Cryptocurrencies have gained popularity since Bitcoins were first launched in 2009 and in place of cloud storage, investors are now looking for solutions on how to store cryptocurrency on a USB. Cryptos are typically traded and stored on web-based cryptocurrency exchanges that allow users to easily complete transactions. However, this rise in the transfer of digital assets online has resulted in more crypto heists with billions of crypto coins being stolen.
According to Market Watch, $400 million was lost during the first three months of 2023. Despite this being a 70% decline from the same period in 2022, many people are still losing money to bad actors and hackers online.
You may be interested in joining the crypto-revolution but are wary of the security of your cryptocurrencies. But as they say, knowledge is power so keep reading as I explain how to use a USB flash drive for cryptocurrency storage and keep your coins safe.
By the end of this article, you should be able to ensure the security of your cryptocurrencies and make your crypto trading venture a success.
Is it Possible For My Crypto To Be Stolen?
Before I dive into why you need to use cryptocurrency hardware USB, I need to explain where all the crypto is and how blockchain works.
Blockchains are a public ledger or database that records cryptocurrency transactions on a distributed network of computers connected via the Internet. Although blockchain is touted as being ‘unhackable’, the blockchain environment or blockchain-adjacent processes are still vulnerable to cyberattacks.
When a transaction is initiated, the blockchain technology authenticates it and it is then bundled with other pending transactions to create a block. This block is sent to all participating computers or miners which use cryptography and other techno to evaluate each new block. When the majority of nodes in the network reach consensus, the transaction is verified.
The block is time-stamped with a hash code – converting data into a unique alphanumeric string – and added to the existing blockchain. Each new block’s hash is calculated using the previous block’s hash and this new hash will be referenced in subsequent blocks.
This makes it almost impossible to hack a chain because if a block is tampered with, the hash code and the codes of all previous blocks will change. Consequently, there will be no consensus within the network. Transactions will be halted until the problem is fixed, the faulty block will be discarded and transactions resume once consensus is reached.
Once the transaction is completed, you will receive a public key to create your crypto wallet and a private key to access your cryptocurrencies.
This process of buying and selling crypto shows why and how cybercriminals attack crypto exchanges, hack wallets, and ultimately gain access to your cryptocurrencies. Although convenient, by you placing your trust in a cryptocurrency USB hot wallet puts your funds at risk of theft.
How Do Hackers Steal Cryptocurrencies?
A hot wallet is an interface that allows you to store, send, receive, view, and manage your crypto coins. These wallets store your private keys which are necessary for you to authorize crypto transactions.
Billions of cryptocurrencies are traded with Bitcoins (BTCs) being the most popular digital currency peaking at over 670,000 coins traded in one day on May 2023.
Chainalysis labels these traded Bitcoins as digital gold and can be referred to as invested, lost, or Bitcoins in active trading.
- Invested Bitcoins: These are coins held over the long term contributing up to 60% of Bitcoins in circulation.
- Bitcoins in Active Trading: These are the 3.5 million Bitcoins, or 19% of coins are constantly being moved between exchanges.
There is a third category of lost Bitcoins that have not been moved from their original address for over five years. This could be due to lost or forgotten private keys and they make up approximately 20% of all mined coins.
With that information in mind, it’s apparent that a large percentage of these cryptocurrencies will pass through a hot wallet. This huge amount of transfers has made online payment services and exchanges the target of numerous malicious attacks that have resulted in people losing their coins.
Hot wallets are a form of software found in a hardware device and because they are connected to the Internet, they are constantly at risk of attack.
To protect your own digital assets, it is advisable to save your Bitcoins (along with your other cryptocurrencies) on a USB.
This is known as cold storage – keeping your cryptocurrencies offline – instead of using cloud storage.
Reasons to Use a USB Flash Drive for Cryptocurrency Storage
Although there are various methods of cold storage, here we look at the main reasons to use a cryptocurrency cold storage USB.
They are a safe alternative to paper wallets which are printouts of your public and private keys. These need to be stored in a secure location where there is no risk of environmental damage.
Paper wallets were the most common method of storage since the formation of cryptocurrencies but because paper disintegrates with time and ink fades, they are not the ideal long-term cold storage solution.
USBs on the other hand offer the same offline solutions yet with added benefits, they are ideal for saving crypto.
Here we look at some key reasons to use a cryptocurrency USB cold wallet instead of hot wallets or paper wallets.
- Breach prevention: Because breaches can only occur through a continuous Internet connection, hot wallets are vulnerable to cyberattacks. In contrast, USBs prevent unwanted access to your crypto coins due to their physical distance from your computer and inability to connect to external networks.
- Reliability/ Durability: Compared to paper wallets, USBs are more durable so make sure you look for one with a compact, hardy exterior.
The solid-state flash memory software is also reliable and ensures any data you transfer is secure. - Flexibility: It’s fairly easy to install a cryptocurrency wallet to USB as you can choose from many different wallets, encryption software, or the operating systems (OSs) you need.
- Availability: USBs can be bought both online and in shops almost everywhere. They are also easily paired with most computers and laptops, hence easing any worries about compatibility.
As we mentioned above, USBs are adequate for new investors especially if you have not collected a large number of coins.
As you gain more experience within the crypto market, you will probably need to invest in a commercial cold wallet that is programmed with specific software for crypto storage.
Reasons to Use a USB Flash Drive for Cryptocurrency Storage
Commercial cold wallets, also known as hardware wallets, are similar to USBs although they offer some extra advantages.
- Advanced Security: Hardware wallets, or crypto sticks, are flash drives that offer higher security levels than typical USBs. If your hardware wallet is lost, damaged, or stolen, you can still recover your currencies with a replacement device.
- Private Keys: These are a string of alphanumeric characters which are automatically generated when you create a digital wallet.
When making transactions using a hot wallet, the wallet generates a private key that is broadcasted to the network. This means a hacker may come across it and use it to access your tokens. By saving this key offline on a USB, no one can access it so long as you keep your private keys secret and safe. - Seed Phrases, also known as recovery phrases, are a cluster or sequence of 12 – 24 words that give you access to your wallet, even if you forget your password or replace your Crypto USB.
It is important to note that seed phrases cannot be changed or recovered so be extremely careful to store them in a safe place.
These benefits should be good enough reason to build USB cryptocurrency offline, but first, how do you choose the correct type of USB?
Tips for Choosing (and Using) The Correct USB and Cryptocurrency Wallet
Although most USBs can store crypto, here are several things you should remember before buying a cryptocurrency cold storage USB.
- It is advisable to use a new, blank USB that has never been used on any other device. This will prevent any hidden malware infections from interfering with your data.
- For convenience, choose a dual USB-A and USB-C drive. This will make sure you’re crypto is accessible from any device.
- Use this USB exclusively for crypto and keeping the OS’s security patches updated.
Never use your USB wallet on a public computer or a device you don’t trust. If using a computer other than your own, make sure it’s not connected to the Internet, and don’t reuse your passwords anywhere else.
One final tip. Use an encrypted password manager to organize your passwords and keep them safe.
How to Save Cryptocurrency on USB
With the above information in hand, these five steps will get you started in putting cryptocurrency in a USB drive. These are applicable only when you need to format a USB to hold cryptocurrency.
- Create a bootable flash drive.
The first step in storing cryptocurrency on USB is to by creating a bootable USB. We do this using Tails OS, a portable Operating System that protects individual privacy and maintains anonymity.Ideally, you should download the entire blockchain to a flash drive wallet, but some blockchains are so big – like Bitcoin which has 435 GBs of data – it is not practical to store them on a flash drive. To save this amount of data, you will likely need an external hard disk drive (HDD) or a high-capacity thumb drive.With the largest drive reaching up to 2 TB or 2,000 GB, saving entire blockchains is still possible.
Below, here is a short list of the top five blockchains, their blockchain sizes, and their current market cap.TOP-5 Blockchains to store crypto on USB # Top 5 Blockchains Crypto Currencies/Tokens Supported (Top 3) Blockchain Size in GBs (full ledger) Market Cap in Billions 1. Ethereum – ETH
– Tether (USDT)
– USD Coin (USDC)Parity/Open Ethereum – 6GB
Go-Ethereum (Geth) – 11GB
Total Ethereum – +60GB$ 199.58B 2. Binance Chain – Binance Coin (BNB)
– Bitcoin (BTC)
– Ethereum (ETH)+/- 432GB $ 34.81B 3. Ripple – XRP +/- 14TB $ 46.87B 4. Cardano – ADA +/- 132GB $ 9.25B 5. Dogecoin – DOGE +/- 62GB $ 8.92B Depending on the size of the blockchain your cryptocurrency uses, it’s worth the time to check out various-size USBs and choose one that meets your unique requirements.
For investors who do not plan on mining bitcoin, Tails is the way to go. It works by routing your Internet connection through Tor. You can create a ‘persistent’ system to save files onto your USB’s memory in an encrypted section for extra security.
TOP TIP: Don’t assume that the Tor network provides 100% protection. As long as any system is connected to the Internet, there is still a very real risk of external infiltration so stay vigilant when inputting your passwords on any devices.
Once you download the Tails ISO, you can use Rufus software for Windows that lets you turn USB drives into a bootable drive. For Linux and Mac users, we recommend you download Etcher – a similar software for creating bootable flash drives.
Follow the prompts to configure your language & keyboard settings and also apply the persistent volume option to encrypt unused parts of your USB.
When you set your password, you can then launch a new system although it’s possible to use the persistent volume option as a live system even if you have not opened it.
These encryption software are essential to protect your crypto coins from cyberattacks. Once downloaded make sure to disable your USB before removing it from your computer.
- Install your crypto wallet on your computer.
The next step is to install a crypto wallet and for our purposes, we will use the free Electrum wallet to save bitcoin on USB. Conveniently, Tails is pre-installed with Electrum.There are numerous wallets to choose from, but some are only designed to be used as hot wallets so ensure you install a crypto wallet that offers cold storage option.After rebooting your computer, open the Electrum wallet and assign it a name. You can create new wallets or import existing standard, 2-factor authentication, or multi-signature wallets.You will then be prompted to generate a new seed that will give you a 12-word private key. Write down these words in the order presented as you will need to enter them in the same exact order.Once you enter the correct sequence of words, you will be asked to create a password to re-encrypt the wallet. This process will automatically give you access to the Bitcoin wallet but you can download different wallets for each type of currency or crypto token you hold.
- Switch off your computer’s Internet connection.
With all the relevant software downloaded onto your device, switch off or disconnect Internet access to your computer. This is to prevent bad actors from accessing the data saved on your USB. It’s also advisable to restart your computer to be certain that your computer’s OS is offline. - Install the wallet onto your flash drive offline.
Once you have turned off the Internet, plug your USB device back into your computer. You can now set up the USB wallet because you have already downloaded your chosen wallet onto your computer. You need to use the password and seed key in your possession to access the wallet via your USB. - Transfer your crypto keys from your hot wallet to your cold wallet.
Finally, you can send or receive transactions from your hot wallet to your cryptocurrency cold wallet. As soon as your hot wallet has generated and completed the transaction, you don’t need to reconnect the flash drive to the Internet because your funds are already saved in the blockchain.Make sure to eject your flash drive correctly to avoid damaging those important privacy keys. And as they say; ‘Not your keys; not your bitcoins.’, so remember to Never Share Your Private Keys with anyone unless you are willingly granting them access to your digital assets.
What are the Best Encrypted USB Sticks for Cryptocurrency
Encrypted USBs have some unique features that will allow you to:
- Install software-encrypted files to a standard USB with programs such as Bitlocker, Truecrypt, and VeraCrypt.
- Access to software that will minimize the risk of infiltration.
- Use an interface and keypad for authorization and though often expensive, it provides maximum flexibility.
When choosing an encrypted USB, there are some features that you should keep in mind mainly:
- Must-Have Features:
- Secure Advanced Encryption Standard (AES-256) encryption
- Government validations
- Robust, tamper-proof design
- Protection against brute force attacks
- Good-to-Have Features:
- Water and dustproof device
- Fast read and write speeds
- Secure access types
You should also consider the initial cost of buying a USB as well as its capacity/space.
With these essential features in mind, here’s a look at some encrypted USB drives that make it almost impossible for outside parties to access your crypto data.
Top Five Encrypted USBs
In addition to the encryption provided by these USBs, always remember that physical security, strong passwords, and limited access to the device will also contribute to keeping your private keys safe.
- Kingston Digital Data Traveler
This Kingston digital flash drive is one of the highest quality USBs on the market with 256-bit AES-XTS hardware encryption yet costs an average of $70. It is waterproof for up to 1.2m of submersion and protected with ESET antivirus software. Starting from 16 GB capacity and a 5-year warranty, it is designed to delete your data after ten failed attempts. - Apricorn Aegis Secure Key 3NX
The Aegis Secure Key ensures data security by using a key[pad that requires a 7-15 digit PIN number for access. Combined with military-grade hardware encryption as well as a tough exterior design, this 30GB flash drive retails at around $130. - Lexar JumpDrive Fingerprint F35
Lexar JumpDrive offers a unique security feature with fingerprint technology that lets you store up to ten fingerprints. With capacities of 32, 64, 128, and 256GB, you can expect to pay less than $100 for the 254GB device and be able to store your private keys against unauthorized access. - Verbatim Store ‘n’ Go Secure Pro
This Verbatim USB 3.0 Flash Drive, is designed to store sensitive data with top-level encryption and anti-tampering features. With a limited lifetime warranty, the device comes in 16, 32, 64, and 128GB capacity, and all security features are compatible with Mac OS and Windows. They retail between $25 and $80. - SanDisk 1TB Extreme Pro Portable SSD
Designed for durability and high-speed data transfers, the SanDisk Extreme Pro is one of the best high-capacity portable external SSDs on the market. It offers 1TB of storage capacity, IP55 dust, and water protection, and can withstand impact from up to two metres. Although it retails between $100 and $200, the large capacity will let you download most cryptocurrency blockchains.
All of these devices boast 256-bit AES encryption meaning they meet US government encryption standards and offer the highest level of protection of sensitive data.
Top Five Hardware USBs
I previously mentioned hardware wallets with dedicated crypto storage capabilities. These devices can sign transactions and perform cryptographic operations without connecting to any online network.
If you do decide to use a cryptocurrency hardware USB, there are several factors for you to consider, namely:
- Multi cryptocurrency support
- Initial cost
- Robust security features
- Ease of use & convenience
- User-friendly interface
- Offline storage capabilities
- Durability & imperishability
- Compatibility & support
With these features in mind, here is a summary of the top five cold storage wallets.
- Industry Leader: Ledger Nano X Crypto Wallet
This leading crypto wallet is the ideal alternative to online crypto exchanges and provides very advanced levels of security. The device costs $149 and includes additional features including:- Bluetooth connectivity.
- Intuitive user interface.
- Support for over 5,500 crypto assets.
- Storage for up to 100 different crypto applications.
- Compatible with the most common software including Mac, Linux, Windows, Android, and iOS.
So the main question is, how safe is Ledger crypto hardware wallet? One of the major advantages of storing crypto on Ledger is if your device is lost, damaged, or stolen, your coins will be 100% safe. You just need to ensure you have your recovery/seed phrase handy that will let you restore your accounts on a new Ledger USB wallet.
- Worth the Investment: Trezor Model T
The Trezor hardware wallet is one of the most advanced devices for storing cryptocurrency on USB offering advanced security features including:- Support for more than 1200 currencies.
- Interactive color LCD touchscreen.
- Compatible with most operating systems including Windows, Linux, Mac as well as Android mobile devices. However, there is no compatibility with Apple devices.
- Can be used includes as a password manager and two-factor or multi-factor authentication.
- MicroSD card to lock the device if not inserted.
- Waterproof and tearproof plastic paper cards to write down the seed phrase.
This wallet however is more expensive than other devices averaging $219 but numerous reviews and positive responses confirm the brand’s reputation for accessibility and security. One drawback of this wallet is that Trezor can only be used in a USB connection.
- Keeping Within Your Budget: KeepKey
For a more pocket-friendly option, take a look at the KeepKey wallet which attempts to give market leaders Trezor Model T and the Ledger USB wallet a run for their money. This is an affordable USB stick for cryptocurrency costing only $50 that can support over 7,200 digital assets.Apart from its affordability, the benefits it offers include:- Wide touchscreen for easy navigation.
- PIN protection to prevent unauthorized use.
A downside of this wallet is its lack of compatibility with mobile devices and requires a direct USB with your desktop.
We must also address the negative reviews about the KeepKey hardware wallet with many reviewers bemoaning the lack of customer service and lost currency. While it is ideal if you are looking to hold Bitcoins over the long term, you may find it unreliable when venturing into different cryptocurrencies.
- The Best Combination of Hot & Cold USB Devices: SafePal S1
SafePal S1: So, even though I’m talking about the features of cryptocurrency cold storage USB, this SafePal S1 hardware wallet is one we must mention. It features aspects from both hot and cold storage USBs making it a unique flash drive for cryptocurrency storage.It is a combination of three wallets:- Mobile SafePal app
- SafePal browser extension
- Safelpal S1 wallet
These three options create a SafePal ecosystem that can be used interchangeably all with advanced security features.
Retailing at $49, there is no compromise on the:
- Air-gapped security features such as a QR code.
- Access to 54 blockchains.
- Supports 15 languages.
The SafePal S1 cryptocurrency hardware wallet assures you of strong security features as there is no access to NFC (near-field communication) tools or USB connections for access.
- Best Security Features – NGrave Zero
This is one of the best cold storage hardware devices and has been termed the ‘coldest ‘ wallet in the market. It was developed using world-leading technology and security features including:- Highest security certification – Evaluation Assurance Level 7 (EAL7).
- NGrave Graphene backup solution.
- NGrave Liquid mobile application.
- 100% air-gapped.
- All secret keys are generated completely offline.
- Rear camera to scan QR codes.
- Built-in light sensor.
- Fingerprint sensor.
- Compatible with 14 tokens.
- Compatible with Ethereum network (ERC20) and multiverse network (ESDT) tokens.
So our top pick? If I was to put aside the expense and focus on the benefits, the Ngave Zero cold wallet is definitely our first choice. Having won the Crypto Wallet Solution of the Year, it has proved to be impenetrable and is well worth the investment.
TOP TIP: Do not buy any cryptocurrency hardware USB from third parties online. There is the risk of tampering, meaning a malicious actor could have access to your funds.
I’ve been previously mentioned hot wallets and cold wallets and below, we’ll explore these further.
Cryptocurrency Hot Wallet vs Cryptocurrency Cold Wallet
Hot and cold wallets have been mentioned above, and both have their own pros and cons. Even though we clearly lean towards cold storage wallets, here we provide a brief comparison of the two types of crypto wallets.
| Hot Wallet | Cold Wallet |
|---|---|
| Create bootable Web-based or mobile applications that are constantly connected to the Internet and other networks such as Bluetooth and 4G. | Physical storage hardware that does not have the capability to connect to the Internet. |
| Can be hacked remotely just like normal websites. | Not easy to breach if kept in a secure location. |
| Mostly free except for coin storage fees. | Can be expensive with prices can reaching up to $400. |
| Compatible with any currency. | Some devices may not support all currencies. |
| Only portable if software includes mobile applications. | 100% portable. |
| Vulnerable to breaches from online hackers. | Minimal risk of losing your digital assets unless someone has your hardware and seed phrase. |
Each type of wallet has both advantages and disadvantages so it’s necessary to weigh each option depending on your priorities. Expense vs security vs convenience are just some factors to consider. Your choice will also depend on your level of experience in trading cryptocurrencies, how much cryptocurrency you have, and your long-term investment plans.
In Conclusion
Once you have decided to store your cryptocurrency on USB, simply refer to this guide for step-by-step instructions on how to do it. Once you understand the movement of cryptos between individual wallets and online exchanges, it is clear your crypto coins are at risk of theft by hackers.
By looking at the advantages of putting cryptocurrency in a USB drive, you can then follow five easy steps that explain how to save cryptocurrency on USB. Additionally, we have made it easy for you to choose the best hardware wallet if you want more specialized storage options for crypto.
After a final look at the major differences between hot and cold wallets, we hope this information has given you the confidence to make the best decision on how and where to save your valuable cryptocurrencies.