Definition of Cold Storage

What does the term "cold storage" mean? What is the definition of the term "cold storage"?

"Cold storage" refers to the practice of keeping an important piece of information or asset (such as a Bitcoin) "offline" in order to improve security.

Definition of Cold Storage - Financial DictionaryFor instance - let's say that you have your Bitcoin wallet sitting on your computer, and this computer uses the Internet. Well, this would be called a "hot wallet", as your wallet would be in danger of falling victim to a hacker, should they be able to access your computer.

Instead, if you wanted to significantly increase your security measures, you would want to put your Bitcoins into "cold storage". This could include:

1) USB drive that is stored in a safe place
2) paper wallet
3) wallet on an offline computer

So, if you kept your Bitcoin wallet on a USB drive that was stored in a safe place (safety deposit box, for instance), this would be an example of "cold storage".

There have been numerous cases of people having their computer hacked and their Bitcoin wallets stolen, which makes the implementation of proper security measures exceedingly important.

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