Cryptocurrency

What’s Wrong With Cryptocurrency Cold Wallets?

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In order to safeguard the crypto funds, investors turn to cold wallets. Increased cyber theft cases also put insecurity in crypto investors. This lack of security causes them to choose extra secured options. In older times when there were no banks, people were used to bury their savings underground, making them least accessible. The idea of a cold wallet also resonates with this old way of securing funds.

In cold storages, people can store their private keys—the password, without which one cant access the crypto funds. Some investors even disconnect the internet after locking these keys on computers. People have become so obsessed with the crypto fund’s safety that some of them also write the password on a strip and then put it in the ‘safety deposit boxes.’ However, the concept of Cold storage is imperfect. Its imperfection is also proved by the painful incident of the Canadian Cryptocurrency exchange QuadrigaCX.

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Somehow, the overuse of these cold storages limits the potential of blockchain technology or cryptocurrencies. Storing crypto assets in cold storage can prevent an investor from the extreme volatility of crypto space. But, it also keeps the investor away from the possible benefits of the market fluctuations. This actually restricts the crypto users from stepping in the crypto-economic networks. By getting involved in the crypto market rather than just relying on cold storage is one of the ways to strengthen the cryptocurrency economy.

Cryptocurrency Cold Wallets

Take up a role in the crypto market will not only add the volume and liquidity in the market but also will encourage the innovations in Blockchain technology. This can promote improved adoption of emerging technology, which will bring improvement in crypto space. Those investors not participating actively in the crypto networks may eventually lose out.

Here, CEO and co-Founder of Anchor Labs, Nathan McCauley also agrees with the thought. Anchor Labs is a cryptocurrency custodial startup, which aims to resolve this issue attached with Crypto cold wallets. The CEO said,

“Imagine holding traditional equities and not being able to capture dividends – The cold storage providers are effectively going to be dropping dividends on the floor.”

Ruti Vora

Ruti regularly contributes in-depth news articles for leading cryptocurrencies. She contributes technical chart-based price updates and analysis pieces on world's leading digital currencies. She holds graduate degree in journalism.

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