Hot and Cold
Active Cryptocurrency traders use both. Big whales also. The bottom line is, what are you going to do? Hot wallets are connected to the internet while cold wallets are not. Having a hot wallet is like checking your bank status. The cold wallet is for large amounts of Cryptocurrency that you want to hold. Its more safer because the wallet is offline and hackers cant access it.
Hot wallet – Pros and Cons
Binance & Coinbase for an example are hot wallets. Your funds are being held in the website system, locked in your account. But keep in mind that the “captain of the boat” is not you. The captain, are the people having access to the account details, CEO, and etc.
- It’s free
- Easy to use
- Quick access (A lot wallets offer smartphone support)
- Hot wallets are connected to the Internet which means that your cryptocurrency is less secure (Your crypto amount could literally disappear by a system mistake or being stolen from a hacker etc.. a lot scenarios)
Cold wallet – Pros and Cons
A hardware wallet is a physical device. The prices varies between $100 – $400. Its offline and you must plug it in your computer. When you have to make a transaction the device will ask you for password and for confirmation you must click on the device button’s. Very “hacker-proof”.
- It’s Physical
- Its not quick option for fast transaction or day traders ( Example: You are outside and suddenly you want to buy or sell. Well you cant because your wallet is at home )
I’m using Ledger Nano S as a cold wallet