A cold wallet, also known as a cold storage wallet, is a type of crypto wallet for storing cryptocurrency that is not connected to the internet. It is an offline wallet used for storing cryptocurrencies securely. This can be in the form of a hardware wallet, a paper wallet, or any other physical medium that stores the user's private keys offline.
In a hardware wallet, the private keys are stored in a secure hardware device. This device is typically a specialized, tamper-proof piece of hardware designed to store private keys in a secure manner, making transactions possible without exposing any sensitive information to a potentially compromised computer.
The main advantage of a cold wallet is that it greatly reduces the risk of digital theft, hacking, or malware, which are common in 'hot wallets' or online wallets. However, it also requires more careful handling to prevent loss or damage.