Is it difficult to store private keys and mnemonic phrases? A detailed guide on choosing and using cold wallets

Pain Points: Why You Need a Cold Wallet

As on-chain interactions become more frequent, hot wallets are indeed convenient, but the associated risks cannot be ignored. How many people have lost private keys and seed phrases due to poor management? Even worse, assets are stolen or completely disappear. This is why the demand for cold wallets is soaring—they offer an offline solution for securely storing crypto assets.

However, the market offers a wide variety of cold wallets. How do you choose the right one? How to use it? This article will help you understand everything thoroughly.

Cold Wallet vs Hot Wallet: What Are the Key Differences

Before diving into cold wallets, let’s understand the basic concepts.

Cryptocurrency wallets are digital tools used to store, manage, and use virtual currencies, available in two forms:

Simply put: Cold wallets sacrifice convenience for maximum security, while hot wallets prioritize ease of use.

What Is a Cold Wallet? How It Works

Cold Wallet refers to storing cryptocurrencies on an offline device, typically a hardware wallet, but also includes paper wallets, USB wallets, etc.

The Two-Step Workflow of Cold Wallets

Step 1: Generate Public-Private Key Pair

When setting up a cold wallet, cryptographic algorithms generate two key pieces of information:

• Public Key (Address): Similar to a bank account number, can be shared publicly to receive assets
• Private Key: Like a bank password, controls all assets, must be kept secret
• Seed Phrase (Mnemonic): A user-friendly version of the private key, usually 12 or 24 English words, for easy backup and recovery

Step 2: Offline Storage and Physical Isolation

Cold wallets store private keys via physical means, disconnected from the internet, preventing remote attacks by hackers or malware. Note that a typical cold wallet usually stores only one private key, with a limited number of keys supported.

Top Cold Wallets Recommended in 2025

There are many hardware wallets on the market. Here are three reputable and widely used products worth considering:

Ledger Nano X

• Manufacturer: Ledger (France)
• Security Certification: CC EAL 5
• Specifications: 72mm×18.6mm×11.75mm, weighs 32g
• Supported Currencies: Over 5500 cryptocurrencies, including mainstream coins (Bitcoin, Ethereum, Dogecoin, Litecoin, etc.)
• Price: $149

Trezor Safe 5

• Manufacturer: SatoshiLabs (Czech Republic)
• Security Certification: CC EAL 6+ (highest level)
• Features: Touchscreen for more intuitive interaction
• Supported Currencies: Over 1000 cryptocurrencies
• Price: $169

SafePal S1 Pro

• Security Certification: CC EAL 5+
• Connectivity: Supports USB-C and QR code scanning
• Supported Currencies: Over 30,000 cryptocurrencies (widest range)
• Price: Around $89.99 (high cost-performance ratio)

How to Choose a Cold Wallet? Four Core Considerations

There’s no absolute standard for selecting a cold wallet, but you can evaluate based on these four dimensions:

1. Security — The Top Priority

Different manufacturers use different encryption technologies. Prioritize products with strong encryption algorithms, multi-factor authentication, and hardware protections like shockproof and waterproof features. Checking security certification levels (e.g., higher CC EAL levels) provides an intuitive reference.

2. Compatibility — Supports Your Currencies

Before purchasing, confirm that the cold wallet supports the cryptocurrencies you hold. While most hardware wallets support thousands of coins, some only support mainstream currencies, which can be limiting.

3. Cost — Weigh Investment and Return

Cold wallet prices range from $50 to $500. Assess your asset size and long-term needs to ensure the expenditure is worthwhile. High-end products may not be suitable for everyone.

4. User Experience — Ease of Use Matters

Although the operational process is similar across devices, interface design and usability vary greatly. A user-friendly interface can significantly reduce difficulty and improve asset management efficiency. Check official websites or user reviews for real-world experiences.

Practical Guide to Using a Cold Wallet

Preparation: Obtain Public-Private Key Pair

If you don’t already have a public and private key, generate them via a cold wallet or hot wallet. If your private key is already stored on a cold wallet, skip this step.

Transaction Phase: Sign and Authorize

When making a transaction, connect the cold wallet to your phone or computer, unlock the device with PIN or password, then initiate the transaction request.

Verification Phase: Confirm Transaction

After initiating, verify transaction details on the device screen or software. Confirm everything is correct before submitting. After completion, disconnect from the internet immediately, restoring the private key and seed phrase to offline status.

Key Tip: Never connect to unknown DApps, as this can compromise the offline advantage of your cold wallet and reduce security.

Storage Phase: Proper Backup

While hardware wallets typically feature shockproof, waterproof, and fireproof functions, careful protection is still necessary to avoid damage. More importantly, back up your private key and seed phrase on paper or USB drive. In case the hardware fails, backups ensure your assets are not permanently lost.

Market Outlook for Cold Wallets

According to Blockchain.com data, the global crypto wallet users have reached around 68 million. In 2022, the growth was astonishing: in the first half alone, the number exceeded the total for all of 2021, reaching 80 million.

The hardware wallet market has even greater potential: in 2021, the market size was about $400 million, expected to grow to $3.6 billion by 2032, with a compound annual growth rate (CAGR) that is impressive.

As demand expands, more developers are entering this space. Fierce competition benefits consumers—manufacturers are increasing security certifications, expanding coin support, enabling cross-chain functionality, and lowering prices. This means users will have access to better products and services.

Summary: Cold wallets are not optional but essential tools for long-term holders. Choosing the right product and mastering proper usage will ensure your crypto assets are truly secure and worry-free.