Hot, Warm, and Cold storage are terms often heard in describing storage approaches for crypto assets, but surprisingly these terms remain largely undefined.
The lack of clear definitions not only causes confusion (ones person’s Hot is another person’s Warm), but also has significant implications in an insurance context specifically around what types of wallets are allowed in a program or covered in an insurance policy.
Evertas has addressed this lack of clear definitions by developing a comprehensive taxonomy to identify wallet storage types in the table below.
|Is the wallet implementation connected to the internet?|
|Yes, Single Signature||Yes, Multi Signature||No|
|On-chain wallet / Smart Contracts||Hot: On-Chain||Hot: On-Chain||N / A|
|FIPS Rated HSM (Level 3+)||Warm||Warm||Cold|
|FIPS Rated HSM (Level <=2)||Hot: Off-Chain*||Warm||Cold|
|Non-FIPS Rated HSM||Hot: Off-Chain*||Warm||Cold|
|Non HSM: Electronic with secure enclave (e.g., smartphone, tablet)||Hot: Off-Chain*||Warm||Cold|
|Non HSM: Electronic without secure enclave (e.g., computer)||Hot: Off-Chain*||Hot: Off-Chain*||Cold|
|Non HSM: Non electronic (e.g., metal wallet, not connected to computer, SD card, paper, magnetic tape)||N / A||N / A||Cold|