Hot Wallet Vs Cold Wallet: All You Need To Know About These Two Types

Photo of author

By Crypto Vibe

If you are new to crypto and want to grasp the terms fully before you start making investments, you are on the right track. We receive many questions from crypto learners. One of the most common ones is the hot wallet vs cold wallet comparison. Before we get into comparing the two types of crypto wallets, let’s first find out what really is a crypto wallet.

Crypto Wallet

Hot Wallet Vs Cold Wallet

A crypto wallet allows you to save, send, and receive cryptocurrency digitally. We use the term ‘digitally’ to put emphasis on the idea that crypto wallets are software capable of storing and transferring digital currency. So, when you hear about crypto wallets, you need to be sure that you are dealing with a software wallet.

Hot Wallet

The most commonly used crypto wallet is the hot wallet. It is very easy to understand and use. When you download your mobile or desktop wallet, you basically create a hot wallet to manage your crypto exchanges. This type of crypto wallet is suitable for frequent exchange users as it is connected to the internet. This means that you can make seamless transactions or exchanges within a few clicks.

Cold Wallet

A cold wallet is more secure as compared to hot wallets. What makes it different from a hot wallet is that it is not connected to the internet. Hardware wallets are a popular type of cold wallets as they are very secure, easy, and supported by the manufacturer. To make transactions and exchanges through a cold wallet, you will need to connect to the internet.

Cold Wallet Hot Wallet Vs Cold Wallet

Hot Wallet Vs Cold Wallet – Key Takeaways

  • Hot wallets are online wallets (connected to the internet) for quick transactions and exchanges whereas cold wallets are offline wallets that require a medium and/or an internet connection.
  • A hot wallet is more vulnerable to hacking and breaching as compared to a cold wallet which is more secure.
  • Hot wallets are mostly suitable for frequent crypto spenders and exchangers.
  • Cold wallets are mostly suitable for storing or saving cryptocurrency for a longer period of time.