Cold storage keeps the private key inside dedicated hardware or on an offline machine. The transaction is prepared online, passed to the device, signed there, and returned. The key never leaves.
Cold storage defends against malware and key theft. It does not defend against approving a malicious contract or confirming a transfer you were manipulated into making — the device signs whatever you confirm on it.
Related terms
Hot wallet
A wallet running on an internet-connected device, such as a browser extension or phone app.
Private key
The secret value that authorises spending from an address. Anyone holding it controls the funds, permanently and irreversibly.
Token approval
Permission you grant a contract to move a token on your behalf, which stays in force until you revoke it.
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