Cold nodes or cold masternode setup are also sometimes called as hot / cold Masternodes. The reason is this kind of setup involves 2 wallets. One wallet will be installed remotely on your VPS server(hosted by KYD). It is called masternode wallet and they don’t hold any of your coins, that’s why it’s considered cold. The second wallet will be installed on your local personal computer. That wallet holds all your coins and it is considered as hot wallet as they are connected to the Internet. So how do they work?

Both the wallet that KYD host for you and your local PC wallet will have a full copy of the blockchain. (Phantom nodes excluded)
However your local wallet is the one that is safely holding the collateral amount and so you have full control of your private keys. Now using local controller wallet you’ll create a secondary private key which is also called as masternode private key. This masternode private key doesn’t give access to your coins but instead it acts as a communication. This key is the proof that you own the funds and it tells the cold online wallet to act on behalf of the hot wallet. Now using local controller wallet you initiate communication and once the masternode is enabled you can safely close your local QT wallet and take it offline. Only your VPS wallet that has no coins will stay online 24 x 7.

Your keys, your coins…. safe and secure.