Everyone wants to keep their money safe. Especially if you’ve worked hard for it, you would want to ensure that you do your best to safeguard it from being stolen or lost. And just like with cash, cryptocurrencies are stored in wallets to hold funds.
Cryptocurrency wallets come in two kinds—hot and cold. Hot wallets are those that are connected to the internet like Phantom and Metamask. Cold wallets are stored offline, usually through a physical flashdrive-like device such as a Ledger or Trezor.
Both come with their own pros and cons. Hot wallets are easier to use and more convenient because they can be accessed from any device with an internet connection. This makes them better for transacting, especially if you do it often, since it allows you to easily send and receive crypto. However, because they are connected to the internet, they are more vulnerable to hacking and cyber attacks. They also store your private keys online, which could potentially be accessed by unauthorized parties that steal your funds, making them less secure.
On the other hand, cold wallets are much more secure as they store your private keys offline, which cannot be accessed by hackers. Having your funds stored on a physical device instead of on the internet also makes it less vulnerable to cyber attacks. However, these security measures make the wallet inconvenient, since funds can only be accessed from the specific hardware wallet you stored the funds in. They are also not that good for transacting as they require you to manually transfer cryptocurrency to a hot wallet or exchange to make a transaction.
And while there isn’t one correct way on how to store funds, it is important to be aware of how we can keep each of these wallets safe to avoid being hacked and losing money.
If you’re interested in hot wallets, here are some tips on how to keep your hot wallet safe:
For those interested in cold wallets, here are some tips on how to keep your cold wallet safe:
Other general rules of thumb are to not store large amounts (or all) of your cryptocurrency in a single wallet. Most people would also recommend using a cold wallet if possible, as they are considered the most secure way to store cryptocurrency.
Again, it is up to your discretion if you would prefer using a hot wallet, cold wallet, or both. What is important is that you take the necessary precautions needed in using each to ensure you keep your funds safe.
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