Cold storage (IT)

What is cold storage (IT)?
In general, cold storage in IT means that data or other objects are kept at rest or in a less accessible part of a system. In the bitcoin world, 'cold store' refers to the practice of keeping bitcoins offline to prevent unauthorized access.

Bitcoin allows owners to use different types of Bitcoin wallets and place bitcoins in a place where they cannot be reached from servers connected to the internet.

As with cash, bitcoins can be stored where they can be used quickly or where they can be safely stored. Storing bitcoins involves handling the encryption of these digital currency units. However, the essential concepts of Bitcoin cold storage are relatively simple. For example, a Bitcoin owner can keep a few coins in an internet-connected digital wallet while downloading the rest of the Bitcoin capital to a USB stick. The USB flash drive can be placed in a bank vault, as can gold bars or other physical resources stored for optimal security.

These storage features are only part of Bitcoin's growing popularity as a competitor to national physical currencies that is now being accepted by more sellers of products and services. In this sense, various cold storage strategies for Bitcoin represent a new step from physical cash to digital assets. In contrast to the last great transformation of finance, Bitcoin offers a unit-based system that is in many ways comparable to cash, where the exchange of Checks to commercial transactions via credit or debit cards was more of a convenient account access system. That said, Bitcoin's popularity could have a huge impact on how people manage their money and wealth.