What are Hot and Cold Wallets?
When trading cryptocurrency, it is essential to think about the different ways to store this crypto. One primary reason people love the idea behind cryptocurrency is that it gives you control over your funds. Having control over your funds also unlocks a new responsibility of being able to store them properly.
To store cryptocurrency, one needs to have a crypto wallet. Crypto wallets allow the storing, sending, and receiving of cryptocurrencies. There are two main types of crypto wallets: hot and cold wallets.
Hot wallets are crypto wallets that reside in your mobile device, desktop, or browser. They require an internet connection to function and are often called software wallets. Today, you can find some hot wallets: CLV wallet, Metamask, Trust wallet, Blockchain wallet, Coinbase wallet, Robinhood, Exodus, etc.
On the other hand, cold wallets are crypto wallets that store private keys offline; they are not connected to the internet. There are two categories of cold wallets. They are paper wallets and hardware wallets.
As the name suggests, paper wallets are printed pieces of paper containing public and private keys paired with two QR codes used to unlock the wallet and perform transactions. Hardware wallets are physical storage devices connected to your computer via USB ports when a transaction is required. Some hardware wallets available today are Ledger Nano X, Trezor Model T, ELLIPAL Titan Mini, Ledger Nano S, etc.
Pros and Cons of Hot Wallets 2
Hot wallets are easy to access and make it easy to transfer cryptocurrencies between parties as they are always connected to the internet. They are also easy to set up, free to use, and beginner-friendly.
While hot wallets have their advantages, they also possess several disadvantages. Hot wallets are prone to cyber-attacks as they are connected to the internet. They foster third-party dependence, and users may lose assets if the service-providing companies go out of the market.
How to Keep Hot Wallets Safe
When using a hot wallet, never perform cloud backups or keep photos of your seed phrase on any internet-connected device. Always make a hard copy of your seed phrase and store it offline. The most important rule of thumb for keeping hot wallets safe is to not authorise any unknown transactions. This can happen from a phishing event or fraudulent dApp.
Pros and Cons of Cold Wallets
Cold wallets are a more secure way to store cryptocurrencies as they are immune to cyber-attacks. They also require the user to confirm the transaction before it gets executed, thus fostering more security.
Cold wallets are not suitable for day traders and quick transactions as they require several processes before users can perform transactions.
CLV wallet enables users to perform fast transactions. It is a multi-chain connected wallet that supports popular blockchains, helps cross-chain compatibility, and allows users to enjoy decentralized finance.
CLV (previously Clover Finance) is a one-stop infrastructure platform for cross-chain and decentralized applications.
The CLV chain is a Substrate-based specialized Layer 1 chain that is EVM compatible and cross-chain interoperable. The CLV wallet is a multi-chain all-in-one wallet, for Day-to-Day, DeFi, and Gaming purposes.
Featured by Coinlist as one of the most noteworthy projects in 2021 and backed by major industry institutions such as Polychain Capital, Alameda Research, Huobi and OKex’s Ventures Arm, with our multi-dimensional products lineup, CLV uniquely positioned itself as “Passport to the Omniverse”.
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