As the name suggests, cold storage is for cold storing things that we want to preserve for a long time. In crypto space, investors who prefer preserving their digital currency for a prolonged period make use of the cold storage concept. However, the cold storage in the crypto world is a little different from other options for storing cryptocurrency and is also a little bit tricky to understand. Before we jump onto reading about popular cold wallets in the market, let’s have a look at what is cold storage or cold wallets.

What is Cold Storage in Cryptocurrency?

Cold storage is like keeping the reserve of cryptocurrencies offline. For instance, cold storage is used by exchanges. Exchanges usually offer instant withdrawal of digital currencies. To cut down the invasion by hackers, which can breach the security and steal your entire reserve, the exchange keeps the cryptocurrency reserved in cold storage. This cold storage does not exist on the web server or computer, but offline, which ensures that your currency is safe. Additionally, if required, an exchange will keep only a limited amount on the web server.

Methods of Cold Storage

There are different ways of cold storing, like

  • Storing cryptocurrency on a USB drive or any other hardware
  • Paper wallet
  • Offline Bitcoin Hardware wallets

Hardware wallets: These physical wallets allow you to store your cryptocurrency offline. The most common form of hardware wallet used by the maximum number of investors is the USB stick type wallet. Although, they are free from frauds and hacking, but are not entirely infallible. If you opt for hardware wallets, make sure you don’t choose the ones which were pre-owned at some point in time. Some of the trustworthy hardware wallet options that you can select include, Trezor, Ledger, and Keepkey.

Paper Wallets:
These are undoubtedly the safest options for cold storing your crypto coins in an offline way. In these wallets, the public and private keys are printed on a piece of paper, which the investor needs to store. These printed keys are actually QR codes, and every time you need to make a transaction or exchange your currency, you can scan the code. Since the keys stay away from the web server, there is the least possibility of it being stolen. But you should always keep in mind the fact that the paper where the QR codes are printed must be held safely and should not fall into wrong hands.

Pros & Cons of Cold Storage

Like all other crypto wallets, cold storage also comes with its pros and cons.


  • Cold storage is excellent for holding a large number of crypto coins for a longer term.
  • It keeps the money away from web servers, thus making it safer.


  • Possibilities of external damage due to carelessness are very likely. However, recovery can be made, in case users have a recovery seed.
  • Setting up cold storage can be a daunting task, especially for beginners.
  • When compared to online exchanges, cold storage is not considered an ideal option for daily transactions.

So, if you have made up your mind to opt for cold storage or cold wallets, make sure you read through all the aspects of cold storing your coins in these wallets.


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