Cold wallets are known to many beginners as a way to safely store virtual currency, but in reality, there is a gap between their image and their convenience and operation. In this article, we will explain the misunderstandings that beginners often have about cold wallets, the reality of the situation, and summarize the points to be aware of when using them.
- The misconception that cold wallets are a "perfect defense"
Many beginners tend to think that cold wallets are a perfect defense and completely safe from hacking. It is true that cold wallets are isolated from the Internet and boast higher security than online wallets. However, care must be taken with the physical storage location and human error when using them. For example, there is a risk that a seed phrase written on paper may be lost or stolen, so when using a cold wallet, safety measures including physical protection are required.
- The misconception about simple storage
Cold wallets are often thought of as something you can set up once and be done with, but in reality they require regular checks and updates. They require you to keep your seed phrase and recovery information stored in a safe place, which can seem a bit of a hurdle for beginners who are not familiar with them. In particular, the setup and management process may seem complicated for those with little technical knowledge.
- The misconception that cold wallets are "free and safe"
Beginners tend to think that cold wallets are free to use. While there are certainly ways to set one up for free, such as a paper wallet, where you write down your seed phrase on a piece of paper, in many cases it is recommended to purchase a dedicated hardware wallet for safe storage and use. Hardware wallets are expensive, which can be a surprising expense for beginners and can be one of the factors that make them think twice when considering a cold wallet as an option.
- The misconception that it is easy to withdraw assets
Cold wallets are purposely isolated from the internet for security reasons, but beginners tend to think that withdrawing assets is easy. However, to withdraw assets from a cold wallet, you need to connect the device to a computer, etc., and enter the necessary information to access it, which can be a bit complicated for beginners who are not familiar with it. Although it is highly secure, it requires different operation from a hot wallet, which can be accessed instantly.
- The misconception that cold wallets guarantee "eternal safety"
Many beginners think that if they store their data in a cold wallet, it will be safe forever, but in reality, seed phrases and recovery information may face problems such as deterioration over time, loss of paper, and device failure. Running out of battery is a terrible thing. As technology evolves, new risks (physical theft, loss, mismanagement of seed phrases, etc.) may arise, so it is important to regularly check and review your backup system.
Effective cold wallet operation points
For beginners to become adept at using cold wallets, it is a good idea to pay attention to the following points.
- Importance of physical management : Consider using a fireproof or waterproof case to store your seed phrase.
- Regular verification : Check the stored information and prepare a backup system in case of emergency.
- Use only when necessary : Store assets that are traded frequently in a hot wallet and store only assets suitable for long-term storage in a cold wallet.
For beginners, cold wallets are a reliable way to protect your assets, but at the same time, they can also lead to unexpected risks if you do not understand how to operate them properly. To use them safely, understand the reality and hassle of management and operate them in the right way.