The concept of cryptocurrency is new but, the popularity of Bitcoin in these years is commendable. Bitcoin launched 12 years back by Satoshi Nakamoto. In the recent few years, Bitcoin has caught attention of financial investors. In regards to that, the cold storage

What is Cold Storage?

There are no real coins used for the transactions in the bitcoin network. Instead of it, there are only virtual or digital coins that are used for transaction purposes. All the digital coins are stored in the digital wallets from which an investor can buy or sell the digital money. In bitcoin, cold storage means that storing the Bitcoin offline. After which, an investor can spend them without any private keys.

Usually, this kind of wallet is kept visible like a piece of hardware. It offers security because there is no risk of hackers being involved with this storage system. There are the types of cold storage methods under bitcoin. This includes paper wallets, hardware wallets, sound wallets, and deep cold storage. An investor can go for any option as per suitability.

What are the Benefits of Cold Storage?

The biggest benefit of cold storage is that it offers utmost safety and protection from theft. This storage system is quite secure compared to the other options available for storage purposes. Stealing essentials from cold storage is not that easy. A person needs to have physical access to the cold wallet for stealing the essentials. Theft needs to know the PINs and passwords used to keep the cold wallet safe.

Differenttypes of cold storage systems are designed so so that they are not prone to hacking. As mentioned above, it can be stored in paper wallets or the form of physical bitcoins. These are completely safe but, they have become outdated and hardware replaced the same. Hardware wallets are the most reputable and reliable option to save bitcoins. More about hardware wallets, they are designed so that, even if it gets attached to the computer, there are no chances of data-stealing.

Now, if it gets connected to the internet, there are fewer chances of hacking or stealing. It is so because the hardware wallets are secured with the owner’s signature. With the help of this digital signature, an investor can assign the ownership to the recipient of the bitcoin transaction.

Shortcomings of Cold Storage technology

Cold storage systems are indeed very safe from the point of view of hacking. But, there is various other risk associated with the cold storage system. Read to know more.

1. Chances of Getting Damaged:

The cold storage systems are known to be prone to damages. It is so because cold wallets are usually penned drives or other tangible assets. These assets may get damaged while transportation, or they may get stolen. These devices are vulnerable to electromagnetic disruption. Therefore, if you forget the device somewhere, you may lose millions in a few seconds.

2. ReaveIdentity Most investors hide their identity in the bitcoin network, and no one knows about the other investor in the chain. But, when the things are stored in cold wallets, there is a chance of identity revelation. The person owning that device shows that they own the bitcoin in the network.

3. Control Issues:

There are issues related to access control, too. It is so because is the cold storages are protected with a private key. This private key will not allow any person to access the file. Therefore, if a person owns the file dies, many other investors may face huge losses.

4. Violence Risks

It is a common and most prominent risk for owning a cold storage wallet. If any person knows about the owner of the cold wallet, then there are great chances that they may try to steal the device through violence. This can risk someone’s life and other investment.


Cryptocurrency is a new investment area that is gaining popularity, especially bitcoins. But before you own a bitcoin, know about the risk and benefits of owning a cold storage wallet. There is a risk of investment involved with cryptocurrency. An investor can go for applications like the bitcoin trading, anapplication that allows investors to buy or sell bitcoins easily.