Security in Bitcoin world is very important, there are enough stories for bitcoin lost and theft. Choose a storing method wisely will save you a lot of trouble. There are many options like web wallet, software wallet, paper wallet, multi-sig, cold storage etc. for Bitcoin users to store their bitcoins and spend them. From all those choices, cold storage is a very secure method.
(Web wallets and software wallets are usually hot wallets, hot wallet means the private key is online, on the other hand, cold wallet or cold storage is always offline. )
How does cold storage work and how to make a transaction using it?
Let me use an easy example to describe this:
Alice requests Bob to send her some money by sending Bob a return envelope. Bob uses his key to open his safe, puts some money in the envelope and sends it back to Alice. No one has access to Bob’s key, so no one can steal his money.
If Bob puts his key in an insecure place, thieves can try to get it and spend his money.
Now, think about this: how can hackers get your private key?
Because you put it online and there’s a way for them to get it. If you put your private key offline, only sign the transaction offline, and broadcast signed transaction to the Bitcoin network to complete the payment, there’s no way for hackers to get it.
Is cold storage perfect?
People would argue cold storage is inconvenient for everyday transactions. Current cold storage methods require users to print paper wallets or to have an offline computer. Current cold storage hardware requires users to tether to a computer, it’s not very portable, easy or convenient to use.
CoolWallet makes cold storage convenient!
CoolWallet has solved those short-comings of cold storage and makes it easy to transact.
Here’s CoolWallet features for you to know more about it.