From Beginner to Expert: The Complete Guide to Using Cold Wallets and Product Highlights for 2025

Why Are More and More People Choosing Cold Wallets?

In cryptocurrency asset management, the security of private keys and seed phrases is a major concern for many users. Cases of loss, forgetfulness, or theft occur frequently, making many realize a critical issue: storing assets on an online environment is too risky.

As a result, the demand for cold wallets has surged. Compared to hot wallets that are connected to the internet daily, cold wallets offer an alternative approach—completely isolating private keys offline, fundamentally avoiding threats from hackers and malware.

What Exactly Is a Cold Wallet? Revealing Its Working Principle

Crypto Wallet is a digital tool for storing, managing, and using virtual currencies, divided into two main categories: hot wallets and cold wallets. They can receive, store, and transfer various assets such as Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), Litecoin (LTC), and more.

Cold Wallet is straightforward: storing cryptocurrencies on an offline device. Usually referring to hardware wallets, it can also include paper wallets or USB wallets. Hot Wallets are software-based, running on internet-connected devices like computers or smartphones, including app wallets and PC wallets.

How does a cold wallet operate? Two key steps

Step 1: Generating a Key Pair

When setting up a cold wallet, the system generates two keys using encryption algorithms—public key and private key.

The public key (also called address) is used to receive assets and can be shared publicly, similar to a bank account number. The private key is highly confidential, with the highest authority; possessing it allows full control over the wallet’s assets, akin to an account password.

To facilitate memorization, many wallets also generate a seed phrase—usually 12 or 24 English words, which is essentially a human-readable version of the private key.

Step 2: Offline Isolated Storage

Cold wallets are physically isolated from the internet, with private keys securely stored on hardware devices or other offline media. This isolation effectively prevents hacking and malware intrusion. Note that cold wallets can store private keys generated from other devices or hot wallets, but typically support only a single private key per device.

Three Hardware Wallets Worth Considering in 2025

Currently, the market offers many hardware wallet options. The following three stand out for their reliable reputation and practical features.

Ledger Nano X—All-in-One Functionality

• Manufacturer: Ledger (France)
• Security Level: CC EAL 5 certified
• Specifications: 72mm×18.6mm×11.75mm, weighs 32 grams
• Supported Currencies: Over 5500 cryptocurrencies, covering all mainstream coins
• Price: $149

Known for its broad compatibility, this product supports the largest number of supported coins in the industry.

Trezor Safe 5—Enhanced Security Version

• Manufacturer: SatoshiLabs (Czech Republic)
• Security Level: CC EAL 6+ certified (higher certification level)
• Special Features: Equipped with a touchscreen display
• Supported Currencies: Over 1000 cryptocurrencies
• Price: $169

This device offers an extra layer of security certification, and the touchscreen improves user experience.

SafePal S1 Pro—Cost-Effective Choice

• Security Level: CC EAL 5+ certified
• Connection Methods: USB-C connection and QR code scanning dual mode
• Supported Currencies: Over 30,000 cryptocurrencies (widest range supported)
• Price: Approximately $89.99 (more economical)

This wallet attracts cost-conscious users with its lower price and extensive currency support.

How to Choose the Right Cold Wallet? Four Decision Criteria

Different users have different needs, but four key aspects should always be considered when selecting a wallet.

Security—The Top Priority

The core value of a cold wallet is secure isolation. Different manufacturers use various encryption technologies, so it’s essential to focus on whether strong encryption algorithms, multi-factor authentication, and other protective measures are well-implemented to ensure seed phrases and private keys are truly uncrackable.

Compatibility—Does the Wallet Support Your Coins?

Before purchasing, confirm that it supports the cryptocurrencies you already hold. Although most cold wallets claim support for thousands of coins, some only support mainstream assets. In this regard, SafePal S1 Pro and Ledger Nano X perform more comprehensively.

Cost—Balance Price and Value

Cold wallet prices vary widely, from dozens to hundreds of dollars. Ask yourself: does the wallet I pay for truly meet my needs? Higher price doesn’t necessarily mean the best choice; the key is value for money.

User Experience—Ease of Operation

While most wallets have similar operational logic, differences in appearance design and interface friendliness are significant. Choosing a product with a clear interface and easy navigation will make asset management more convenient. It’s recommended to check official specifications and also consider real reviews from other users.

How to Use a Cold Wallet in Practice? A Three-Step Beginner’s Guide

Step 1: Create or Import a Key Pair

If you don’t have a public-private key pair yet, you can generate one using a cold or hot wallet. If the private key is already stored in the cold wallet, skip this step.

Step 2: Initiate and Verify Transactions

To transact with a cold wallet, connect it to your phone or computer, enter your PIN or password to unlock. After initiating a transaction, confirm and verify it on the device to complete. Immediately disconnect after the transaction, so the private key re-enters offline status, maintaining security.

Important Tip: Do not connect to unfamiliar DApps, as this can negate the advantages of a cold wallet and increase risks.

Step 3: Properly Store the Hardware

Although most hardware wallets are resistant to drops, water, and fire, careful handling is still necessary to avoid damage. If the hardware is completely destroyed, assets may become unrecoverable. Therefore, it’s recommended to back up private keys and seed phrases on paper or USB drives.

What Is the Difference Between Cold and Hot Wallets? Which One Should You Choose?

Both are tools for storing crypto assets, but they differ significantly across multiple dimensions:

Storage Method: Cold wallets are offline and isolated, while hot wallets operate online.

Physical Features: Cold wallets are tangible hardware devices; hot wallets are intangible software programs.

Security Level: Cold wallets are more secure due to isolation; hot wallets have higher risks because they are connected to the internet.

Operational Convenience: Cold wallets require multiple verification steps and are more complex; hot wallets can complete transactions with a few button presses, offering a smoother experience.

Cost Investment: Cold wallets typically cost between $50 and $500; hot wallets are mostly free.

Suitable Scenarios: Cold wallets are ideal for long-term holding and large assets; hot wallets are suitable for frequent trading and small asset flows.

What Is the Future Outlook for the Cold Wallet Market?

According to Blockchain.com statistics, the global crypto wallet users have reached around 68 million. By 2022, this number grew exponentially, surpassing 80 million in the first half alone, exceeding the total for all of 2021.

The hardware wallet market is similarly substantial. In 2021, the hardware wallet industry was valued at $400 million, and it is projected to expand to $3.6 billion by 2032, demonstrating strong growth momentum.

As user demand expands, more developers are entering the hardware wallet space. While increased competition will phase out inferior products, it also drives continuous innovation—improving security certifications, expanding cross-chain capabilities, increasing supported coins, and lowering prices. For consumers, this competition can only be beneficial.

Final Advice

Cold wallets and hot wallets are not mutually exclusive; they can be used together strategically—keeping large assets in cold wallets for long-term storage, while using hot wallets for daily transactions. Choosing the right cold wallet, setting it up properly, and backing up regularly can significantly reduce the risk of losing or having assets stolen.

Understanding the differences between cold and hot wallets and making choices based on your asset size and usage frequency is a wise approach to asset management.