If you're ready to trade Bitcoin (BTC) or other altcoins, you will need cryptocurrency wallets to store them- just like you store money in your wallet. After purchasing your cryptocurrencies, you can withdraw and keep them in your external wallet. There are two cryptocurrency wallets you can choose from: "cold" and "hot" wallets. This article takes a detailed look at these crypto wallets.
Cold Wallets
Also known as "hardware wallets," cold wallets are encrypted, portable devices which store cryptocurrencies. They are known as "cold" because these devices are offline. Additionally, cold wallets are more secure than hot wallets. Ledger, Trezor, Keepkey are some examples of cold wallets.
Pros of Using Cold Wallets
Numerous advantages and perks come with using cold wallets for storing your cryptocurrencies. Here are a few:
All transactions are subject to user approval before they are completed.
It has a high level of security. These wallets can't be hacked
Protecting private keys from viruses and hackers is a top priority when designing a hardware wallet.
Cons of Using Cold Wallets
However, just as there are upsides to using cold wallets, there are also downsides. These
include:
Mostly expensive compared to hot wallets-which are usually free.
They must be switched on and then linked to the Internet, and hardware wallets are less handy than hot wallets.
Hot Wallets
These wallets are available online for cryptocurrency transactions by the wallet's owner. They are primarily mobile, web, and desktop based. Examples are Metamask, Trust wallets, and Exodus.
Pros of Hot Wallets
Here are a few reasons why you may prefer using hot wallets
Instant access to your crypto funds. If you're a frequent shopper, you won't have time to fiddle with USB connections.
They're simple to use, install, and maintain
Hot crypto wallets are either free to use or come with a small monthly fee to keep them up to date.
Cons Of Hot Wallets
And here are some downsides you may want to be aware of:
If your wallet is compromised, you'll lose all of your money.
Because the public and private keys are available on the Internet, whatever you save in a hot wallet is open to attack.
The mobile, desktop, and web-based wallets sometimes are considered less secure than hot wallets.
You must make a personal choice on how to keep cryptocurrencies secure while achieving the proper balance between utility and security when storing them, just like any other precious asset.