What are Air-gapped Wallets?

What are Air-gapped Wallets

Content provided by various contributors. DYOR.

An air-gapped cryptocurrency wallet is a wallet that is completely offline and disconnected from the internet. It is a cold storage wallet, which means it is not accessible from an online device and is much less vulnerable to hacking. The idea behind an air-gapped wallet is that it is physically isolated from any network, making it almost impossible for anyone to access it remotely.

To transfer funds to or from an air-gapped wallet, the user must physically transfer the wallet to a device connected to the internet and perform the transaction there. This adds an extra layer of security, making it much harder for anyone to steal the funds stored in the wallet.

Air-gapped Wallets Benefits

There are several benefits to using an air-gapped wallet for storing cryptocurrency:

  1. Increased security: As mentioned, an air-gapped wallet’s biggest advantage is its increased security. Because it is completely offline, it is much harder for hackers to access the funds stored in the wallet.
  2. No need to trust third parties: With an air-gapped wallet, you completely control your funds. You don’t have to trust a third-party service to keep your funds safe, as they are stored on a device that is not connected to the internet.
  3. Greater privacy: Air-gapped wallets can also provide greater privacy for users. Since the wallet is not connected to the internet, no one can track the transactions made from the wallet.
  4. Can be used in areas with poor internet connectivity: An air-gapped wallet can be useful in areas with poor internet connectivity, as it allows users to access their funds even when the internet is unavailable.

Air-gapped Wallets Risks

Bitcoin live price
price change

While air-gapped wallets offer increased security and privacy, there are also some risks to consider:

  1. Physical damage or loss: Since the wallet is a physical device, it is vulnerable to damage or loss. If the device is damaged or lost, the funds stored on it will also be lost if you don’t back up your seed properly.
  2. Complexity: Setting up and using an air-gapped wallet can be more complex than using an online wallet. This can be a barrier for some users and may discourage them from using this type of wallet.
  3. Limited functionality: An air-gapped wallet has limited functionality compared to an online wallet. For example, you cannot easily check your account balance or view your transaction history without transferring the wallet to a connected device.
  4. Possibility of malware: While the risk is minimal, there is a possibility that malware could be transferred to the air-gapped wallet if the device is not properly secured. Following best practices for securing the device and regularly checking for malware is important.
Read more from author

Editor's picks

What Are DeFi Lending Platforms?

Decentralized finance (DeFi) lending platforms are decentralized applications (dApps) built on blockchain technology that enable users to borrow and lend cryptocurrency. These platforms use smart contracts to automate the lending process, eliminating the need for intermediaries such as banks. Here's an example of how a DeFi lending platform might work: Alice wants to borrow 100 ETH, so she goes to a DeFi lending platform and posts a request for a loan. Bob, who has 100 ETH to lend, sees Alice's…

What is The Capital Gains Tax in Crypto?

Cryptocurrency capital gains tax is the tax imposed on the profit made from the sale or exchange of a cryptocurrency. The tax rate for capital gains can vary depending on the country or jurisdiction. Still, in the United States, it is typically calculated as the difference between the cryptocurrency's purchase price (or cost basis) and the sale price multiplied by the individual's marginal tax rate. In some countries like the US, you only need to pay the capital gains tax…

Cryptocurrency vs. FIAT Money

Cryptocurrency is a digital or virtual currency that uses cryptography for security. It operates independently of a central bank or government. Bitcoin, the first and most widely used cryptocurrency, was created in 2009. FIAT money, on the other hand, is a currency a government has declared legal tender, but a physical commodity (such as gold) does not back it. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material…

Short-Term vs. Long-Term Crypto Investors

Short-term crypto investors typically buy and sell digital assets within a short time, often within a few hours or days. They are often driven by market fluctuations and aim to make quick profits. Long-term crypto investors hold onto their assets for longer, often for several months or years. As a result, they often believe in the technology and potential of the digital asset they are investing in and need to be more focused on short-term market movements. Short-Term vs. Long-Term…

What Are Bitcoin Maximalists?

Bitcoin Maximalists believe that Bitcoin is the only true cryptocurrency and that all other cryptocurrencies are inferior or unnecessary. Therefore, they often advocate for using and adopting only Bitcoin and reject the idea of diversifying one's cryptocurrency portfolio with other coins or tokens. Bitcoin Maximalists are known for their strong belief in the value and potential of Bitcoin as a decentralized and scarce digital asset. They often view it as a store of value or hedge against traditional fiat currencies…

Coins vs. Tokens: What Are the Differences and Similarities?

Crypto coins and tokens are digital assets that use blockchain technology, but they have some key differences. A crypto coin, like Bitcoin or Litecoin, is a standalone digital currency used to buy goods and services or traded on cryptocurrency exchanges. Coins have their blockchain and can be mined (created by solving complex mathematical equations) or minted through staking. On the other hand, a token is a digital asset built on top of an existing blockchain, like Ethereum or BNB Chain.…

What Are Overbought and Oversold Conditions in Crypto Trading?

Overbought and oversold conditions in crypto trading refer to situations where the price of a cryptocurrency has moved to an extreme level in one direction or the other. An overbought condition occurs when the price of a cryptocurrency has risen significantly and is considered too high relative to its recent trading history. This can indicate that the market is becoming too bullish and that the price may soon experience a correction. An oversold condition occurs when the price of a…

What is Crypto Tokenomics?

Crypto tokenomics refers to the economic principles and mechanisms that govern the creation, distribution, and use of tokens within a blockchain-based network. A token is a digital asset that can be traded on blockchain platforms and represents a certain value or utility within a specific ecosystem. For example, consider a decentralized application (dApp) built on the Ethereum blockchain. The dApp might issue its token, let's call it "APP," which can be used to access certain features or services within the…

What Are Gold-Backed Tokens?

Gold-backed tokens are digital assets backed by a physical asset, in this case, gold. They are typically issued by a company that holds a certain amount of gold in reserve. The company will issue certain tokens representing a specific amount of gold. For example, one token might represent one gram of gold. These tokens can be bought and sold on various cryptocurrency exchanges, similar to how other cryptocurrencies, such as Bitcoin, can be traded. The token's value is tied to…