How to keep crypto assets secure? Cold wallets become the preferred choice for long-term storage

As on-chain activity becomes more frequent, more people are starting to use hot wallets for daily transactions. But this also brings new concerns: how to securely store private keys and seed phrases? If these critical pieces of information are lost or stolen, the entire asset account could be at risk. For this reason, cold wallets—offline storage solutions—are gradually becoming essential tools for long-term holders. So, what exactly is a cold wallet? How to choose and use one? Let’s explore each aspect.

Core Concept of Cold Wallets

Cryptocurrency wallets are digital tools for storing, managing, and using virtual assets, divided into hot wallets and cold wallets. Both can be used to receive, store, and transfer BTC, ETH, DOGE, LTC, and other coins.

Cold wallet refers to a cryptocurrency wallet stored on an offline device. Usually, when we say cold wallet, we mean hardware wallets, but it also includes paper wallets, USB wallets, and other offline mediums. In contrast, hot wallets (also called software wallets) run on online devices like computers and smartphones, and can be categorized into app wallets and PC wallets.

The fundamental difference is: cold wallets are disconnected from the internet, with private keys fully controlled by the user; hot wallets are online, offering convenience but being more vulnerable to network attacks.

How Cold Wallets Work

To understand how cold wallets protect assets, it’s important to know their workflow, which mainly involves two steps.

Step 1: Generate Key Pair

When initializing a cold wallet, it automatically generates a key pair—public key and private key—using encryption algorithms.

The public key (also called address) is like your account number, which can be shared openly. Its main purpose is to receive encrypted assets transferred from others.

The private key is your super password; owning the private key means controlling all assets in that wallet. Additionally, there’s a seed phrase—usually 12 or 24 English words—that serves as a backup for the private key, making it easier to remember and restore.

Step 2: Offline Isolated Storage

The core advantage of cold wallets is that they do not connect to the internet. They store private keys physically, effectively preventing hacking and malware attacks. It’s worth noting that cold wallets can store private keys generated elsewhere or imported from hot wallets. However, most cold wallets support storing only one private key per device, with some limitations on quantity.

Popular Cold Wallet Products on the Market

In 2026, the hardware wallet market is highly competitive. Here are three representative cold wallet products and their main features.

Ledger Nano X

• Made by French company Ledger, a well-known industry brand
• Certified with CC EAL 5 security level
• Compact size (72mm×18.6mm×11.75mm), highly portable
• Supports over 5,500 cryptocurrencies, covering most mainstream coins
• Retail price around $149

Trezor Safe 5

• Developed by Czech company SatoshiLabs
• Achieved higher CC EAL 6+ security certification
• Equipped with a touchscreen display for more intuitive operation
• Supports over 1,000 cryptocurrencies
• Priced around $169

SafePal S1 Pro

• Security certification level CC EAL 5+
• Supports USB-C and QR code connection methods, offering high flexibility
• Supports over 30,000 cryptocurrencies, with extensive coin coverage
• More affordable, approximately $89.99

How to Choose the Right Cold Wallet

When selecting a cold wallet, users have different needs, but there are four core considerations.

Security First

The primary role of a cold wallet is secure storage. Different manufacturers employ various technical solutions. Before purchasing, verify whether the wallet uses strong encryption algorithms, supports multi-factor authentication, and has protective features—these are often indicated by security certification levels (like CC EAL series).

Coin Compatibility

Ensure the cold wallet supports all the cryptocurrencies you hold. While most products support thousands of coins, some wallets only support mainstream tokens. If you invest in small or new coins, confirm compatibility carefully.

Price Factor

Hardware wallets range from $50 to $500. The key is to evaluate cost-effectiveness. If your assets are relatively small, entry-level products may suffice; for larger holdings, investing in a high-end wallet could be more economical.

User Experience

Although operation processes are similar across products, interface design, button layout, and display clarity vary. Choosing a wallet that’s comfortable to use makes asset management easier. Check official websites for detailed info and consider user reviews for real-world feedback.

Proper Steps to Use a Cold Wallet

Once you have a cold wallet, how should you use it?

Key Initialization and Import

If you haven’t generated a public/private key pair yet, you can create one via the cold wallet or hot wallet. If your private key is already stored on the cold wallet, you can skip this step.

Signing and Transaction Authorization

To make a transaction, connect the cold wallet to your phone or computer, usually requiring PIN or password entry to unlock the device. After unlocking, you can initiate a transaction.

Transaction Verification

After initiating a transaction, verify the details directly on the cold wallet device (or via connected software on your phone/computer). Confirm the transaction is correct before approving. Once completed, disconnect immediately. The private key and seed phrase return to offline status, greatly reducing exposure risk. Be especially cautious not to connect to unknown DApps, as this could compromise the security advantages of the cold wallet.

Proper Backup and Storage

Although hardware wallets are designed to be durable—shockproof, waterproof, fire-resistant—they still need careful protection to avoid damage. If damaged and not backed up, asset recovery becomes extremely difficult. It’s recommended to back up private keys or seed phrases on paper or USB drives as emergency measures.

Cold Wallets vs. Hot Wallets: Security Path

Both cold and hot wallets are vital tools for managing crypto assets, but they differ significantly across multiple dimensions.

• Storage Method: Cold wallets use offline physical isolation; hot wallets operate online.
• Physical Form: Cold wallets are physical hardware devices; hot wallets have no physical form.
• Security Level: Cold wallets are generally more secure than hot wallets.
• Ease of Use: Hot wallets are simpler and faster to operate; cold wallets are relatively more cumbersome.
• Cost: Cold wallets typically cost $50–$500; hot wallets are usually free.
• Applicable Scenarios: Cold wallets are suitable for long-term holding and large assets; hot wallets are better for frequent trading and small transactions. In practice, combining both—using cold wallets for long-term storage and hot wallets for daily operations—provides both security and flexibility.

Hardware Wallet Market’s Rapid Growth

According to Blockchain.com, in 2022, the global crypto wallet user base reached 80 million, showing exponential growth compared to 2021. Meanwhile, a report by Research And Markets indicates that the hardware wallet market could grow tenfold in ten years—from $400 million in 2021 to $3.6 billion by 2032—highlighting the increasing demand for cold wallets.

The main driver of this growth is users’ rising emphasis on asset security. As the crypto ecosystem matures and user numbers expand, more people recognize that long-term holdings require high-security solutions like cold wallets.

Additionally, intensified market competition has positive effects. Many developers are entering the hardware wallet space, pushing manufacturers to innovate—improving encryption strength, expanding cross-chain support, increasing supported coins, optimizing user interfaces, and lowering prices. This healthy competition benefits users through better products, more choices, and higher quality.

Looking ahead, cold wallets are expected to evolve from niche tools into standard equipment for crypto asset management, especially for users adopting long-term holding strategies, where their importance will only grow.