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What is Storage?
Cold storage refers to methods of storing your cryptocurrencies offline. It is becoming an increasingly popular action among individuals who have a large bulk of cryptocurrency coins.
The reason that cold storage is becoming more popular, is because more sophisticated malware is being created by certain individuals that can search for a person’s cryptocurrency wallet. Once the malicious software has found an individual’s cryptocurrency wallet, it can be hacked and then drained.
The positives of cold storage are that it is firstly, a great place for an individual to store a large number of cryptocurrency coins for longer periods of time. Also, using cold storage will keep an individual’s cryptocurrencies away from the internet, which helps to keep it more secure from attackers.
There are also some negatives to cold storage. Firstly, due to the lengthier process involved, cold storage is not suitable for quick or daily transactions. Furthermore, setting up cold storage can be a very lengthy and difficult process for newcomers to the cryptocurrency market. Finally, being careless during the process of cold storage could cause damage to your cryptocurrencies. Although, if you have a recovery seed, this is reversible.
There are a few different methods of cold storage. Individuals are able to store their cryptocurrencies on USB drives. Although, great care should be taken not to damage or misplace a USB drive, due to the potential of losing your coins. A paper-wallet may be used, or an individual may choose to use an offline hardware to store their bitcoins, such as Trezor.