Technical Definition

Cold Storage

Cold storage keeps cryptocurrency private keys offline to reduce exposure to internet-based attacks.

By Crypto University Editorial
Private KeySeed PhraseHardware Wallet

✦ Key Insight

Keeping private keys offline can greatly reduce exposure to phishing, malware, malicious browser extensions, and remote hacking.

✕ Common Misconceptions

Cold storage does not protect against losing a recovery phrase, signing a malicious transaction, physical theft, or incorrect backups. Never share a seed phrase with anyone.

Detailed Explanation

Cold storage means keeping the keys that control crypto away from internet-connected devices. Hardware wallets and properly created offline signing devices are common examples. The cryptocurrency itself remains recorded on the blockchain.

In Practice

“Someone holding Bitcoin for several years may keep the signing keys on a hardware wallet and only connect the device when they need to authorize a transaction.”

Dig Deeper

Hardware Wallet

A dedicated physical device that stores private keys offline and signs transactions internally.

Private Key

The secret number that authorises spending from a crypto address.

Hot Wallet

A wallet whose private keys are held on an internet-connected device.

Seed Phrase

A list of 12 or 24 ordinary words that is the master key to every account in your wallet.

Custody

Custody is the safekeeping and control of digital assets or the private keys needed to access them.