If you are starting off as an investor in the world of cryptocurrency, you may have come across the terms cold wallets and hot wallets. The first thing you should decide as an investor is where you should be storing your cryptocurrency. There are quite a few options available including online wallets as well as physical wallets.
What are hot and cold wallets?
The most important distinguishing factor between both types of wallets is internet connectivity. A cold wallet is kept completely offline and is only accessible with explicit authorization at the end of the cryptocurrency holder. Online wallets or a hot wallet can be accessed anytime. When it comes to storing your cryptocurrency, you need to balance your needs between accessibility and security to help choose the right type of wallet.
Cold Wallets
If you own a lot of cryptocurrency assets that you do not need to access frequently, using a cold wallet is the best way forward. Nothing compares to the security offered by a cold storage wallet. If you opt for a hardware wallet, it will essentially work exactly like a paper wallet but unlike normal wallets, it is completely secure. You can only access it using a secure private key which acts as a password. You cannot access your cryptocurrency cold storage wallet without it.
If you do not want to opt for the hassle of an offline Bitcoin wallet and would value convenience over security, only then should you opt for a hot wallet.
Hot Wallets
While Bitcoin cold storage might be far superior when it comes to advanced security. There are quite a few popular options when it comes to hot wallets that work safely but they do not have the same amount of protection that cold wallets can offer. Every system has a flaw, and if your hot wallet provider suffers a security breach there is not much you can do. However, you do not need access to any hardware to access your data at any time which is what makes hot wallets so popular.
Which One Should You Choose?
There is no clear-cut answer to the question as each has its advantages. However, online data breaches are at an all-time high, and there is very little you can do to protect yourself from them if you have a hot wallet. If you are someone who will be holding cryptocurrency for an extended period of time, you should definitely consider going for cold storage options.
In fact, there are cold storage options that come with companion apps to manage your cryptocurrency on the go, which brings cold wallets almost on par with hot wallets in terms of functionality.
If you are someone who is heavily concerned about security, a cold wallet would definitely be the best way forward. If you are looking for a cold storage wallet for your cryptocurrency, you should check out ELLIPAL’s offerings. They offer impeccable security features and let you keep your cryptocurrency safe from prying eyes.
1 comment
The ellipal app on my phone is not recognizing my cold wallet assets. (lite coin). keeps giving an error message. How can I repair the app as I can log into the cold wallet but it shows no assets