How to choose between hot and cold wallets? The complete guide to cold wallets in 2025

As on-chain interactions become increasingly popular, more and more people are learning how to operate wallets. However, accompanying issues have also emerged: lost private keys, leaked seed phrases, stolen assets… such incidents are common. Many users realize that relying solely on hot wallets on their phones or computers may not be secure enough; cold wallets are the proper long-term storage solution for crypto assets.

So, what exactly is a cold wallet? What are the fundamental differences between cold and hot wallets? Which trustworthy cold wallet products will be available in 2025? How can you safely use a cold wallet? Today, let’s explore these questions.

Cold Wallet vs Hot Wallet: What Are the Differences?

Before diving into cold wallets, it’s important to understand the difference between cold and hot wallets.

Cryptocurrency wallets can be divided into two categories: hot wallets (also called software wallets), stored on internet-connected devices like smartphones and computers, including app wallets and PC wallets; and cold wallets (also called offline wallets), stored on offline devices, mainly hardware wallets, but also paper wallets and USB wallets.

The biggest differences lie in several aspects:

Storage Method: Hot wallets are always online, while cold wallets are physically isolated offline storage. This determines their security levels—cold wallets effectively prevent hacking and malware attacks, whereas hot wallets are more vulnerable to cyber threats.

Ease of Use: Hot wallets allow for instant transactions anytime and anywhere, while cold wallets require connecting to a device to operate, making them relatively more cumbersome. Cost-wise, hot wallets are usually free, whereas cold wallets require an investment of $50 to $500 for hardware devices.

Applicable Scenarios: If you frequently trade, hot wallets are most suitable; for long-term storage of major cryptocurrencies like BTC and ETH, cold wallets are the preferred choice.

What Is a Cold Wallet? Understanding the Core Mechanism

A cold wallet is essentially an offline digital wallet that stores private keys. When you use a cold wallet, it generates two things through encryption algorithms:

Public Key (also called address): Think of it as your account number, which can be shared publicly and is mainly used to receive cryptocurrencies. Others only need your public key to send you funds.

Private Key: Similar to a password for your account, possessing the private key means owning all assets in the wallet. Additionally, there’s seed phrase, a human-readable version of the private key, usually consisting of 12 or 24 English words, mainly for easier memorization and backup.

The working principle of a cold wallet is simple: it does not connect to the internet and stores private keys in a physical, isolated manner. This way, even the most skilled hackers cannot access your assets. It’s important to note that while cold wallets typically store only one private key, this key can be generated by yourself or imported from other devices or hot wallets.

Recommended Hardware Cold Wallets in 2025: Comparing Three Products

Currently, the market offers a variety of cold wallets. Here, we focus on three well-regarded hardware cold wallet products with a large user base.

Ledger Nano X

Produced by French company Ledger, it has a security certification level of CC EAL 5, measures 72mm×18.6mm×11.75mm, and weighs only 32 grams. Its major advantage is support for over 5500 cryptocurrencies, covering almost all mainstream coins, priced at $149.

Trezor Safe 5

Made by Czech company SatoshiLabs, with a security certification level of CC EAL 6+ (higher than Ledger), it features a touchscreen for more intuitive operation. It supports over 1000 cryptocurrencies, priced at $169.

SafePal S1 Pro

This product has a security certification level of CC EAL 5+, supports USB-C and QR code scanning for connection, and supports over 30,000 cryptocurrencies, making it the most extensive in supported coins among the three. It costs about $89.99, offering a high cost-performance ratio.

Each of these products has its own strengths: Ledger is known for stability, Trezor for the highest security level, and SafePal for affordability and extensive coin support.

How to Choose the Most Suitable Cold Wallet?

There’s no absolute answer; it depends on individual needs. However, you can consider the following four aspects:

Prioritize Security

The primary purpose of a cold wallet is secure storage, so security is the top priority. Focus on encryption strength, support for multi-factor authentication, and whether it has international security certifications. Both Ledger and Trezor have high security certification levels, so there’s no need to worry too much about this.

Compatibility Must Be Sufficient

Before purchasing, confirm that the cold wallet supports the cryptocurrencies you hold. While most cold wallets support thousands of coins, some products may only support mainstream tokens. If you hold small or new tokens, SafePal’s support for over 30,000 coins is a significant advantage.

Cost Should Be Reasonable

Cold wallets range from dozens to hundreds of dollars. Decide based on your asset size and usage frequency. If you only store assets worth a few thousand dollars, it’s unnecessary to spend too much; for assets worth hundreds of thousands of dollars, spending an extra $100 on a more secure product is worthwhile.

Don’t Overlook User Experience

Although the basic operation of each wallet is similar, differences in interface design, interaction logic, and touchscreen responsiveness can be significant. It’s recommended to read user reviews and watch product demo videos before purchasing to choose a product that feels comfortable to use. Official websites usually provide detailed information, and user feedback on Reddit and Twitter can also be valuable references.

How to Use a Cold Wallet? Three Quick Steps

Step 1: Generate or Import Private Key

If you don’t already have a private key and public key, you can create a pair using a cold wallet or hot wallet. If you’ve generated one elsewhere, you can import the private key into the cold wallet.

Step 2: Initiate Transaction and Sign Authorization

When you want to make a transaction with the cold wallet, connect it to your phone or computer. Usually, you need to enter a PIN or password to unlock the device, then confirm the transaction details on the screen. This step is called “signing authorization” and is the core of the cold wallet’s security mechanism—the private key remains offline and only participates in signing when you authorize.

Step 3: Complete the Transaction and Disconnect Immediately

After transaction confirmation, disconnect the cold wallet from the device immediately, returning it to offline status. This ensures your private key and seed phrase are kept in a completely secure environment.

A key reminder: Do not connect to unknown DApps casually. Even with a cold wallet, connecting to malicious applications can make it vulnerable to attacks just like hot wallets. Additionally, while hardware wallets generally have features like drop resistance, waterproofing, and fire resistance, you should still handle them carefully to avoid damage from impacts. It’s also recommended to back up private keys or seed phrases offline using paper, USB drives, or other methods to prevent loss.

Cold Wallet Market Outlook: Hardware Wallets Enter a Boom Period

According to Blockchain.com statistics, the number of global crypto wallet users is growing rapidly. In late 2021, there were about 68 million users, surpassing 80 million by mid-2022, with astonishing growth.

The market size for hardware cold wallets is even more impressive. A report by Research And Markets indicates that the hardware wallet market reached $400 million in 2021 and is expected to grow to $3.6 billion by 2032, representing a substantial annual growth rate over the next decade.

As market demand expands, more developers are entering the cold wallet space, intensifying competition. For users, this is a positive development—manufacturers must improve security, cross-chain support, coin variety, and pricing to compete. This means future cold wallet products will become increasingly secure, user-friendly, and affordable, with more options available.

In summary, cold wallets and hot wallets are not opposites but complementary. Hot wallets are suitable for flexible daily trading needs, while cold wallets provide ultimate security for long-term assets. If you hold significant crypto assets and don’t plan to trade frequently, now is the time to consider acquiring a cold wallet.