Cold Storage
Keeping cryptocurrency private keys offline to protect them from online threats.
What is Cold Storage?
Cold storage refers to storing cryptocurrency private keys on a device or medium that is completely disconnected from the internet, making it inaccessible to remote hackers. Common cold storage methods include hardware wallets (dedicated USB-like devices such as Ledger or Trezor), paper wallets (printed private keys), and air-gapped computers. Because the private keys never touch an internet-connected device during normal operation, cold storage is considered the most secure method of holding cryptocurrency for the long term. The trade-off is reduced convenience: spending from cold storage requires physically connecting the device and manually authorizing transactions. Cold storage is the standard practice for exchanges, institutional custodians, and serious individual holders.
Example
After the collapse of the FTX exchange in 2022, where customer funds held online were lost, many investors moved their cryptocurrency to hardware wallets. The principle 'not your keys, not your coins' underscores why self-custodied cold storage protects holdings against exchange failures, hacks, and insolvency.
Source: Investopedia — Cold Storage