What are hot and cold cryptocurrency wallets?

Storing cryptocurrencies in cryptocurrency wallets in a safe and secure manner is very necessary so that you can make sure of your money in safety. As for storing cryptocurrencies, multiple solutions are available for users to achieve this goal. For those who prefer transfers and prefer full control over secure Bitcoin storage, the use of a   "hot wallet" and a " cold wallet" is worth considering.

What are hot and cold cryptocurrency wallets to begin with?

To clarify the concept of hot wallet and cold wallet, we must first understand how they differ. As the name suggests, a hot wallet is a cryptocurrency storage address like Bitcoin, from which users can spend money at any time. This wallet is always connected to the internet directly, as it maintains an active connection to the bitcoin network .

On the other hand, a cold wallet does the exact opposite. That is, you cannot use it for normal daily expenses, but you can receive funds at any given time. The cold wallet will not connect to the Internet [directly], as it is used to store cryptocurrencies such as Bitcoin offline. If there is no connection between the Bitcoin wallet and the Internet, hackers cannot steal money from the wallet. Unlike a hot wallet that remains vulnerable to attack, which is why users should store their valuable coins in cold wallets, only use hot wallets for daily expenses until you have yourself safe.

 

Hot wallet for spending and cold wallet for storing money 

Although both wallets can be used to receive funds just fine, it is advisable to rely primarily on the hot wallet to receive funds. Once the transaction is confirmed, the funds can be transferred to the cold wallet without problems. Users often keep a small portion of each transaction in their hot wallet, to cover regular expenses. And large amounts are stored in the cold wallet, which will only be accessed during the time of need.

 

A simple way to think of the two different wallets is that a hot wallet is a lot like a checking account, meaning you use it every day, while a cold wallet is more like a savings account.

As if you are keeping 90% of your cryptocurrencies safely stored away in your cold wallet, while you have a hot wallet transferring the amount that you will spend from the cold wallet.

Cryptocurrency traders like Bitcoin consider their wallet as a way to store BTC, which is what it was designed to do in the first place. The cold wallet is the perfect solution for storing larger amounts of money. Maintaining large amounts of Bitcoin at all times will ensure that no money is lost or stolen.

In the centralized cryptocurrency law, there is no body that protects you in the event of your cryptocurrency exchange, you are the first and last responsible for the security of your cryptocurrencies. Because in cryptocurrency transactions such as Bitcoin, it is impossible to return the money without it being voluntary on the part of the recipient.

Enthusiasts and owners of cryptocurrencies will wonder why all this is in order to make cryptocurrencies in wallets safe?

Because Bitcoin theft cannot be tracked or controlled, and hackers of the world are only looking for a simple loophole to steal other people's money, and because everything connected to the Internet can be hacked, web wallets, any hotspots, can be accessed by hacking your computer, phone, or email and obtain Your own wallet key and transfer all your money to hacker wallets, while the enthusiasts and owners of cryptocurrencies keep their currencies in cold wallets, this means that the offline wallet device, such as LEDGER NANO S wallet, must be connected with the internet-connected wallet to complete the cryptocurrency exchange.

There is nothing inherently wrong with Bitcoin wallets on a computer or mobile device. Then again, most devices are not completely safe unless the owner takes the necessary precautions. Since most consumers are not well versed in device security, the use of alternative solutions is more than foolproof. In this particular case, that means setting up two separate Bitcoin wallets to keep the money safe.