<p><strong>Cold Storage</strong> refers to the practice of storing cryptocurrency offline, away from the internet, for enhanced security. It involves using a hardware <a href="/NewSite/encyclopedia/crypto-wallet/" class="ency-link">wallet</a> or a paper wallet, which are not connected to the internet and thus, less vulnerable to hacking attempts.</p>
<p>Cold storage matters because it significantly reduces the risk of theft from hackers. For instance, in 2018, a hacker stole $500 million from the Japanese cryptocurrency exchange Coincheck, highlighting the need for offline storage. By keeping cryptocurrencies in cold storage, users can protect their assets from such threats.</p>