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Offline Storage Meaning

Also known as Cold Storage. It refers to the practice of storing cryptocurrency private keys on a device or medium that is not connected to the internet.

This is the gold standard for security. Examples include hardware wallets (like Trezor), paper wallets (keys written on paper), or air-gapped computers.

Offline storage effectively immunizes funds against remote hacking attacks. A hacker cannot steal keys that are physically sitting in a safe deposit box.

Exchanges typically keep 95-98% of their customer funds in offline storage to prevent catastrophic loss in the event of a breach. The downside of offline storage is accessibility.

It takes time to physically retrieve the device and sign a transaction. Therefore, it is used for "Vault" or "Savings" accounts, while "Hot Wallets" (online storage) are used for daily operational funds.

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