What is an air-gapped wallet?

An air-gapped wallet is a crypto wallet whose signing device is physically cut off from networks. The term comes from computer security, where an "air gap" means empty space between a sensitive machine and everything else. In crypto, the idea is that malware on a laptop or phone cannot reach keys that live on a device it can never talk to directly.

How does an air-gapped wallet work?

The setup has two parts. An online app, often called a watch-only or coordinator wallet, knows your addresses and balances and builds transactions, but holds no private keys, as described in what a watch-only wallet is. The offline device holds the keys. To send funds, the online app creates an unsigned transaction and passes it to the offline device, which shows the details on its own screen, signs it, and hands back the signed version for broadcast.

For bitcoin, this handoff usually uses the Partially Signed Bitcoin Transaction format. BIP 174, which defines it, notes that the signer can be offline because the file contains all the information needed to produce signatures. The format is covered in what a PSBT is.

How do air-gapped hardware wallets send transactions?

The two common methods are QR codes and memory cards. Keystone describes its Keystone 3 Pro as a fully air-gapped device with no USB data, Bluetooth, Wi-Fi or NFC connections, communicating only through QR codes and a microSD card. Coldcard's documentation covers moving transactions in and out on a microSD card. Desktop software such as Sparrow says it supports common hardware wallets in both USB and air-gapped modes. Device details are in what Coldcard is and what Keystone wallet is.

Is an air-gapped wallet safer than a USB hardware wallet?

An air gap removes one route for an attack, a direct data link to a possibly infected computer. It does not remove every risk. The seed phrase backup still has to be kept safe, the user still has to check the address and amount on the device screen before signing, and a device tampered with before delivery could still leak secrets by other means. Any hardware wallet, air-gapped or not, depends on being genuine.

Air-gapped signing also adds steps, such as scanning codes back and forth, which some people find slower for frequent transactions. Whether the trade-off suits a given person is a personal choice, and this guide explains how the method works rather than recommending it.