Cold storage
Cold storage
- What it is
- Storing private keys offline, without a permanent network connection
- Why
- To protect assets from hacking and remote access
- Forms
- Hardware devices, offline media, paper backups
- The main risk
- Loss of or damage to the device and the recovery phrase — access cannot be restored
- What to think through
- Backups, where they are kept and heirs’ access
In plain words
Cold storage is a way of keeping the private keys to crypto assets offline, without a permanent internet connection. Hardware devices, isolated media and sometimes paper backups of the recovery phrase are used. The logic is simple: what is not connected to the network cannot be hacked remotely.
The opposite is hot storage, where the keys sit in an app or on a platform with permanent network access. This is convenient for active transactions but more vulnerable. A common practice is to keep a small operational portion in hot storage and the bulk in cold storage.
With cold storage the main risk shifts from an external threat to one’s own mistake. Losing the device, damaging the medium or losing the recovery phrase means irretrievable loss of the assets — no one can restore access. That is why backups, where they are kept and, separately, the procedure for heirs’ access are thought through: without this, the capital may disappear together with its owner.
When it is used
What needs to be thought through
- Hardware device
- Offline storage
- Reliability and wear
- Recovery phrase
- Several copies
- Different storage locations
- Loss of the medium
- Physical damage
- A forgotten phrase
- Heirs’ access
- Instructions
- Legal arrangements
How to organise storage
- 01Choose a storage method
- 02Create backups
- 03Spread the storage locations
- 04Think through heirs’ access
- 05Check access periodically
What you need to know
- Offline storage protects against remote hacking
- Loss of the keys and phrase is irreversible
- Backups are kept in different places
- Media wear out and need to be checked
- Heirs’ access needs to be arranged in advance
Common mistakes
- Keeping a single copy of the recovery phrase
- Keeping the backup next to the device
- Photographing the phrase and storing it in the cloud
- Not checking that the medium works for years
- Leaving heirs no instructions
What this means for a BRIDGES client
When we discuss succession planning, we raise crypto assets separately. It is the only kind of property that can simply disappear if the heirs cannot gain access.
Frequently asked questions
01 /What is cold storage?
Storing private keys offline, without a permanent network connection, to protect assets from remote hacking.
02 /How does it differ from hot storage?
In hot storage the keys sit in a network-connected app or on a platform — more convenient for transactions, but more vulnerable.
03 /What happens if the device is lost?
With a backup recovery phrase, access is restored. Without it, the assets are lost irretrievably.
04 /Where should the backup phrase be kept?
In at least two different physical locations, not next to the device. Keeping a photo in the cloud or a messenger is a bad idea.
05 /How can heirs be given access?
Prepare instructions in advance and arrange the access procedure so that heirs can use it and outsiders cannot.
06 /Does the storage need to be checked?
Yes, periodically: media wear out, and a forgotten procedure is discovered only when you try to gain access.
See also
Read next
This material has undergone editorial review by BRIDGES.
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