What is cold storage?
Cold storage is a method of storing data that aren’t accessed often.
When it comes to Bitcoin and crypto, cold storage means that the bitcoins are “offline”. They are not on a phone or computer that is connected to the Internet.
The purpose of having your bitcoin offline is that a hacker connected through the Internet cannot reach it.
It’s a lot like a castle surrounded by a moat with the drawbridge up.
A moat is a body of water surround this castle. Photo by By Dariusz Jemielniak (“Pundit”) - Own work, CC BY-SA 3.0.
When you want to send out Bitcoin, however, you don’t bring the computer online. If you do, that’ll make it a hot wallet – this means the keys have been on a computer that is online.
How do you send Bitcoin?
When you send Bitcoin out from a mobile app like Phoenix, it’s like you’re writing out a check and signing it all from your phone.
When you prepare a bank check, you write:
- whom you’re paying
- the date
- the amount
When you’re ready to give it, you put your signature.
Checks, still fairly popular in the Philippines, has a lot of similaries with Bitcoin transactions. Photo from National Museum of American History - Image by Godot13, CC BY-SA 3.0
It’s similar with Bitcoin. You need to input:
- the address you’re sending to, such as
bc1q6mt760gzxyuwx0sgj4zfa7v4y5fwgutllsry09 - the amount
When you’re ready to send it, you sign it with the private keys.
Here’s the Sparrow Wallet interface to send Bitcoin.