The simplest definition of a cold wallet is “a wallet not connected to the internet”. Hence the risk of being compromised is much lower because it is not connected to the internet. These wallets can also be called offline wallets or hardware wallets. Cold wallets store a user's private key on a unit that is not connected to the Internet. The user can view the portfolio without risking their private key, thanks to software running parallely. Perhaps the safest way to store cryptocurrency offline is to use a paper wallet. A paper wallet is a wallet you can create from specific websites. It generates both public and private keys that you can print on a sheet of paper. The ability to access cryptocurrency at these addresses is only possible if you have that piece of paper on which the private key is printed or written. Many people laminate these paper wallets and store them in a safety deposit box at their bank or in a safe at their home. These wallets are useful for high security and long-term investments because you cannot quickly sell or exchange your Bitcoin assets stored in this way. A more common type of cold wallet is a hardware wallet. A hardware wallet is usually a USB drive device that securely stores a user's private keys offline. This has serious advantages over hot wallets as they are not affected by any viruses that might be on someone's computer. By using hardware wallets, private keys will never come into contact with your networked computer or potentially vulnerable software. These devices are also typically open source and provide security through code checks, rather than a company that declares the safety of the community and usage. Cold wallets are the safest way to store your Bitcoin or other cryptocurrencies. However, you need to know a little more about setup. To set up your Bitcoin wallet, you need to have three items: an exchange account to buy and sell, a hot wallet to hold small to medium sized cryptos you want to trade or sell and a cold hardware wallet to store larger assets for the long term.