with a highly secure way of managing their private keys. Even the cold wallet issuer will not have access to the private keys stored within it, giving users the peace of mind of keeping their crypto assets in their own private safe, free from external risks. Additionally, the CoolWallet Pro is not connected to the internet, ensuring that private key information remains in the secure component. It uses encrypted Bluetooth to connect to the CoolWallet App only when executing the verification process. As a result, crypto assets can be kept safe and secure.
Along with security, convenience is also an essential factor when choosing a cold wallet. Despite the ongoing threat of malicious attacks, we still need to conduct transactions frequently and be prepared for unexpected situations. Therefore, a portable cold wallet that can be used anytime and anywhere is definitely necessary. The CoolWallet Pro not only has the dimensions of a credit card but is also incredibly slim, measuring only 0.8mm thick and weighing 6 grams. It can be easily stored in a cash wallet and accessed in real-time, providing maximum flexibility for moving funds.
In the rapidly changing Web3 world, a cold wallet’s ability to support multiple blockchains, crypto, and various services can determine users’ success in this new landscape. The CoolWallet Pro is a top-performing cold wallet that already supports nearly 30 popular main chains, including Bitcoin, Ethereum, Binance Smart Chain, and Tron, as well as over 12,000 tokens. Moreover, the number of supported main chains is constantly increasing. In addition to blockchain support, users can seamlessly buy, sell, exchange, stake crypto, and interact with DApps directly through the CoolWallet App. All of these activities are carried out under the protection of the cold wallet, ensuring users can safely navigate the Web3 world with ease.
5 security guidelines to protect your crypto assets.
1. Safely store your handwritten recovery phrase – avoid screenshots or photos
When creating a wallet, whether it’s a cold or hot wallet, most Web3 wallet applications require users to write down a recovery phrase. This handwritten recovery phrase helps users recover their wallet in case of any issues and is also necessary to recover the crypto wallet in other applications. It is like a key to accessing your crypto assets.
Therefore, taking screenshots or photos of the recovery phrase for convenience or storing it online, such as on cloud storage, is strictly prohibited. Such actions significantly increase the chances of malicious hackers stealing your digital assets. If taking a screenshot or photo is unavoidable, it should be quickly replaced with a handwritten version, and all digital and backup files should be deleted to minimize risks.
Most importantly, the handwritten recovery phrase must be properly stored in a secure place known only to oneself, and protected from external factors that may make it unreadable, such as water damage, pet chewing, or accidental burning near an ashtray.
DELIVERED EVERY WEEK
Subscribe to our Top Crypto News weekly newsletter
2. Do not use the same recovery phrase or private key for both cold and hot wallets
When it comes to ensuring the security of your crypto assets, it is crucial to avoid using the same recovery phrases or private keys for both cold and hot wallets. Even if you are using a reputable cold wallet brand for an additional layer of security, it is never advisable to use the same recovery phrase of the cold wallet to recover a crypto wallet on a hot wallet application. For example, using the same recovery phrase of a CoolWallet Pro/ S to recover a wallet on the CoolWallet HOT module can compromise the security mechanism of the cold wallet. Although the security component of CoolWallet Pro/S strictly protects the private key, using the same recovery phrase for a hot wallet would expose the private key to the connected network, thereby making the crypto assets in CoolWallet Pro/S also vulnerable to attacks by hackers.
To mitigate such risks, it is recommended to use separate recovery phrases for cold and hot wallets. The majority of your assets should be stored in the cold wallet, while only a small amount of crypto that requires real-time operation or that is only supported by the hot wallet should be kept in the hot wallet. This approach allows you to enjoy the advanced security protection of the cold wallet while still benefiting from the convenience of the hot wallet.
3. Use strong passwords
Using strong passwords may seem like common sense, but how can you truly achieve the standard for a strong password? Firstly, the longer the password, the higher the security, ideally with at least 10 characters. Secondly, as the complexity of the password increases, it becomes harder for hackers to guess, so a strong password should consist of a mix of upper and lower case letters, numbers, and symbols. Lastly, a strong password should be something that you can remember but others would find it almost impossible to guess. Therefore, try to avoid using personal information such as your birth date or phone number, and aim for a high level of randomness to increase security.
4. Avoiding Phishing Attacks
Although phishing attacks are a well-known type of cyber attack, they are particularly critical in the rampant crypto market. Just one careless click on a phishing email or on a link in a text message can result in malware lurking on your phone or computer, waiting to steal your valuable crypto assets.
Fraudulent emails or text messages often impersonate well-known or previously contacted companies to lower your guard. Therefore, it is essential to verify the sender’s domain and phone number. If you suspect that the sender is asking for your personal information or asking you to confirm some information, be cautious and avoid responding immediately. Such requests are most likely phishing scams. Above all, never disclose your private key or recovery phrase. Legitimate companies never ask for this information.
5. Using a Cold Wallet
Don’t forget that the safest and most effective way to keep your crypto assets is by using a cold wallet. When your private key is securely stored in a cold wallet rather than exposed in an internet-connected environment, your crypto assets will remain beyond the reach of any unauthorized individuals who might attempt to steal them.
Keep up with cryptocurrency industry trends with media outlets
If you want to gain a deeper understanding of the trends and latest news in the cryptocurrency industry, it is recommended starting with articles from the following media outlets: