After purchasing cryptocurrency, it is vital to decide how and where to store your assets. As cryptocurrency runs on blockchain, it requires a digital storage system. This system is called Wallet. There are two types of crypto wallets available: Hot Wallet and Cold Wallet, or you can choose a combination of the two. Which option is right for you is a personal choice and depends on various factors.
In this blog, we will understand what hot and cold wallets are, their types, the differences between them, and how to choose one.
What is a Hot Wallet?
Hot wallets allow users to store crypto directly on their mobile devices or desktops. Due to their constant connection to the internet, these wallets are considered hot. Hackers can easily trace private keys on these hot wallets since they are online, 24*7. Moreover, like any other Android or iOS app, hot wallets can be downloaded from Google Play or the App Store. The majority of hot wallets available today are free to download, and some are also available as mobile apps and browser extensions.
Some hot wallet examples are Exodus, MetaMask, and Trust Wallet.
Types of Hot Wallet
There are different types of hot wallets and they can be used for different purposes. Some are used as mobile apps, web-based wallets, or even wallets based on specific ecosystems. There is a long list of wallets, and their use depends on the needs of the user. As a blockchain development company, we offer a range of hot wallet solutions tailored to your requirements.
Among the most popular hot wallets are Edge, MetaMask, Coinbase Wallet, Trust Wallet, Exodus Wallet, and Robinhood.
Wallets such as MetaMask allow you to manage Ethereum-based tokens within an ecosystem. Trust Wallet, on the other hand, supports more than 65 cryptocurrencies and tokens, making it a non-custodial and more inclusive wallet. This wallet is available for mobile and web software. With more than 260 cryptocurrencies supported, Exodus Wallet is a versatile software wallet.
What is a Cold Wallet?
A cold wallet is a cryptocurrency wallet that stores your private keys offline, often on a physical device. Hardware wallets protect digital crypto assets from online hackers by using a flash drive-like device that does not connect to the internet. The use of cold storage wallets ensures the security of cryptocurrency holdings and is referred to as cold storage in the crypto world.
Some popular cold wallet examples are paper wallets, Ledger, and Trezor.
Types of cold wallets
There are different types of cold wallets available. Some of them are mentioned below.
Paper Wallets
This is a document where public and private keys are printed on it. In addition, there is a QR code embedded in the paper that facilitates crypto transactions. In the event of damage to the document, it becomes useless.
Hardware Wallet
It is a type of cold wallet that stores private and public keys offline. Hardware wallets are typically USBs or smart cards, without which you cannot access your crypto. Trezor, Ledger, and KeepKey are examples of commonly available hardware wallets.
Deep Cold Storage
A wallet of this type makes accessing your wallet extremely difficult. You could compare this to keeping your cold wallet in a bank's vault or safe deposit box. Wallets like these are designed for those who need minimal access to their wallets.
Sound Wallet
A sound wallet stores your private keys as audio files on CDs, USBs, or vinyl disks, which can then be decoded with a spectroscope app or even a real spectroscope to reveal the hidden codes.
Choosing the best cold wallet should be chosen after conducting in-depth research.
Read more about Crypto Hot Wallet vs. Cold Wallet