Cold storage is the practice of holding crypto offline, away from any internet-connected device. Common methods include hardware wallets and, less often, paper wallets.

Why it matters

Because the keys never touch the internet, cold storage greatly reduces exposure to hacking and online theft. It is often used for holdings that do not need to be moved frequently.

Things to keep in mind

The trade-off is convenience, since accessing funds takes an extra step. Keeping the backup for a cold wallet safe is just as important as the device itself.