Choosing a Bitcoin Wallet: Hot vs Cold

CIOReviewIndia Team | Saturday, 21 November 2020, 16:47 IST

Bitcoin WalletNo Bitcoin trader is complete without a Bitcoin wallet. This tool is essential when trading Bitcoin. It functions as a storage for your Bitcoin assets. There’s a private key that’s exclusive to you and no one else. You use this key to access your Bitcoin wallet and verify transactions.

Also, you get a public key. This one helps you make purchases and get money. You share this with other Bitcoin traders when you purchase assets. You probably knew this already. If you do, then you’ll know that there are several Bitcoin wallets available. However, you’ll find that they come down to 2 groups: hot and cold wallets. So what’s the difference?

How Hot and Cold Wallets Differ

Both types of wallets serve as effective storage for your Bitcoin. The key difference is the connection to the Internet. Hot wallets are called hot because they’re connected to the Internet. What makes them risky is the fact that they’re susceptible to hacker attacks. On the other hand, they can be pretty convenient.

Mobile wallets are a great example of this. The wallet comes in the shape of an app that you install on your phone. If you want to trade face-to-face then you just whip out your phone. Additionally, if you’re looking to buy something you just get your phone out.

Web wallets are also popular hot wallets. You can access them from the comfort of your home or any other place that has an Internet connection. But what about the cold wallets?

The cold wallets are not connected to the Internet. This type of wallet is a lot safer than a hot one. That’s because you store your Bitcoin on various devices. The downside of the cold wallet is that it can only store a limited number of Bitcoin assets. Hardware and paper wallets are cold Bitcoin wallets.

You’ll come across both types of wallets online. All you need to do is find the one that suits your needs best. To get an upper hand in Bitcoin trading you can get help from a trading bot. One platform that offers this kind of service is Naturally, you’ll need to make an account. Then you’ll need to deposit the minimum amount and go over a demo lesson. Once you understand how everything works you can opt for a live session. You’ll set the bot and it will do the trading for you.

Which Ones Are Better?

The hot Bitcoin wallets are more popular than the cold ones. The prime reason is that they’re easily accessible. Most hot wallets are available for free. But you should be wary of the level of security they offer. That’s why when you’re going for a hot wallet you should go for one of the best ones.

Cold wallets are much more secure because they don’t store the private key online. For example, if you’re using a hardware wallet then your store the private key on a USB or another external device. This means that you’re practically immune to hacker attacks. It’s true that they’re not convenient but they’re a lot safer than cold ones. So which ones to pick?

If you want to play it safe, then you should go with cold wallets. However, the type of wallet you choose depends on your needs. If you want accessibility then go for a hot one, but make sure that it offers ample protection from malware and hackers.

On the other hand, if you’re looking to go safe, there are several cold wallets you can choose from. Paper wallets are some of the top Bitcoin wallets when it comes to security. That’s because you print out your private key on a piece of paper. Naturally, that key is connected to an online wallet with a public key you can use for transactions.

As mentioned before, you can also choose a hardware wallet. This one keeps your private key on an external device. The desktop wallet is another one that you’ll come across. This type of wallet keeps your private key on a computer or a laptop.

Nevertheless, there are various types of wallets online. Before you choose one make sure to weigh in the pros and cons of every potential choice.

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