Hot Wallet Vs. Cold Wallet and Types of Cryptocurrency Wallet

Jessa Muyot
Sep 5, 2018 · 3 min read

Which wallet do you think is the best? Are you familiar with these types of crypto wallets?

Read below to find out!

The difference between a hot wallet and cold wallet:

HOT WALLET refers to any digital wallet that is connected to the internet. It provides immediate access because it stores your crypto assets online. It means individuals can readily access their funds, make and receive payments instantly. However, a hot wallet is more susceptible to hackers since its connected to the internet. A hot wallet is better for a simple day-to-day transaction.

COLD WALLET refers to any digital wallet that is NOT connected to the internet; it’s offline. Hence, it is more secure and safe than hot wallet. There’s is a very low chance for hackers to compromise it. Since it is not connected to the internet. Usually, the chance of losing your assets are when you either lost or damaged your device. Usually, a cold wallet is a physical device and is used for long-term holding.

TYPES OF CRYPTOCURRENCY WALLET

DESKTOP WALLET is the type of wallet where it can be online or offline. You can download and install it on your PC or Laptop.

MOBILE WALLET is the type of wallet that runs on an application on your phone and can be used as a means of payment anywhere even in retail stores (if they accept crypto). It is convenient because it is more portable than desktop wallets. To have this type of wallet, all you have to do is install the app on your mobile phone and set up an account.

WEBSITE WALLET is the type of wallet that runs on the cloud and can be accessed from multiple devices with an internet connection. It’s fast in processing transactions. However, it can be risky because some online wallets ARE scams. It happened before.

HARDWARE WALLET is the type of wallet that has a physical form. It looks similar to a USB device. This is the most secure wallet amongst all kinds of wallets because it is stored offline. It processes a transaction online by directly plugging it in any computing device.

PAPER WALLET is the type of wallet that also has a physical form. It is merely a copy of your public and private keys in a printed sheet of paper that carries all the data needed to transfer and receive funds. This is the least used wallet, because it can be easily damaged or lost over time.

ANALOGY: HOT WALLET is like the everyday wallet you have in your pocket or bag while COLD WALLET is like a vault where you keep your money for a long time.

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Jessa Muyot

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