Cold Storage, A Basic Overview – Sagecoins
It’s common for people getting acquainted with digital currency to hear the term “cold storage”. This term refers generally to a category of digital currency wallet options and security that take the form of hardware and offline resources.
What is Cold Storage
As we explained in a previous post about wallets there are two categories of digital wallets, hot wallets and cold wallets. Hot wallets are the category of any type of wallet that stays connected to the internet, while cold wallets are stored separate or can be separated from any network. In this post we will provide a basic overview of some of the advantages of cold storage and why many view it as the safest option for holding their digital currency keys and data.
Advantages of Cold Storage
Cold wallets are hardware devices that store user keys. There are many different options, and each have unique approaches to providing security solutions. In general, many hardware wallets carry out different processes to reach the same end, securing access to the stored keys and information through a password, seed phrase, or some other type of user authentication.
For many years hackers were the boogeyman that lurked over the digital currency community. Cold storage was the innovative response. “Cold” storage security devices by definition are disconnected from the internet when not in use, therefore minimizing the risk of a malicious party gaining access to a user’s assets.
It is important to do research when choosing a wallet that fits your needs across all aspects. Factors to include would be accreditation from security organizations, price point, and level of security for the amount of capital invested in digital assets.
As examples of companies to consider it is worthwhile starting with the most popular. Among these companies leading the digital currency industry are Trezor and Ledger. They are each often found at the top of recommendation lists that dissect the cold storage options currently available. Each boast a variety of security features.
Ledger as an Example
In order to provide an example of some of the security features to look for, or at least consider, in the following paragraphs we analyze Ledger whose offerings has made it one of the most trusted in the industry.
Ledger is a company that provides cold storage option at various price points and makes an effort to constantly update their solutions, reacting to its users and the market. The Ledger company provides constant support through classical support services and through their “Genuine Check” feature which was developed to authenticate their devices integrity and check for tampering every time it is connected for use. With the constant evolution of threats, companies who provide a watchful eye and update frequently can be invaluable.
Ledger’s proprietary software, Blockchain Open Ledger Operating System (BOLOS), is also a distinguishing feature as it provides a unique solution and therefore not relying on the software of another company.
Cold storage options may also be able to work in tandem with other external digital wallets (online/hot wallets). For example, Ledger can work with Ledger Live & 1000+ with external wallets. Many hardware wallets can even function as a means to simply support digital wallets with minimal software of their own. This option allows even more choice. A good parallel/comparison would be a computer drive that can support security software on it. In other words, a similar relationship as Dell and Microsoft Windows share.
We wish you the best of luck as you research the solution that is best for you. If you want to explore the companies we mentioned, Ledger and Trezor, as a place to start, follow the links below.
Ledger — https://shop.ledger.com/?r=1822089f69fe
Trezor — https://www.trezor.com
Published at Fri, 28 Jun 2019 16:54:28 +0000
