What is Cold Storage?

In the IT environment, cold storage refers to a type of storage for information that is required less frequently. The access times to the data are longer than with conventional storage methods. Cryptocurrencies can also be stored in such “cold storage”. In this environment, this means the offline storage of cryptographic keys.

There is no clear definition for cold storage. The literal translation is “cold storage”. It is a type of storage where the stored information is needed less frequently. This “cold data” is stored for a long time, and accessing it requires more time. Depending on the area of application, storage media are used that are optimized for long storage times, high storage volume, long service life and low costs. For example, data in such storage is accessed only after months or years.

Typical data that is “cold stored” is data backups, old business data with legal retention periods or rarely needed historical archives. The storage type is also used in the environment of cryptographic currencies. Here, it refers to a storage method in which the money is stored in a protected manner using an offline medium.

Classic storage media for cold storage

Unlike conventional storage methods, cold storage uses storage media with slower access times. A classic storage medium is magnetic tape, for example. It offers long storage times, large storage capacity and is inexpensive to purchase. If the data is to be accessed, it must first be inserted into the tape drive and wound to the correct position.

Optical storage media such as DVDs or Blu-rays can also be used to store data. Other storage media include inexpensive hard disks that are switched off after data recording or put into an energy-saving mode via ATA command.

Cold data storage in the cloud environment

In the cloud environment, “cold storage” is cloud storage that offers slower access times than usual cloud storage, but is suitable for large data volumes. Here, too, storage media are used in the background that can be switched off or put into passive mode. Numerous cloud service providers provide specially optimized services for this. These include products such as Amazon Glacier or Google Coldline.

Cold storage and cryptocurrencies

“Cold storage” in the context of cryptocurrencies such as Bitcoin refers to an offline storage of the money. It can be a security measure to prevent online theft by cyberattacks. Usually, the cryptographic keys that allow access to the money are stored offline.

Possible offline storage methods for cryptocurrencies are:

  1. Memory cards and storage tokens,
  2. USB flash drives,
  3. paper.

Set up Bitcoin Paper Wallet

Step 1

When it comes to setting up the Bitcoin Paper Wallet, you need relatively little. An Internet connection, paper and possibly a functioning printer are absolutely sufficient to store cryptocurrencies via Bitcoin Paper Wallet.

If you want to generate a new Bitcoin address, you should first visit BitAdress.org. The page then asks you to move the mouse or to enter some letters and numbers. If you have done this 100%, you have already created your own Bitcoin Paper Wallet. Now it’s a matter of successfully securing the wallet.

Step 2

One now gets to see the public and private address where one can store Bitcoin Paper Wallet cryptocurrencies later. Now one goes to the “Paper Wallet” tab. Here you can select how many addresses you want to generate. Then you click on “Generate” to generate new addresses. After that you only have to click on “Print”. Now it comes to the question, which printer you should use. If you use Google Chrome, you can also save the page as a PDF file (and then print it, of course).

Step 3

Use the public address or the QR code to transfer BTC. For this purpose, one uses an app of the wallet with the QR code, but can also use a wallet uncomplicatedly on the PC. You buy the Bitcoins on the desktop wallet and then send them to the Bitcoin paper wallet. All you have to do is enter your public address and the amount. The Bitcoin wallet Blockchain.info is recommended here. Here there is a special Paper Wallet function that facilitates the process. Here you go to “Import/Export” and then to the Paper Wallet link, which is located in the menu on the left.

Step 4

Securely store the Bitcoin Paper Wallet coins. For particularly large amounts, it may also make sense to store them with a notary. The storage in a safe is absolutely recommendable.