A Cold Wallet is cryptocurrency wallet that is not connected to the Internet or any other network.
Wallets can be classified as either hot or cold.
Cold wallets are not connected to the Internet, providing added security over hot wallets.
Hot wallets, like any service accessed over the Internet, are always exposed to Internet security threats like hacks, phishing attempts, malware, viruses, and other attacks that could lead to the permanent loss of your cryptocurrencies and digital assets.
A cold wallet, like a piece of paper with your private key or seed phrase copied to it or a USB thumb drive, is not connected to the Internet.
Cold wallets are used by individuals as a super simple way of keeping all of the online threats away.
Being connected to the Internet inherently makes a hot wallet less safe than a cold wallet.
As we mentioned above, cold wallets come in two primary forms:
- Paper wallets – as the name implies, these wallets are physical pieces of paper used to store your private keys or seed phrase
- Hardware wallets –consists of a hardware device wallet, like a USB thumb drive or Ledger Nano X, that stores your private keys or seed phrase.
A less popular cold wallet option involves using a piece of wood or metal and etching or carving your private keys or seed phrase directly onto the physical items.
While the items would be more durable than a piece of paper, they could still be destroyed and lost.
Let’s not talk about how long it would take to carve a private key into a block of wood!