Expert opinion

INTERVIEW: Tips On How To Start Investing In The Cryptocurrency Industry Safely By Using Cold Wallets

In the ever-evolving world of digital finance, cryptocurrency has taken centre stage as a revolutionary investment medium. However, just like any other asset, it comes with its own risks and challenges, especially regarding security. One of the most effective ways to safeguard your cryptocurrency investments is through Cold Wallets. 

That said, many enthusiasts lost their trust in cold wallets after the recent fiasco surrounding Ledger and its hardware wallet policy affecting private keys. Nonetheless, many experts still consider these types of wallets safe options. We caught up with hardware wallets sales startup The Crypto Merchant’s founder, Mark Venables, who gave us salient tips on how to safely invest in crypto by using cold wallets:

  1. The cryptocurrency industry has seen tremendous growth in recent years but it comes with risks. How can cold wallets provide a safer and more secure approach to investing in cryptocurrencies?

    • Yes, the industry has seen significant growth, but it’s still early days. Crypto, much like anything else, is susceptible to all manner of online attacks in ways we can't even imagine yet. Cold or hard wallets do just that – you become your bank.

  2. Cold wallets are often recommended for the long-term storage of cryptocurrencies. Could you explain the advantages of using a cold wallet over other storage options, such as hot wallets or exchanges, regarding security and control?

    • Cold wallets aren’t just for long-term storage. I get why that was the perceived purpose a few years ago and is probably thought of that way by many people today. Still, the fact is using a cold wallet isn’t a lengthy process, so that it can be used with everyday transactions.  The advantage over the other options mentioned above is simply the security, and the self-custody component is the main factor here.

  3. Cold wallets come in different forms, including hardware, paper, and even offline software wallets. What factors should investors consider when choosing the right type of cold wallet for their specific needs?

    • There are different ways to store your keys offline, of course, but doing so on paper or through other software-based digital wallets exposes you to a whole set of other issues.  If you want to secure your crypto assets with a cold wallet, you have many choices now. Investors, traders, holders, and newbies need to consider their activity. It’s important to make a choice considering if you are holding, trading, or even transferring and how often.  Some wallets suit situations better than others, and there are makes and models out there that are superb but not yet common.

  4. The setup process for cold wallets can vary depending on the type and brand. What are the key steps and best practices for securely setting up a cold wallet, especially for beginners unfamiliar with the technical aspects?

    • The setup does vary quite considerably.  I have a failsafe way to set it up correctly and effortlessly every time. We help our customers with these types of issues. The manufacturers have a certain amount of help but are short of actually reading the instructions, and then you’ll always find something on YouTube when in doubt. 

  5. One of the critical aspects of cold wallet usage is storing and protecting private keys. What are some recommended methods for securely managing and backing up private keys associated with cold wallets to prevent the risk of loss or theft?

    • This is arguably more important than the cold wallet. Get yourself a seed phase backup device. Don't keep it online or on your computer. Negate everything you did to achieve self customer, and don't just write it on some paper you’ll misplace.  

  6. While cold wallets provide excellent security, they pose challenges, such as potential hardware failures or damage. What steps can investors take to ensure their cold wallets' long-term maintenance and reliability?

    • These devices are like anything; if you entrust this device with significant investments, treat it with the respect it deserves.  If it needs charging or firmware updating, simply do what is required, don't neglect the device, and have a backup.

  7. Cold wallets are designed to protect against online threats, but what about physical threats like theft or loss? What measures should investors take to safeguard their cold wallet devices and prevent unauthorised access to their funds?

    • Cold wallets aren’t just for protection against online threats. Don’t carry it around if you don't have to. If you aren’t trading hourly and need it on and offline, keeping it in the safe or someplace safe is best. If you insist on carrying it around, then a seed backup is better.

  8. Cryptocurrency scams and phishing attempts are prevalent in the industry. What red flags or warning signs should investors watch out for to avoid falling victim to scams when using cold wallets?

    • Scams are a bigger business than the industry it's self almost.  I have to say, first and foremost, common sense is your best protector.  If someone asks for information you wouldn’t even tell your family, I’d be reluctant to share it with someone on the phone. 

  9. In the event of a forgotten PIN or lost access to a cold wallet, what options are available to regain access to the funds? How can investors avoid the risk of permanently losing their cryptocurrencies?

    • At that point, it’s not much anyone can do. The best thing to do is to have a seed backup device or just use a seed phase spreadsheet that tracks all pins and passwords used for your various wallets. 

  10. The crypto market can be highly volatile, and investors may need to access their funds for trading or other purposes. How can cold wallets balance security and accessibility when actively participating in the cryptocurrency market?

    • If you are trading, then you should check out several options concerning wallets. Each cold wallet will have pros and cons regarding its security and accessibility, so you will have to use personal preference to decide and understand what you can tolerate. 

  11. The regulatory landscape for cryptocurrencies is evolving. Are there any legal or regulatory considerations that investors should consider when using cold wallets?

    • Not anything currently on the market or mainstream that I am aware of. I believe regulation is generally introduced as protection (or at least should be). As a fellow Crypto space enthusiast and owner of The Crypto Merchant, I got into this to ensure we offered the widest range of protection on the planet.  Something I am happy to say I have achieved thus far