Hot wallets keep keys on an internet-connected device; cold storage keeps them offline and signs there. Learn how cold signing works and when to use it.
Online vs offline keys
- Hot wallet: keys live on a phone or computer that's online. Convenient, but malware could steal them.
- Cold storage: keys stay on a device that never connects to the internet, typically a hardware wallet.
How cold signing works
- A watch-only app on your computer builds an unsigned transaction (often as a PSBT: a partially signed Bitcoin transaction).
- The offline device shows you the amount and destination. You check them on its screen and approve.
- The device signs and returns the signed transaction.
- The computer broadcasts it.
The private key never touches the online machine.
Which to use
| Amount | Suggestion |
|---|---|
| Pocket money | Hot wallet on your phone |
| Savings | Cold storage |
| Large or shared funds | Cold storage with Multisig |
Air-gapped signing
Some signing devices never connect by cable at all: they pass unsigned and signed transactions back and forth by QR code or memory card. That removes even the USB connection as a possible attack path.
A simple setup for most people
| Purpose | Where | How much |
|---|---|---|
| Spending | Phone wallet (hot) | What you'd carry in cash |
| Savings | Hardware wallet (cold) | Everything else |
Key takeaways
- Hot wallets are online and convenient; cold storage keeps keys offline.
- Cold signing passes only unsigned and signed transactions across.
- Match the storage to the amount.
Common questions
What is a PSBT?
A partially signed Bitcoin transaction (BIP 174): a standard format for passing a transaction between devices for signing.
Is a paper wallet cold storage?
Technically yes, but paper wallets are easy to misuse. Hardware wallets with seed backups are the usual choice today.
Is a hardware wallet a cold wallet?
Yes. It keeps keys offline and only signs when you approve on the device.
Can a cold wallet receive bitcoin while offline?
Yes. Receiving only needs an address; signing is needed only to spend.