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Cold and hot cryptocurrency wallets: what to choose?
Today, the protection of cryptocurrency assets is the most pressing problem for all users. This is due to the fact that fraudsters come up with more and more sophisticated methods of how to steal your savings every time. In this article, we will look at how cold and hot cryptocurrency wallets differ from each other, as well as in which of them and under what circumstances it is better to store your coins.
- COLD CRYPTOCURRENCY WALLETS: FEATURES
Cold cryptocurrency wallets are a way to store money offline. They can include any funds that are not tied to the network.
Paper cryptocurrency wallets. This method of storing cryptocurrencies is considered by many to be the safest, because not only is it not in contact with the Internet, but it has nothing to do with any digital devices at all. The solution is as follows: a secret key is generated for you via a special service, which you print or simply write down by hand. Then this piece of paper is laminated and hidden in a safe place.
Fragmented keys. This method of storing funds is appropriate for a group of people who make financial decisions together, such as small businesses, family contracts, etc. It consists in the fact that the generated key is divided into several fragments, depending on the number of persons involved, and is distributed among them. Accordingly, if one element of the key is stolen, the security of funds is still preserved.
USB-purses. They are the most innovative storage devices available to ordinary users. Such wallets are portable devices that are connected to a PC through a USB port. Their memory stores private keys, which cannot be extracted. To make a transfer, you need to connect the device to a computer with the Internet and press the button on the gadget itself, which generates an electronic signature.
Thus, cold storage eliminates the interaction between the wallet itself and the online network, which significantly reduces the likelihood of cryptocurrency theft.
- HOT CRYPTOCURRENCY WALLETS: FEATURES
Hot cryptocurrency wallets are programs designed to store digital coins that have a permanent connection to the Internet. The following types of them are distinguished:
Mobile applications. Such wallets are installed on smartphones and essentially work like regular online banking applications.
Online wallets. Wallets of this type are special online services where you can create your own storage addresses.
Desktop wallets. They are separate programs installed on a PC.
Representatives in each of the above categories are quite numerous, so there is a lot to choose from. It is better to read beforehand reviews about each type of wallets and choose the most reliable and checked.
- COLD AND HOT CRYPTOCURRENCY WALLETS: PLUSES AND MINUSES.
Cold wallets
Pros:
A higher degree of security.
The possibility of offline storage.
Cons:
Poorly adapted for regular payments.
Can be lost along with the medium.
Require backups.
Hot wallets
Pros:
Great for regular and micropayments.
Convenient and easy to use.
Don't require physical media.
Cons:
Can be hacked.
Always connected to the Internet.
If you uninstall the program, you may lose access to the wallet forever.
Experts recommend to start cold and hot cryptocurrency wallets in a cooperative. That is, store the principal amount on cold wallets, and money for everyday expenses and transfers - on hot wallets. This will allow you to save most of your budget in case of hacking. Cold and hot cryptocurrency wallets show the greatest efficiency exactly when working together.
