Cold storage

Cold storage means keeping and spending bitcoin offline without the private keysGlossaryPrivate keyA secret, randomly generated number that you use to sign transactions and so control your bitcoin. Anyone who knows the private key can spend the bitcoin that belongs to it – it must never fall into anyone else’s hands.On the learning path: Stage 5 · Step 3 – Backing up your seed phrase →In the glossary →× ever being online.^[1] The bitcoin itself stays on the blockchain – only the key is ‘cold’. ‘Cold wallet’ means the device or set-up used for it.

What it looks like

• Hardware walletGlossaryHardware walletA small dedicated device that keeps your private keys offline and signs transactions internally. The key never leaves the device, so malware on your computer can’t get at it.On the learning path: Stage 6 · Step 1 – Hardware wallets compared →In the glossary →×: the most common route. The device generates and stores the keys and signs internally.
• Offline signing device: the payment is prepared online, carried to the device as a PSBTGlossaryPSBT (partially signed Bitcoin transaction)A standard format for Bitcoin transactions that are not yet fully signed. It lets a wallet app, a hardware wallet and co-signers pass a payment between them without sharing private keys.On the learning path: Stage 6 · Step 1 – Hardware wallets compared →In the glossary →× by QR code or memory card, signed there and handed back – without cables or wireless connections (air gapGlossaryAir gapAn air-gapped signing device has no cable or wireless connection to other devices. Transactions travel back and forth by QR code or memory card – so the private key stays completely offline.On the learning path: Stage 6 · Step 1 – Hardware wallets compared →In the glossary →×).^[2]
• Watch-only online: an app with the extended public key (xpubGlossaryxpub (extended public key)An extended public key from which all the addresses of a wallet account can be calculated. Nobody can spend bitcoin with it – but anyone who knows it can see your entire account history.In the glossary →×) shows your balance and receiving addresses, but can’t spend anything.

What cold storage doesn’t solve

Cold storage protects against theft by hackers and malware^[1], not against loss, fire or burglary. So back up the seed phraseGlossarySeed phrase (recovery phrase)A sequence of usually 12 or 24 words from which your wallet derives all its private keys. Anyone who knows the words has full access to your bitcoin – so they belong in an offline backup and never in anyone else’s hands.On the learning path: Stage 5 · Step 3 – Backing up your seed phrase →In the glossary →× on paper or as a metal backupGlossaryMetal backupA backup of your seed phrase on steel or titanium – punched, engraved or made with letter tiles. Unlike paper, it survives fire and water. Independent tests show that simple stainless steel plates are robust and often the cheapest.On the learning path: Stage 5 · Step 3 – Backing up your seed phrase →In the glossary →×, kept separately from the device. Always check receiving addresses on the device’s display.

You can receive at any time; only spending takes a few more steps.