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Definition cold storageair-gapped walletoffline wallet

Cold Wallet

A wallet whose private keys are kept on a device or medium that never connects to the internet.

Cold storage ranges from a consumer hardware device that signs transactions over a cable or QR code, to institutional deep storage where keys are generated in a secure room and transactions require several staff members and a documented procedure. Keeping the key offline defeats remote attackers, at the cost of speed: institutional withdrawals from deep cold storage can take hours or a full business day by design. Cold storage does not defeat every threat, since a user can still approve a fraudulent transaction on the signing device, and the physical backup can be lost, destroyed, or stolen. Most operators combine a small hot wallet for daily flow with cold storage for the bulk of assets.

In practice

Air-gapped signing passes an unsigned transaction to the offline device by QR code and returns the signed version the same way, so the key never touches a networked machine.

The common misunderstanding

Cold storage protects keys from remote theft, but it does not protect against approving a fraudulent transaction or against losing the physical backup.

02

Related terms

Custody The arrangement for safekeeping the private keys that control digital assets, and therefore for…
Hot Wallet A wallet whose private keys sit on a device connected to the internet, so transactions can be…
MPC Wallet A wallet in which a private key is split into shares held by different parties and never exists…
Multisignature Wallet A wallet that requires several separate keys to approve a transaction, such as two of three or…
Self-Custody Keeping your own private keys, so that no company can move, freeze, or lose your digital assets on…
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