Cold Storage
Cold storage keeps cryptocurrency private keys on a device that never touches the internet — typically a hardware wallet — making remote theft practically impossible. It's the standard for securing long-term holdings.
Crypto held on an exchange is controlled by the exchange ("not your keys, not your coins"); a hot wallet on your phone is convenient but internet-exposed. Cold storage — hardware wallets like signing devices, or fully air-gapped setups — keeps the keys offline, so an attacker would need physical access plus your PIN or passphrase.
The trade-off is operational risk: lose the device AND the seed phrase backup, and the funds are unrecoverable by anyone. Most long-term holders use cold storage for savings and keep only spending amounts in hot wallets.
Related terms
- Seed Phrase
- A seed phrase is a list of 12 or 24 common words that encodes a crypto wallet's master private key. Anyone holding the phrase controls the funds; losing it (with the wallet) means the funds are gone permanently.
- Self-Custody
- Self-custody means holding your own cryptocurrency private keys rather than leaving coins on an exchange. You gain immunity from exchange failures, at the cost of being solely responsible for security and backups.
- Satoshi (sat)
- A satoshi is the smallest unit of bitcoin — one hundred-millionth of one BTC (0.00000001 BTC). There are 100,000,000 satoshis in every bitcoin, making small everyday amounts practical to price.