Cryptopedia
Hot Wallet
What is a Blockchain Wallet?
A blockchain wallet is a digital wallet that allows users to store and trade their digital currencies. Compared with physical wallets, a digital wallet can generate and manage a user’s address and private keys. The address is similar to the number of a credit card and the private key is the password of the card. A wallet in digital form can store different cryptocurrencies since it has only one address. There are two types of wallets: hot wallets and cold wallets based on the fact if connected to the internet.
Cold Wallets
Cold wallets are offline wallets that are stored on a platform that is not connected to the internet. When using these wallets, users must have sign-in credentials to gain access to them. Without being connected to the internet, the wallets are not vulnerable to a cyberattack, which makes them safer than hot wallets in terms of storage. However, once the sign-in credentials are lost, cold wallets are no longer accessible.
Hot Wallets
Hot wallets are online wallets. When using these wallets, users must sign in with their login information first and be verified by the server to access them. With an internet connection, the wallets allow transferring and receiving digital currencies instantly, which is more convenient than cold wallets but at the same time it makes them vulnerable to a cyberattack.
As for cold wallets, they are more suitable for preserving digital assets for long-term investment while hot wallets are handy for frequent trading. At present, the mix of hot and cold wallets is popular, which can separate funds for different purposes to lower risks.
A blockchain wallet is a digital wallet that allows users to store and trade their digital currencies. Compared with physical wallets, a digital wallet can generate and manage a user’s address and private keys. The address is similar to the number of a credit card and the private key is the password of the card. A wallet in digital form can store different cryptocurrencies since it has only one address. There are two types of wallets: hot wallets and cold wallets based on the fact if connected to the internet.
Cold Wallets
Cold wallets are offline wallets that are stored on a platform that is not connected to the internet. When using these wallets, users must have sign-in credentials to gain access to them. Without being connected to the internet, the wallets are not vulnerable to a cyberattack, which makes them safer than hot wallets in terms of storage. However, once the sign-in credentials are lost, cold wallets are no longer accessible.
Hot Wallets
Hot wallets are online wallets. When using these wallets, users must sign in with their login information first and be verified by the server to access them. With an internet connection, the wallets allow transferring and receiving digital currencies instantly, which is more convenient than cold wallets but at the same time it makes them vulnerable to a cyberattack.
As for cold wallets, they are more suitable for preserving digital assets for long-term investment while hot wallets are handy for frequent trading. At present, the mix of hot and cold wallets is popular, which can separate funds for different purposes to lower risks.
