According to inferse.com bitcoin or any other cryptocurrency is stored online in blockchain wallets that an owner can access only when they possess both the public key and the private key. These keys, if stored online, are very susceptible to hacking and malware attacks. Thus, private keys are stored in cold storage to prevent these thefts.
To know more about blockchain wallets, you can visit https://bitcoin.stackexchange.com/
Therefore, what is this Cold Storage?
Cold Storage or Cold Wallets in non-technical terms are offline environments where we can store our cryptocurrency’s private keys. Cold Storages are usually a device such as hardware, USB drives, and such where we can generate and store our private keys in an offline environment away from hacking and malware attacks.
Cold Storage for Bitcoin
For instance, there are many cold storage options for Bitcoin or any other cryptocurrency. One can use Ledger Nano X or Trezor, hardware wallets, paper wallets, USB drives, and desktop wallets. All of this cold storage protects your keys. However, they differ as they provide different levels of security. The most reliable are hardware wallets, as they are hard to copy and are very robust compared to paper wallets.
However, you may ask if cold storages are necessary?Cold storages are very necessary as they protect your cryptocurrency from malware attacks and make you the sole owner of your cryptocurrency. If you have not stored your private keys in cold storage, third-party hosted wallets hold those keys on our behalf. This, however, is very risky as our cryptocurrency can be in jeopardy if their servers are hacked, shut down, or if their servers are down for some reason.
Thus, by storing your private keys in cold storage, you avoid these risks, become the sole owner, and can access your Bitcoins (or other cryptocurrencies) whenever needed.
Some of the best hardware wallet cold storages for Bitcoin are Ledger Nano S, Trezor, KeepKey. Bitaddress is one of the most trusted paper wallets in the market, and desktop offline wallets such as Electrum and Armory for Bitcoin are trendy. Out of these options, only the hardware wallets can be quickly restored if the cold storage is damaged due to some complications. However, each cold storage option has advantages and disadvantages that make it effective in different scenarios.