First up, what’s a hot wallet? For that matter, what’s a cold one? If you’re not “up there” when it comes to the more modern tech, you may not ever have come across these terms before or might not know what they mean. Fortunately, though, they’re pretty straightforward. A hot wallet is simply any e-wallet for storing cryptocurrency that’s connected to a device of some sort, whether that’s your computer or something else. It’s pretty convenient for most people; you can access your funds whenever, and you don’t usually have anything physical to hold onto.
Next, cold wallets. Cold wallets are those that use private offline storage. Pretty often, they’ll look rather like USBs, and you can plug them into your computer when you need them, but otherwise, they’re stored in a drawer – or whatever you like – and away from your computer, but still an e-wallet.
That’s the quick rundown to get you started, and if you’re still wanting more, you can learn all about them in our simple guide. You’ve also got the option to check out helpful tips like how to add Suica to Apple Wallet, plus tons of other how-tos’ if you flick through the web in search of them. Before you get into those intricacies, though, how do you know which kind of wallet to go for? Let’s get cracking on a rundown of the e-wallet that’s right for you!
What Could A Hot Wallet Do For You? (Pros)
So, hot wallets – a quick breakdown of all the reasons you might want to use these. First up, there’s constant accessibility; your hot e-wallet is available from anywhere you are with the internet, meaning that you can use it from home, from the bus, from a hotel room – whatever you need, whatever suits your lifestyle. You don’t need to lug a piece of equipment around; it’s all digital. That means it’s really got the convenience factor, and if you’re into crypto, that might be huge for you. These wallets are great for everyday transactions and funds you’re using a lot, because they eliminate a lot of hassle.
You also ditch the hardware associated with cold wallets; you don’t need a physical device, because it’s all done digitally. You might think you’re not fussed about having one more gadget around, but there’s an important factor here: that device usually comes with a cost. It’s not just USB vs digital – it’s USB and dollars vs digital. Many hot e-wallets are free to use, tipping the balance in their favor for a lot of people.
The downsides? Well, we’re going to cover them in more detail when we turn to cold wallets (and why you might prefer these), but ultimately, the biggest one is security, because you’re connected to the internet, and potentially hackable as a result. Let’s look at that next by unpicking cold wallets and their advantages.
What Could A Cold Wallet Do For You? (Pros)
Cold wallets, as mentioned above, win hands down when it comes to security. They’re not connected to the Internet so you can wave goodbye to your concerns about cybercrime and hacking. The cold wallet is “cold” and stored in a physical location in your home – great if you’re worried about internet safety, and who doesn’t at least consider this these days?
Another big benefit? You don’t need to add personal info or ID to your cold wallet, so if privacy is important for you… these could definitely win your favor. Hot wallets will need some information so they can confirm you are you, and for some, that’s a privacy sacrifice they’d rather not make.
Of course, there are a few downsides here – with cost and inconvenience being big factors. If you’re prone to losing things like USBs (you are definitely not alone there), you’re possibly looking at a liability rather than an asset, and you’ve definitely got to consider the risk of damage or physical theft too. None of those are fun things!
What Should You Choose?
Let’s be honest: there’s no simple solution here that’s going to work for everyone every time. We’ve all got different habits, different contexts, and different goals with crypto – some of us are using it daily, while others hardly ever need those crucial digital keys. Some of us worry a lot about loss or physical theft, while others have their eyes on cybercrime.
Neither e-wallet is the perfect solution, so why not go for both? This might be the best option, letting you tap into the convenience factor of hot wallets, the safety factor of cold wallets, and the best of both worlds. If you put the majority of your funds in a cold wallet, tucked away somewhere secure – great. You can then have some “hot” funds ready for online purchases, dabbling in crypto games, or anything else you feel like. Those sound-like big wins in every direction, and they split your crypto up, so if you do lose some, the rest will remain safe.
For further information on managing NFT ownership, you can check out this guide by Pudgy Penguins.
