This blog post may contain references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to those products or services.
Nowadays, buying and selling cryptocurrencies is extremely popular. This popularity might come as a shock to some people, especially since the value of cryptocurrencies can change overnight. However, these decentralized digital currencies are even starting to catch investors’ attention. Yet, like with any asset, you need a safe place to store it. When it comes to crypto, a wallet is the answer. However, two main types are available, and to find the best crypto cold wallets or hot ones, you first need to understand the difference between them.
Comparing Hot and Cold Crypto Wallets
In our discussion of cold wallets vs. hot wallets, we look at various features and how both types differ. The basics are that cold wallets are hardware devices that keep your digital assets offline, while hot ones are digital platforms that connect to the internet. Below, we consider a few aspects in which these types differ.
Cybersecurity
Cold wallets are more secure than hot ones simply because it’s not connected to the internet, so no one can access your crypto without physically having the device. With hot wallets connecting to the internet, there’s always a chance that hackers can take advantage of a vulnerability to access your money.
Various cybersecurity measures are employed to prevent it, but it’s still not as secure as a device that doesn’t connect to the internet. However, the drawback of a physical device or paper containing the pin and QR code is that someone can steal it in person, so you’ll need to secure it in a safe place.
Price
Many hot crypto wallets are free, or you pay interest on the cryptocurrency you store on the platform. However, that’s still cheaper than buying a hardware device, which can range between €50 and €250. Still, remember that cold devices are generally a one-time purchase, while hot platforms might cost you money as long as you use them.
Crypto Storage
Both options can store tens of thousands of cryptos, but the difference comes with the minimum amount it can store. It depends on the device, but generally, cold hardware devices have a higher minimum limit of cryptos they can hold.
As such, you often use these to store 1,000 or more crypto units, while the hot ones can store as little as one unit. Further, depending on the type of device you use, like a USB or paper, it might be difficult to load more cryptos onto it, making the ease of use slightly lower when storing cryptos.
Ease of Exchanges
When exchanging cryptos, hot crypto wallets win by a landslide. Since it’s already connected to the internet, completing a trade within minutes of accessing your account is very possible. Further, it’s usable on any device connected to the internet, which means its ease of use is much better.
On the other hand, cold ones require you to connect it to the internet manually. This process can mean plugging the device into your desktop using a cable or other complex actions.
What Is the Right Choice for You?
Overall, there are distinct uses for both types of crypto wallet options, especially as Bitcoin’s popularity is still growing since its inception 14 years ago. Cold wallets are best for investors who buy cryptos and then let them sit for a few years to see how the value changes. It’s ideal for someone who doesn’t interact much with their cryptocurrencies.
Meanwhile, hot wallets are ideal for buyers in the thick of things. A hot crypto wallet is the better option if you frequently use your crypto, like when playing at a crypto casino or constantly selling and trading it. Thanks to these specific uses, it’s easy to realize which type you’re looking for.
If you want a bit of both, then use a hardware device that’s easy to use. An example would be using a USB, which you can simply plug into your computer. However, that still limits you to your computer for the most part, so consider carefully the type of ease of use you want to experience.
Use the Best Crypto Wallet Type
Deciding on the best crypto wallet depends on your purpose for the cryptocurrencies you buy. It can be for investment purposes, in which case the cold storage type is better. However, the hot storage option is ideal if you’re looking to become a regular crypto trader. Consider what you want to do, and find the perfect wallet for your goals and the assets you choose to invest in.
Become an Insider
Editorial Disclaimer: The editorial content on this page is not provided by any of the companies mentioned and has not been endorsed by any of these entities. Opinions expressed here are author's alone
The content of this website is for informational purposes only and does not represent investment advice, or an offer or solicitation to buy or sell any security, investment, or product. Investors are encouraged to do their own due diligence, and, if necessary, consult professional advising before making any investment decisions. Investing involves a high degree of risk, and financial losses may occur.
