Hot Wallets and Cold Wallets for Cryptocurrencies: Things to Know

by: Editorial Staff

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If you are thinking about keeping your bitcoins or cryptos in wallets, then you should first know about the kind of wallets you will get. There are basically two different kinds of wallets. First one is the hot wallet and then comes the cold wallet. In this post, we are going to discuss and advantages and disadvantages of both the wallets to make your decision precise.

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Hot wallets for Cryptocurrencies

Wallets that are always connected in the cloud with the internet are known as Hot wallets. However, hot wallets are quite vulnerable since hackers can access them. This is the reason why most people prefer to use hot wallets for storing smaller amounts of bitcoins. Some of the examples of hot wallets are Kraken or Coinbase, or any other web or mobile related apps.

Apart from the aforementioned wallets, there are various desktop wallets too. You can install these wallets on your desktop and connect it to the internet. To keep it secure you will have private keys, and by the process of encryption, you can stay away from hackers. But if somebody steals your laptop or desktop then your bitcoins will be gone. Even if your desktop gets destroyed then also you will lose your bitcoins.

Incidences of stolen desktops for bitcoins are quite common these days. Hence most people don’t use hot wallets for lots of bitcoins. Anyway, you can always use hot wallets for storing few bitcoins that won’t affect you so much in case something goes wrong. If you own lots of bitcoins then we would suggest that you don’t use hot wallets since the risk would be too big.

Cold Wallets for Cryptocurrencies

When it comes to storing a large number of bitcoins, then most people go for cold wallets. There are basically two different types of cold wallets, hardware wallets, and paper wallets.

Paper wallets might sound funny since bitcoins are all about digital currency, but it’s the safest option for storing bitcoins. When you use paper wallets, you won’t have to worry about hackers or any other security threats. You can simply store the paper in a safe place where you can access it with ease. But if your paper wallet gets burned or destroyed, then you will risk it all. Hence, you should have a nice and secure storage to keep your paper wallet safe.

Apart from paper wallets, you can also opt for hardware wallets which is kind of a USB drive that stores your bitcoins. This physical offline device is quite secure and you can access your bitcoins by plugging it in your laptop or desktop. You can use third-party services to keep your hardware wallet safe. Some of the most famous service providers are Ledger Nano, Trezor and KeepKey. It will definitely cost you some bucks but security is guaranteed.

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