What is cold storage for cryptocurrency?

Cold storage for crypto refers to the practice of storing digital assets, such as cryptocurrencies, in a way that keeps them offline and therefore less susceptible to hacking or theft.

Cold storage is typically accomplished by storing the private keys associated with a cryptocurrency wallet offline, either on a hardware wallet (a physical device that securely stores private keys) or on paper, which is known as a paper wallet. By storing private keys offline, the risk of the keys being hacked or stolen is greatly reduced.

While cold storage is considered more secure than hot storage (storing private keys online), it can also be less convenient because it requires more steps to access the funds. Users must typically connect their hardware wallet to a computer or mobile device and enter a password or other authentication measure to access their funds. Paper wallets require physically entering the private key into a device to access the funds. However, the added security of cold storage makes it a popular choice for those looking to secure their digital assets for the long term.