Cold Wallets — How To Set Up & Use Them
In our previous blog post we talked about what you can do to keep your cryptocurrencies safe. There we mentioned that one of the safest ways to do so is to store your cryptos in a cold wallet. A cold wallet, also known as a hardware wallet, is a physical device that allows you to securely store your cryptocurrency offline. Unlike a hot wallet, which is connected to the internet and vulnerable to hacking, a cold wallet provides an extra layer of security by keeping your private keys offline. In this article, we’ll explain how to set up and use a cold wallet so that you can start keeping your cryptos safe confidently.
How To Set Up A Cold Wallet (Hardware Wallet)
As mentioned earlier, a cold wallet is a type of wallet that is not connected to the internet. Cold wallets come in many forms, such as physical devices like a USB drive or a hardware wallets, or paper wallets that contain the private keys to your digital assets. One of the most popular types of cold wallets is the hardware wallet. These devices are specifically designed to store and manage cryptocurrency and offer a high level of security. Some examples of hardware wallets include the Ledger Nano and the Trezor.
To use a crypto cold wallet, you need to follow these steps:
- Purchase a hardware wallet from a reputable vendor. There are several hardware wallet options available in the market, including Ledger Nano, Trezor, and KeepKey. Choose the one that suits your needs and budget.
- Install the necessary software on your computer. Most hardware wallets come with companion software that needs to be installed on your computer to manage and access your cryptocurrencies.
- Connect your hardware wallet to your computer using a USB cable. Follow the instructions provided in the user manual to set up your hardware wallet.
- Create a new wallet on your hardware wallet. This will generate a unique set of keys — a public key and a private key — that will be used to access your cryptocurrencies. Make sure to write down your keys and store them in a safe place.
- Transfer your cryptocurrencies from your hot wallet to your hardware wallet. This process is known as “cold storage.” You can either use a transfer service provided by your hardware wallet vendor or use the wallet address of your hardware wallet to transfer your cryptocurrencies.
- Secure your hardware wallet. Hardware wallets come with additional security features like password protection and two-factor authentication to prevent unauthorised access to your cryptocurrencies. Make sure to enable these features and keep your wallet safe from physical damage or theft.
Once your cryptocurrencies are transferred to your hardware wallet, you can use them to view your balances, make transactions, and check your transaction history. To do this, you will need to connect your hardware wallet to your computer and enter your PIN code to access your wallet. From the software, you can view your cryptocurrency balances and transaction history. You can also create new transactions by providing the recipient’s address and the amount of cryptocurrency you want to send.
It’s important to note that cold wallets are not completely foolproof. If you lose your hardware wallet or forget your password, you will not be able to access your funds. It’s extremely important to keep your recovery phrase and password safe and secure.
For businesses, the best wallet to use depends on the size of the business and transactions. With smaller businesses, it might be sufficient to use a hot, non-custodial wallet such as the one Paywong provides for merchants using the payment gateway. However, as your business grows, it is advisable to use cold wallets to keep your business’ crypto funds safe. There are a few more specific features for businesses to bear in mind when choosing a wallet and it’s best to look for these features when doing so:
- Multi-signature (multisig) support. This feature allows multiple people to approve a transaction before it’s executed and allows for the ‘maker—checker’ function
- Segregated Witness (SegWit) support. SegWit is a technical improvement of the Bitcoin protocol that allows cheaper and faster transactions. If you plan on frequently moving crypto around, look for a wallet that supports SegWit.
- Payment Protocol (BIP70–73) support. The Payment Protocol is a set of standards that improve the security and efficiency of Bitcoin transactions. Support for these protocols is important for businesses to make it easier for their customers to pay them.
With Paywong, anyone can accept crypto payments, including stablecoins, from anywhere in the world with low transaction fees, with or without a website. The startup is also working with a third-party off-ramp solution to allow its users to convert crypto to fiat in real-time. Paywong is a non-custodial crypto payment gateway that provides merchant services for businesses catering to all customers. In addition, Paywong is also useful for individuals who are working as freelancers and want to get paid for their services in crypto via Paywong’s crypto invoicing service.
Paywong has launched a payment gateway with an intuitive dashboard for managing funds, e-commerce integrations, and an invoicing system that generates a payment link that anyone can share. Book a demo to learn more, and you’ll be accepting cryptocurrency as payment from your customers in no time.
For more details and updates, check out the official website as well as Twitter, Linkedin, Facebook, Instagram, and Telegram portals.
About The Company
Paywong is a product of Walawong Solutions Pte Ltd — a Web3 startup based in Singapore. We are on a mission to simplify crypto payments for businesses by leveraging the power of blockchain technology.