What is Cold Storage?
Let's find out Cold Storage meaning, definition in crypto, what is Cold Storage, and all other detailed facts.
Cold storage wallets usually are paper wallets, USBs, hardware non-custodial wallets, or offline computers.
Overall, crypto wallets are utilized for keeping, sending, or receiving cryptocurrencies.
Paper and hardware cold wallets are the most common. A paper wallet is nothing more than a sheet of paper with private and public keys printed on it. A hardware wallet is a gadget that must be connected to a computer to gain the access to funds.
This way of storing funds is utilized by individual people as well as firms who hold custody over clients’ funds, such as cryptocurrency exchanges.
Cold storage adds an extra degree of security to users' money by physically removing the wallet from insecure networks, most notably the public Internet, while not in use. Possible fraudsters cannot access the funds held in the physical cold wallet as long as it is kept in a safe place.
Admission to funds saved on a wallet is protected by one or several private keys, depending on whether the wallet is a single-signature or multi-signature.
However, if the private keys would get leaked, such as through stealing or a hacking attempt, the funds saved in the wallet may be taken and lost forever. Because blockchain transactions are irreversible and cryptocurrency users' identities are anonymous, the rightful owner has little to no remedy in such a circumstance.
Overall, crypto wallets are utilized for keeping, sending, or receiving cryptocurrencies. They can be categorized as:
- Hosted/hot wallets
- Cold wallets
Hosted wallets are not the same as cold wallets. These can be entered on the website of the wallet service supplier. Given its accessibility and simplicity, this is the most popular alternative.