- Cygaar has cleared up the confusion of people who don’t know what hardware wallets are.
- If the computer is hacked, the secret keys necessary to transfer the money are never divulged.
- For safety purposes, never upload the seed phrase from the cold wallet anywhere else.
Cygaar has clarified the misconceptions of people on Twitter who don’t understand what hardware wallets do. Hardware wallets store KEYS rather than assets in cold storage. These gadgets are “safe” because the codes are not exposed elsewhere.
Since the secret keys required to transfer the funds are never revealed if the computer is hacked, the assets are deemed safe in hardware wallets. The keys exist only on the gadgets themselves, and the computer never sees them.
However, if the seed phrase from a cryptocurrency wallet is imported to a computer, the hardware wallet is practically rendered worthless because private keys are now kept in numerous locations. The cold wallet has suddenly turned into a hot wallet.
He also instructed people to never upload the seed phrase from the cold wallet anywhere else for security reasons. Note that a cold wallet is only cold if the credentials for it are exclusively stored on a hardware machine that is not linked to the internet.
A big misconception I've seen is people believe that hardware wallets keep coins/NFTs in cold storage and offline.— cygaar (@0xCygaar) January 15, 2023
This is not true.
Hardware wallets keep KEYS in cold storage, not the assets. These devices are "secure" because the keys aren't revealed anywhere else.
A cold wallet, also known as “cold storage,” stores a digital wallet on a network that is not connected to the internet, protecting it from unauthorised access, cyberattacks, and other issues that a system connected to the internet is susceptible to.
A “hot wallet” is an internet digital money wallet that allows the holder and end users to exchange digital currencies. To store and transfer multiple currencies, such as Bitcoin, a set of private keys stored on software connected to the internet is used.
The hot wallet contains frequently used keys and is Internet-connected. A cold wallet holds seldom-used keys and is maintained offline. A hot wallet is linked to the internet and may be exposed to online assaults, perhaps resulting in stolen assets, but it is faster and makes it simpler to trade or spend cryptocurrency. A cold wallet is often not linked to the internet; therefore, it is less handy while being more safe.