Cryptocurrencies aren’t stored in wallets, but rather, wallets hold keys to access cryptocurrencies on blockchains🔑. Two popular wallet types are hot and cold wallets. Cold wallets, which don’t require internet connection, are further divided into hardware and paper wallets. A hardware wallet is a physical device, like a USB, storing your keys, while a paper wallet is a printout of your private key or a scannable QR code📄🔐.
Setting up a paper wallet involves using programs like BitAddress or WalletGenerator to create a pair of keys, which are then printed out. For added security, BIP38 encryption can be used to add a passcode to the paper wallet🔒. However, if the paper is lost or damaged, the funds become inaccessible.
Hardware wallets store private keys offline on a password-protected device. Examples include Ledger Wallet, TREZOR, and NGRAVE. To set up a hardware wallet, you need to connect your computer to the device, download the software, create a backup code or seed phrase, and create a new wallet for each type of cryptocurrency you want to store. You’ll also need to create a pin to access your device🔒💻.
Despite their security, cold wallets aren’t risk-free. Hardware wallets can be lost, stolen, or damaged, and paper wallets are at risk when generating keys using the internet. However, they’re still considered more secure than hot wallets🔐💼.
To dive deeper, check out the complete article: https://droomdroom.com/how-to-set-up-a-cold-wallet/
