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What is Cold Storage in Cryptocurrency?

Cold Storage in Cryptocurrency

When the cryptocurrency is not in use, it is held in “cold storage”. Every cryptocurrency wallet, whether bitcoin or other cryptocurrencies, has a private and public key.

If a thief tries to steal hardware, you can prevent him from accessing your funds by creating a PIN. You can even get your money back by entering a backup code or recovery phrase.

Bitcoin usually allows instant withdrawals. To protect your crypto assets from hackers and malware and reduce security risks, operators keep bitcoin in cold storage. It means it’s not on a web server or computer.

Advantages

It is an excellent place to store large amounts of coins for long periods of time.

It keeps money away from web servers, keeping it safe.

Disadvantages

Carelessness can cause external damage, but this damage is recoverable if you have a recovery phrase.

Setting it up can be a daunting task for beginners.

Compared to online transactions, cold storage in cryptocurrency is not ideal for quick and everyday transactions.

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