A digital wallet, also known as a hot wallet, is another type of encrypted storage connected to the internet. Here are some key differences between hot and cold wallets.
Cold wallets are more secure . Although hot wallets can provide a high level of security, their online nature means they are vulnerable to hacking.
Hot wallets are more useful. They allow you to send and receive cryptocurrencies quickly, whereas cold wallets sacrifice speed for security.
The vast majority of hot wallets are completely free. The most common type of cold storage is a hardware wallet, which typically ranges from $50 to $150. However, since encryption keys can be stored on paper, free cold wallets can be created.
Some people prefer to keep most of their cryptocurrencies in cold wallets while using hot wallets for small and daily transactions. Given the importance of keeping cryptocurrencies safe, cold storage is a viable option worth considering.
Hardware wallets are a relatively inexpensive option, especially if you plan to invest heavily in cryptocurrencies. Those who think crypto is a good investment often use a combination of hot and cold storage to get the best of both worlds.