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Cold storage
Cold storage means keeping private keys on something never connected to the internet, such as an offline computer, a hardware wallet or paper. Transactions are signed offline and only the signed result is carried to an online device to send.
What it means for you. Keys offline cannot be taken by online attackers, but the medium can be lost, damaged or stolen. Losing it without a backup means losing the funds for good. Keep a tested backup in a second location, and test a small transaction before moving large amounts in or out.
Sources: bitcoin.org: Secure your wallet, Electrum documentation: Cold storage, Bitcoin developer guide: Wallets, SEC Office of Investor Education: Crypto asset custody basics for retail investors · checked 4 October 2026
Hardware wallet
A hardware wallet is a small physical device that stores private keys offline and signs transactions inside the device. The computer or phone it connects to sends the transaction to the network but never sees the keys.
What it means for you. The device protects keys from malware on your computer, but it will still sign whatever you approve, so read the amount and address on its own screen. If the device breaks or is lost, the seed phrase backup is what restores the funds. Buy it from the maker, not a used one.
Sources: ethereum.org: Ethereum wallets, bitcoin.org: Secure your wallet, Bitcoin developer guide: Wallets · checked 4 October 2026