“Hot wallet” and “Cold wallet”, what do they mean and how do we use them?
Many of us have heard of the terms, but few of us understand what the difference between the concepts really is. Basically, there are two different types of cryptocurrency wallets to choose from, each with its own advantages and disadvantages. Let’s examine them and then you can decide how you want to store your cryptocurrencies.
A “hot wallet” is an online cryptocurrency wallet that is permanently online. It is comfortable, but less safe. This means they are more vulnerable to fraud, as hackers can more easily access your private keys and government agencies can more easily see your wallet’s contents. If you do choose this option, it is important that you choose a reputable cryptocurrency exchange with high security standards.
A cold wallet is a hardware type “wallet” (think of it as a USB stick that you can connect to your computer when you want to use it and then remove it) that stores your private key offline. The cold wallet is not permanently online, and you can store your private key yourself – offline.
When sending, receiving or handling crypto assets, you need to use this hardware device and usually have to go through several security steps, which makes your crypto assets less vulnerable to theft. The most popular hardware type wallets include Trezor and Ledger NanoS.
There are two important things you should know before buying a hardware wallet: only buy from a genuine, trusted manufacturer, and don’t buy a second-hand hardware wallet. And second, as with all crypto transactions, make sure you double or triple check the website that the hardware wallet is trying to access.
We hope that we managed to provide clarity to the issues related to hot and cold wallets. You decide where you want to store your cryptocurrencies and if you’re in the mood to invest, visit our website again, and we will be happy to assist you.