Crypto wallet type: Hot Wallet vs Cold Wallet

Before going any further about security, it's important to understand the types of wallets available. In general, there are two main categories in crypto asset storage, namely hot wallets and cold wallets.

Hot wallets: Practical but aggressive

A hot wallet is a digital wallet that is always connected to the internet. This type of wallet is used by most traders because of its ease of accessing assets and making quick transactions. Some typical examples of hot wallets are wallets on exchanges, such as Indodax or BN, as well as app wallets such as Metamask and Trust Wallet.

The advantage of a hot wallet is its ease of use. You can trade at any time without the need for additional equipment. However, due to being connected to the internet, hot wallets are more susceptible to hacking, malware, or data theft.

Cold wallets: maximum security, limited access

Unlike hot wallets, cold wallets are a type of wallet that is not connected to the internet. Some examples of cold wallets that are frequently used are hardware wallets, such as Ledger and Trezor, as well as paper wallets with a physical form of private key.

Cold wallets are much more secure because assets are kept in offline storage, making them less susceptible to hacking. However, using a cold wallet requires more effort, especially when it comes to accessibility. If you trade a lot, cold wallets can be even more useless than hot wallets.