What is a cold wallet?

Cold wallets are offline wallets used to store cryptocurrencies like bitcoins, Ethereum, etc. These are hardware wallets that store the user’s private keys and address on hardware like a USB or an offline computer.

The Long Explanation

Cryptocurrency wallets help users to store, receive and send cryptocurrencies. For private wallet owners (wallets not controlled by exchanges), the security of their wallets is guaranteed by the security of a combination of phrases known as “private keys”.

Should these keys be compromised, anyone with access to them will be able to “import” your wallet, and gain uninhibited access to your crypto assets. And, such crypto thefts are notoriously hard to trace or reverse due to the decentralized nature of blockchains.

Unfortunately, despite the high levels of encryption deployed by most wallets, connection to the internet makes wallets vulnerable to potential phishing attacks and thefts. These are known as “hot wallets”, and include everything from mobile wallets to wallet websites and browser wallet extensions.

Cold wallets, on the other hand, are disconnected from the internet when not in use to provide an extra layer of protection. For as long as the physical wallet remains secure, potential hackers will be unable to access it or the coins stored on it.

Cold wallets come in many different shapes and sizes, but the most popular are hardware wallets. Hardware wallets are special devices like USB drives that hold a user’s private keys. This hardware needs to be plugged into a physical computer to access their funds.

Due to its highly secure nature, cold wallets are employed by both individual users and large companies who hold custody of customers’ crypto assets like crypto exchanges.


Some synonyms of “cold wallet” include:

  • Cold storage
  • Offline wallets
  • Hardware wallets
  • Air-gapped wallet
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