Crypto wallets that are used to send, receive, or store cryptocurrencies can be broadly classified into hot and cold wallets. Hot or online wallets are software that users can access via the public internet. It is also the most commonly preferred option for owning cryptocurrency with its convenience and easy accessibility. But, due to continuing online presence, hot wallets are often subjected to theft or worse, getting permanently lost.
Cold storage, on the other hand, provides an additional layer of protection to the wallet. This is achieved by physically disconnecting the wallet from any network (including the public internet) when not being used. So, as long the cold storage remains intact, it becomes impenetrable from any potential attack.
Paper and hardware wallets are commonly used as cold storage. Even printing the wallet’s public and private key on a piece of paper can act as cold storage. Similarly, USB storage devices act as physical wallets.