Cold wallet

Cold wallet maintains most assets offline? Yes / No

Cold wallet is a system in which private keys for digital assets are stored on a computer, not connected to the Internet. To move the assets, somebody has to go to the computer physically and make the transaction.

The opposite of cold wallet is hot wallet, which is continuously running on the server and accessible online. Hot wallet assets are instantly liquid; most customer facing transactions happen in the hot wallet. When the hot wallet gets “too full,” assets are moved to the cold wallet to make them safe. On the other hand, when the hot wallet is drying up due to customer withdraws, it must be topped up from the cold wallet.

In case of a service compromise, the attacker can only drain the hot wallet, severely limiting the amount of potentially stolen funds.

Applies for: Everyone

Related incidences:

• Linode
• Bitstamp
• Cryptoine

Links:

• Cold storage in Bitcoin Wiki