What is Cold Storage?
Cold Storage wallet
This is any kind of Bitcoin wallet that is not connected to the internet or totally offline, therefore it is the most secure from cyber crime or hackers. It’s a little bit like storing Bitcoins in a vault rather than physical coins on you. Therefore for larger holdings of Bitcoins, it definitely makes more sense to store them mainly in Cold Storage. Technically speaking the Cold Storage of your Bitcoin wallet, means an offline record of your private key, which only you have access to, which is the only way to access your Bitcoins.
Cold Storage of Bitcoins is totally opposite to keeping them in a Hot Wallet, which is online and easily accessible, and therefore more at risk to hackers.
There are many types of Cold Storage, with the main types being;
Paper
This is a paper document which has your private key written on it, and having this information is the only way a transaction can be completed with your Bitcoins. In this case it is extremely important to keep this paper document safe, from theft, loss or fire, such as in a safe, as without it you cannot access your Bitcoins.
Hardware
This is a hardware device which has your private key information on it, but again totally offline and not connected to the internet. The most common form is a dedicated USB stick, or can even be a wristband. Again this device must be kept in a totally safe place as it is the only record of your private key. You need to only use a highly reputable supplier of such hardware devices.
Brain
A Brain wallet is where literally you, the owner, use a memorable phrase or acronym to memorise your entire encrypted private key. Extremely secure but if you forget it, you lose access to your Bitcoins!
