Cold storage refers to a way of storing and interacting with cryptocurrency keys offline. Cold storage is used by cryptocurrency exchanges and individual holders to prevent hackers from being able to access their digital assets.
In contrast to a hot wallet, a cold storage device is not connected to the internet, which protects it from unauthorized access and cyber attacks, as well as other vulnerabilities that come with being connected to the internet.
Due to the irreversible nature of blockchain technology, when digital assets are accessed and stolen, they are irretrievable. This is why it is imperative to keep the private key to your cryptocurrency wallet in a cold storage device like a hardware wallet. When it is stored in cold storage, when making a transaction, the transaction is signed in an offline environment that never comes into contact with a server, making it inaccessible to hackers.
There are countless stories of people forgetting or losing their private key or their private key being stolen and losing access to millions of dollars worth of bitcoin.