Cold wallet refers to the cryptocurrency wallets that are not connected to the internet or any unsecured network for that matter, when not being used. This allows exercising an additional layer of security, as compared to that of hot wallets.
Cold wallets offer a very easy and relatively affordable way to isolate the crypto funds against any hacks, phishing, or cyberattack that may lead to permanently losing their holdings.
Cold wallets are mostly in demand among crypto exchanges that are responsible for holding custody of their customer’s funds. Some of the most common forms of cold wallets include paper and hardware wallets.