Clear DefinitionsCold Wallet
1 min read
Pronunciation
[kohld woll-it]
Analogy
A cold wallet is like a safe deposit box in a bank vault—it’s secure but not immediately accessible for spending.
Definition
A wallet that stores private keys offline—such as hardware, paper, or air‑gapped software wallets—minimizing exposure to online threats.
Key Points Intro
Cold wallets maximize security through:
Key Points
Offline key storage: Keys never touch internet‑connected devices.
Air‑gapped signing: Transactions signed on isolated hardware or offline computer.
Backup critical: Seed phrase secures recovery.
Low convenience: Requires extra steps to transact.
Example
A user generates transactions on an offline laptop, transfers them via USB to a connected computer for broadcasting, keeping keys offline.
Technical Deep Dive
Cold wallet setups use an air‑gapped OS boot (Tails) or hardware wallet. Unsigned transaction data exported as QR or file, signed offline, then imported to broadcast. PSBT (Partially Signed Bitcoin Transactions) format standardizes this workflow.
Security Warning
Physical theft or destruction of cold wallet device/seed results in loss; store backups securely.
Caveat
Less practical for frequent transactions; best for large‑value, long‑term holdings.
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