Cold Wallets vs. Hot Wallets

Crypto wallets store your private keys, keep them secure, and allow you to send and receive cryptocurrencies. Crypto wallets are commonly designated into two categories: cold wallets and hot wallets.

Cold wallets are typically used for long-term holding of crypto assets and are usually hardware wallets, like Ledger or Trezor. Hardware wallets are password-secured physical devices that store your private keys and are not connected to the internet, so they are not as vulnerable to online attacks as hot wallets.

Hot wallets are most commonly used for daily transactions and are typically software-based. Hot wallets are internet-connected, either in the form of browser extensions or mobile apps, and are faster to use—but because they are internet-connected and store your private keys in a less secure way, they are more vulnerable to online attacks like hacking.

It is commonly recommended that crypto users buy a hardware wallet for the safe storage of the majority of their crypto due to their higher security features than software wallets, which should only be used for day-to-day transactions.

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