What Is The Difference Between Cold Wallet & Hot Wallet?
2021.06.04 08:07
Hi~ It's Unicorn
I am going to talk about cryptocurrency wallets today.
Cryptocurrency wallet
A cryptocurrency wallet is a device, program, or service that stores the public or private keys for cryptocurrency transactions. You can use it to trade on the blockchain network. According to how to keep private keys, the types of cryptocurrency wallets can be roughly divided into two categories, “cold wallets" and "hot wallets.”
Cold Wallet
A cold wallet is an offline wallet that stores private keys offline. The traditional way to copy the private key is written on paper, but it is easy to copy and lose it.
Cold wallets are dedicated hardware to securely store your wallet information, which is not connected to the internet. Here are some well-known cold wallet hardware brands, such as Trezor, Ledger, KeepKey, etc.; these cold wallets are equipped with cryptographic functions to make an asset more secure.
Since the cold wallet stores the private key offline, it can significantly reduce hackers' risk of stealing the private key. However, due to the cryptocurrency is usually traded online, it is relatively inconvenient to use the cold wallet to trade.
Hot wallets
Hot wallets are known as online wallets, which are opposite to cold wallets. It’s like a digital wallet which is with software hosting your wallet information. Hot wallets are very convenient to trade cryptocurrency because it is directly connected to the Internet. However, it also means that you may expose your private keys on the internet and face an attack from hackers. Therefore, you have to avoid storing large amounts of cryptocurrency in a single hot wallet.
