Cold Storage
In short: Cold storage is the offline storage of cryptocurrency using tools such as non-custodial hardware wallets, USB drives, offline computers or paper wallets.
Cold storage is the offline storage of cryptocurrency using tools such as non-custodial hardware wallets, USB drives, offline computers or paper wallets. Strictly speaking, the coins stay on the blockchain; what is kept offline is the private key that controls them.
Why it matters
Keeping keys offline puts them out of reach of online attacks, which is why long-term holders and custodians use cold storage for funds they do not need to move often. It is not free of risk. Devices fail, paper can fade or burn, and backups can be lost or found by others, so a sound setup includes a recovery phrase that has been tested and stored in a safe place.
Example
A long-term holder sets up a hardware wallet, writes the recovery phrase on paper and keeps it somewhere safe. They send coins to the wallet's public address. From then on, they can check the balance at any time on a block explorer without connecting the device, and they only plug it in when they actually want to move funds.