The difference between hot and cold crypto wallets
With any service you use online, security should be your top priority. This is especially true for financial transactions: the more you care about security, the less likely you are to have a problem. “Financial security should be one of the first things you pay attention to, even in online casinos,” says Casino Bonuses Finder Product Owner Tony Sloterman. “To keep your personal information safe and to make smooth payments, first check what security standards are in place.”
Keeping them safe is perhaps the most important thing when it comes to purely digital assets like cryptocurrencies. To do this, you must first decide on the type of wallet you will use. Below we share information that will help you with this.
What is a crypto wallet?
Crypto wallets are tools for storing the cryptocurrencies you own. They are available in the form of digital programs or physical devices. The most important thing these wallets do is store both public and private keys. These keys allow you to access the cryptocurrencies you own on any blockchain. You can think of them as a “bank vault key”: anyone with this key can access the money stored inside the vault. For the same reason, the security of the wallet is fundamental.
Warm wallets
A hot wallet is a digital program used for the purpose described above. Its characteristic is that it is constantly connected to the Internet. They can be used on mobile devices, desktop PCs or other devices that can connect to the Internet. Above all, they provide ease of use: you don’t need to carry anything, and as long as you have a smartphone, you can manage your crypto assets from anywhere at any time. Most exchanges can be integrated with hot wallets, making buying and selling crypto very easy. Some wallets in this category are:
● Coinbase Wallet
● MetaMask
● BlueWallet
● Exodus
● Mycelium
But this ease of use has some drawbacks: being constantly online poses a security risk, and hot wallets are more likely to be hacked. There are also exploits and phishing tactics that only target this type of wallet.
Cold wallets
A cold wallet is a physical device that does not connect to the Internet (or only connects when the user wants to). You can compare them to a kind of “USB stick”: you need physical access to the cold wallet to access your crypto assets, and you can only use them with another device (for example, your laptop via USB connection) . Some cold wallets can also connect to mobile devices via Bluetooth. These wallets also have additional security features such as fingerprint scanning and access passwords.
As can be expected, they cannot compete with hot wallets in terms of ease of use: you have to carry the wallet with you and cannot use it independently. But by the same token, they are more secure than hot wallets because, as a physical device, they are almost impossible to hack. As long as you don’t lose your wallet, your money stays safe. Some of the wallets in this category are:
● Ledger Nano X
● Trezor Model T
● ELLIPAL Titanium
● Coldcard
Which one is best?
Both types of wallets have their advantages and disadvantages. The best thing is to decide what you use cryptocurrencies for. If you trade them constantly and regularly, hot wallets will be a much better option because even seconds matter to traders. Buying and selling crypto with a cold wallet is impractical and takes too long. Hot wallets are designed for convenience and speed. But if your goal is not to trade, but to store, i.e. if you intend to keep crypto for a long time after purchase, then cold wallets will be much more suitable for you because they are much safer.
