What characterises a cold wallet?

Detailed explanation

Cold storage describes a security concept, not a particular manufacturer. The crucial secret is generated and used in an environment without a direct internet connection. An online system can use public wallet data to generate receiving addresses, monitor balances and prepare unsigned transactions. The offline system checks and signs. The online system then broadcasts the signed transaction to Bitcoin's network.

A hardware wallet can be part of cold storage when used accordingly. Not every connected hardware device automatically meets every strict definition of offline, and switching off a smartphone does not alone make it a robust cold-storage system. Offline custody also has risks: physical theft, fire, faulty backups, manipulated data transfer and confusing procedures. Transaction details must be checked on the signing device because a compromised online device could prepare a wrong destination. Security comes from the whole process—key generation, backup, signing, verification and emergency planning—not merely the word cold.