Cold Wallet

A cold wallet refers to a wallet which requires users to “double” sign their intention to initiate transactions. Cold wallets are effectively hardware-based devices such as Ledger, Trezor and Safepal which act as a two-factor authentication mechanism where users have to confirm the state of transactions via the physical device rather than simply signing through one’s computer or smartphone. This is intentionally done so that potential attackers cannot exploit a user’s funds without the cold wallet on hand. The “cold” in “cold wallet” comes from a similar phenomenon whereby “cold” engines are not in operation, similar to how this mode of wallet is not intended to be actively used for frequent transactions and is usually designated for long-term storage and security of assets.