Handing your crypto over to another party is always worrisome and disconcerting. Oftentimes people feel uncomfortable about this as they want to be ensured that their funds are in a safe and secure location (either physically or electronically). There are multiple ways that crypto funds can be secured, but with Helio, your crypto is held using a cold storage wallet, the safest method available. 

 

What is a cold storage wallet?

 

These are crypto wallets that run offline, meaning that the money is secured outside of internet usage. A cold storage wallet means that the only system your funds are connected to is the blockchain itself; this is unlike online wallets where your funds will also be associated with the service that you used to set your wallet up with. You do not need an internet connection to see your funds when you have a cold storage wallet. Instead, cold storage wallets rely heavily on hardware or other physical means. For instance, many popular cold storage wallets, such as Trezor or Ledger Nano S, are small hardware devices that have built-in screens that allow you to use them to view your money. They do not need any internet connection whatsoever, so they are not reliant on any other services or organizations to work. This is what makes them so safe, because as a general rule of thumb, anything which is online can be reached and possibly hacked by somebody else. 

 

Some crypto users like paper wallets, these are crypto wallets that contain all your public and private key details written down on either a document or an actual piece of paper. If these are generated on a computer, then you would need to ensure that your computer is offline, and has always been offline, to make sure that it is secure. This prevents others from seeing it or getting hold of it, meaning they can never compromise your devices. If somebody chooses to print their details so they can create an actual paper wallet, then their printer should be offline, too. 

 

Essentially, a cold storage wallet is just a device or piece of paper which holds the information you need to access your crypto wallet, and which can be accessed without the need for an internet connection. This is how Helio stores any crypto which is collateralized, offering maximum security.

 

Why exactly is cold storage so safe?

 

To understand the safety that comes from cold storage, it is easiest to look at why internet wallets (or hot wallets) are easier to compromise. A wallet that can only be accessed via online methods leaves it open to malicious behaviour from other people. If your computer gets a virus, even a simple keylogger virus that monitors and copies every button you press on your keyboard, then a dangerous third party can use those details to gain access to your account. That risk increases with every time that you go online to access your wallet. Crypto is a huge market which generally attracts extremely tech-savvy individuals, so there are many viruses and spyware that have been created with the sole purpose of stealing funds. 

 

With that being said, for the most part, people are safe enough with a hot, online, wallet. It is just that cold storage is the safest way to go, and when it comes to handling other people’s money, cold storage is the most ethical and responsible way forward. It is best practice to use the most secure methods possible when looking after somebody else’s money, and so cold storage is preferable when storing crypto that people have used for their loans.