Hot wallet or cold wallet?

When we store our cryptocurrencies, we want to ensure that they are completely safe. Which is the best of the two wallets to store cryptocurrency?

Cold wallets

Most hardware wallets are cold wallets that work on small to medium-sized USB sticks. Cold wallets include paper wallets, real bitcoins and a separate offline computer for storing cryptocurrencies.

In general, cold storage wallets are very safe. Stealing from a cold storage wallet often requires actual access to the wallet and any associated PINs or passwords that need to be used to access the cash.

Advantages of cold wallets

Hardware wallets are designed to be impregnable to hackers. Depending on the storage method, the money stored in a hardware wallet cannot be stolen, even if it is connected to a computer or linked via Bluetooth.

Hot wallets

Hot wallets include online wallets, mobile wallets and computer wallets. While all cryptocurrency hot wallets are vulnerable to online attacks, online wallets are the least secure of them all.

Large cryptocurrency users are unlikely to hold large amounts of cryptocurrencies in hot wallets. Although a mobile hot wallet is not the same as a classic analogue wallet, they do have one thing in common: it is usually a bad idea to carry a lot of money around with you.

Benefits of hot wallets

One of the advantages of hot wallets is their ease of use. They do not need to go offline to complete a bitcoin transaction because they are always online.

For example, many people use mobile hot wallets to trade or transact bitcoins. Doing so with a frozen wallet would be inconvenient. You would have to find a device (usually a computer) to connect your frozen wallet to, then transfer the required amount of bitcoins to the hot wallet before you can make a transaction.

Summary

The best option between the two wallets would undoubtedly be a combination of both. You want to strike a compromise between the comfort of a hot wallet and the security and peace of mind that a cold wallet offers. Each cryptocurrency wallet can be used for a specific purpose, allowing you to strike a balance between simplicity and security when using and exchanging cryptocurrencies.