How to choose your perfect offline wallet that suits your investment
Hardware wallets are the best offline options when it comes to security, as it drastically reduces the chances of hacking, fraud, and counterfeiting.
The revolution brought by blockchain technology gave birth to several technologies that are crucial for investment management and security. Plus, they are fundamental for keeping the users’ public and private keys safe.
In this article, you will discover how to choose the ideal offline wallet that suits your investment, before you buy bitcoin, so you can store it safely.
What is an Offline Wallet?
An offline wallet is a useful option for users who need to store cryptocurrencies without having access to an internet connection.
Also known as “cold wallet”, this type of wallet stores all digital assets offline, which means it adds an extra layer of security to the process, especially by preventing fund hacking. Also, offline wallets are the ideal way for hodlers (buy-and-hold strategy) who want to keep their long-term investments safe.
Cold Wallets vs Hot Wallets – What Is the Difference Between Them?
Crypto investors have two different options when it comes to storing and safeguarding their digital assets – cold wallets and hot wallets. Also, cold wallets are another term used to describe offline wallets.
On the other hand, hot wallets are crypto wallets that require access to an internet connection to function. While offline wallets are similar to savings accounts, hot wallets are similar to online banking services.
Also, many hot wallets can be found free of charge, especially on websites that offer their native wallets for download. Finding an offline wallet for free is an unlikely event unless there is some type of giveaway involved in the process.
Nonetheless, hot wallets are much more vulnerable to security risks, although the level of security of a crypto wallet also depends on how users use it. Typically, offline wallets tend to be more expensive, but they also offer more in terms of security and reliability.
Furthermore, it is common for crypto investors to store smaller amounts of digital assets within a hot wallet just to use them for transfers and other daily operations. Generally, the bulk of most investors’ portfolios is stored in offline wallets.
Types of Offline Wallets
Typically, desktop wallets are exclusively available on the user’s desktop or notebook. They can be used to send cryptocurrency with encrypted private keys in an offline environment. Nonetheless, desktop wallets require users to be online for either making transactions or receiving funds.
Paper wallets are offline wallets that have a pair of public and private keys that are printed on paper. This way, users’ keys are created offline, which means much fewer risks in terms of security and reliability.
Also, paper wallets are the cheapest option when it comes to acquiring an offline wallet.
Hardware wallets are electronic devices that sign asset transfers using private keys that are stored offline. Hence, if the device is either damaged or lost, the files contained within it can be recovered through a backup seed phrase.
Nowadays, the most popular hardware wallets are Trezor, Ledger, and KeepKey. Most hodlers prefer this type of wallet, as they are perfect for those who want to safely store digital assets for long-term strategies.
Lastly, there are USB wallets. These represent one of the simplest ways to store digital assets, as they make it possible to export and save the user’s private keys on a USB device.
Although any user can access his/her portfolio seamlessly, they need to be careful when handling their devices. If someone manages to get their hands on it, it is possible to access and potentially steal the funds stored in the device.
How to Choose an Offline Wallet the Right Way
First, you need to think about the security provided by each type of wallet. Then, it is necessary to assess how easy it is to use, in addition to the type of investment strategy used by each investor.
Investors who want to accumulate a lot of cryptocurrencies for a long time (hodlers) do not need to always have their wallets in hand, which makes it unnecessary to have a wallet focused on accessibility.
On the other hand, if the plan is to make daily transactions with your digital currencies (e.g., day trading, yield farming, etc.), it is essential to adopt an offline wallet option with superior usability.
Each type of offline wallet offers its share of benefits. While desktop wallets are better in terms of usability and accessibility, paper wallets are easier to transport and offer more variety in terms of free versions.
Meanwhile, USB wallets are practical, easy to use, and transport, but they require extra user attention. Also, you need to be quick to sell when cryptocurrency prices begin to soar, so you can transfer them to exchange fast.
Hardware wallets are the best offline options when it comes to security, as it drastically reduces the chances of hacking, fraud, and counterfeiting. Plus, they are less vulnerable to physical damage, allowing recovery in case of loss.