When it comes to storing your bitcoins, the debate is whether you should use a hot wallet or cold wallet. Both types of wallets have pros and cons, but in order to make an informed decision about which type of wallet will work best for you, read on to see the difference between using hot wallets vs cold wallets.
These wallets are called hot because they are connected to the Internet, making them more vulnerable to hacking. A hot wallet refers to a way of storing your coins on an internet-connected device like a smartphone or computer.
This might seem convenient at first glance, but if someone hacks into your account and steals everything, there’s not much you can do about it because they have access to everything on that device.
This category of security risk can encompass free wallets offered by exchanges such as Coinbase and Kraken, as well as mobile storage apps.
Desktop wallets are another type of hot wallet. The main benefit of desktop wallets is that they allow users to have full control over their private keys and provide easy access to manage transactions.
However, since these types of wallets are stored on devices with internet connections that may not always be secure, and they can pose security risks as well as create more opportunities for hacking attempts than cold storage methods like paper or hardware wallets do.
The only drawback of desktop wallets is losing bitcoins if your computer gets stolen or destroyed. Our advice is to use a hot wallet for small amounts of bitcoin and store any large sums offline or in cold wallets.
For people who have a considerable amount of bitcoins, cold wallets are the preferred method of storing them.
A paper wallet is the perfect place to store your cryptocurrency because it’s completely secure, and there are no chances of someone hacking into them.
You might be wondering why we’re talking about storing digital currency on something that can’t technically hold any data? That’s precisely why paper wallets could be perfect for you. They offer complete protection from hackers, but if you lose or destroy it – then you could lose all your cryptocurrency.
Make sure this important information stays safe by keeping the paper somewhere where nobody else has access to it like a safety deposit box.
Another cold wallet storage type is a hardware wallet. You’ll never have to worry about hackers when you keep your virtual treasure chest secure with a hardware wallet. They’re like glorified USB drives that can be plugged in when you are ready to make your transaction. They are made by three of the most trusted brands out there–Trezor, Ledger Nano, and KeepKey.
When it comes to storing your bitcoins, you now see the difference between hot wallets vs cold wallets. Both have their positives and negatives, but ultimately, you need to decide which one is best for your needs.
If you want the convenience of being able to spend money quickly with a hot wallet and don’t care about security or privacy then most likely this type will be good for you.
However, if safety is important (perhaps because bitcoin theft has become commonplace), cold wallets may be more appropriate as they offer greater protection against hackers than hot wallets do.
The decision may not always be easy, so think carefully before making any decisions on what kind of Bitcoin storage option would work best in your situation.