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Crypto Terms:  Letter C

What is Cold Wallet?

Meaning:
Cold Wallet - a cryptocurrency wallet that is not connected to any network while not in use.
easy
2 minutes

Let's find out Cold Wallet meaning, definition in crypto, what is Cold Wallet, and all other detailed facts.

A cold wallet is a cryptocurrency wallet that does not connect to a network when it is not being used. It is usually a piece of hardware that provides reinforced security and can be more reliable than software-based hot wallets that are stored on local computers or online.

Cold wallets are a convenient and affordable way to store crypto assets and protect them from phishing attempts, hackers, or other vulnerabilities that could lead to permanently losing their contents.

Cold wallets are also commonly used by businesses that hold custody over the funds of their customers. Such businesses can be cryptocurrency exchange platforms. Hot wallets are unreliable to such companies due to their vulnerabilities to digital attacks. Businesses that maintain wallets with large amounts of cryptocurrencies on behalf of their clients are frequent targets of malicious attacks.

There are several different types of cold wallets. Two of the most popular types are hardware and paper wallets. Paper wallets are sheets of paper that contain the public address and the private key of a wallet. Cryptocurrency is sent to the public address and the private key is used to access the funds. Paper wallets are often linked to a QR code for convenience.

Hardware wallets are electronic devices that function similarly to a USB stick. Once they are plugged into a computer, the owner can access the assets stored in the wallet.

A more unconventional cold wallet is a sound wallet, which uses CDs and even vinyl records to store private keys.