Crypto Wallets: Hot vs. Cold Wallets

Ever heard of ‘Not your keys, not your coins?’ Cold wallets allow you to store your keys in physical devices, whereas hot wallets are digital storage wallets.

Written By Paul Sokolov

When you think about joining the cryptocurrency universe, you will need to create your cryptocurrency wallet before deciding which coins to invest in. This is where organizing your collection begins. Each cryptocurrency wallet has a private key, thanks to which only the owner of the wallet has access to their funds. However, a cryptocurrency wallet is not only used to store the assets you buy on the platform but also allows you to securely send and receive these and other cryptocurrencies from anywhere in the world. In addition, many hot and cold cryptocurrency wallets also offer various services such as exchanges, delegations, and many other items.

What Is a Crypto Wallet?

Every crypto investor needs to have a cryptocurrency wallet. With the help of this, it is possible to manage their crypto-assets easily. As a rule, such wallets allow operations of storing, receiving, and sending cryptocurrencies through the blockchain network.

Such wallets have software or hardware for managing, storing, and providing private keys to their users. They can be in the form of a smartphone app, a web platform with tools, or a desktop application. Or in the form of portable hardware designed specifically for performing transactions. These wallets are referred to as “cold and hot” wallets. And although their main purpose is the same, it is the storage of crypto assets. However, there is a very significant difference between them.

What is a Hot wallet?

Hot wallets are those that are connected to the Internet. Therefore, they are more practical and convenient to use. There is a huge choice of platforms for storing cryptocurrencies online. Each of them competes with the versatility of their features, such as easy and fast transactions, built-in exchangers, and more. Such wallets tend to come in mobile, web, and desktop versions. Thereby providing their users with unlimited access to their funds, from anywhere in the world, at any time. Guarda is an excellent example of a hot wallet; it combines all the types of wallets listed below to give you complete control over your keys.

Mobile Wallet

Mobile wallets are cryptocurrency wallets that can be downloaded from marketplaces such as Google Play and the App Store. This type of wallet option will definitely suit the user for whom fast and unhindered access to their assets plays a crucial role. Such wallets store private keys that allow access to transactions and are controlled solely by their owner, encrypted on the user’s local device.

Web Wallet

These are wallets that users can access directly through their computer’s browser. Simply go to the wallet page and enter your personal information to access your assets, including your username and password. Just like mobile wallets, they are practical and convenient, and multi-functional.

Desktop Wallet

Desktop wallets are programs that can be downloaded and installed on your computer’s hard drive. Unlike web and mobile wallets, desktop wallets store user information on the computer, not on the Internet. In general, they are more secure than mobile and web-based cryptocurrency wallets. However, the user needs to be careful and keep the equipment safe from malware, viruses, and other things.

What Is Crypto Cold Storage?

Simply put, this wallet provides storage of cryptocurrencies without an Internet connection. Not for nothing, this method of storage is considered the most reliable and secure. The increased offline protection gives reliable protection against hackers and scammers. It should be noted that offline storage also makes it difficult for the user to access the coins instantly. So, this option is more suitable for the user who does not need to make transactions regularly.

Hardware wallets

This is a compact and modern way to store funds. Specially designed devices in the form of flash drives, which can easily fit in your pocket, are considered one of the most reliable ways to save cryptocurrencies. Moreover, most of them are equipped with SEED phrases and password protection, besides the absence of connection to the network.

Paper Wallet

However controversial, what we will tell you now. But, yes, in the technological and information age, one of the most reliable methods of storing cryptocurrencies is considered the paper. More precisely, the public and private keys are recorded on it. And this is a truly no-cost method for 100% protecting funds from hacker attacks. However, you should understand that you will lose access to your funds if you lose or damage the paper carrier. That’s why it is a good idea to keep your keys locked up in a safe. In order to create a paper wallet, you will need to generate a public and a private key to the wallet and then write them on a paper carrier.

So, Which One to Choose? Cold Wallets vs. Hot Wallets

And here, the choice is completely formed based on the user’s needs. If you need to make frequent transactions and use additional functions such as currency exchange, you may want to become a participant in cryptocurrency staking. It is better to choose to store your coins in a warm crypto wallet.

In other situations, if you are going to buy a cryptocurrency, just hold it and occasionally make some transactions. It is worth stopping at the choice of cold storage. Whichever option you like, it is always important to think about the safety of your funds when choosing a cryptocurrency wallet.

It is important to choose a non-custodial wallet. Such a wallet provides complete confidentiality to its users; they are the only owners of their private keys. And they can store and manage cryptocurrencies without worrying about security.

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