Crypto Wallets Hot and Cold Wallets?

Crypto Wallets Hot and Cold Wallets
When you consider joining the cryptocurrency universe, you will need to understand the concept of a cryptocurrency wallet. Simple. Just like your physical wallet that holds your bank cards and money, a crypto wallet helps you store your cryptocurrencies.

A private key in each cryptocurrency wallet, only the wallet owner can access their funds. A cryptocurrency wallet stores your purchased assets on one platform and allows you to securely trade cryptocurrencies in the wallet from anywhere in the world.

What is a Crypto Wallet?

Every crypto investor should have a cryptocurrency wallet. With the help of this, it is possible to easily manage crypto assets. As a rule, such wallets allow storing, receiving and sending cryptocurrencies via the blockchain network. These types of wallets have software or hardware to manage, store and provide private keys to their users. They can be a smartphone app, a web platform with tools, or a desktop application. Or in the form of portable hardware specifically designed to perform operations. These wallets are called 'cold and hot' wallets. Although their main purpose is the same, it is the storage of crypto assets. However, there is a very important difference between them.
What is a Hot Wallet?

Hot wallets are those that are connected to the internet. Therefore, it is more practical and convenient to use. There are a wide variety of platforms for storing cryptocurrencies online. Each competes with the versatility of its features, such as easy and fast operations, built-in exchangers and more. These types of wallets come in mobile, web and desktop versions. Thus, it provides its users with unlimited access to their funds from anywhere in the world at any time. Guarda (https://guarda.com/) is an excellent example of a hot wallet; It combines all the wallet types listed below to give you full control over your keys.

How Do Hot Wallets Work?

Hot wallets are digital wallets used to store and manage cryptocurrency typically used for transactions. They are connected to the Internet and come in various options such as online platforms, mobile wallet versions or desktop wallet versions.

When you want to send cryptocurrency, you use your private key to sign the transaction, which is broadcast to the network and confirmed by other nodes. Hot wallets are extremely convenient but less secure than cold wallets. Therefore, they require additional security measures such as encryption of the backup file and private keys to reduce risk.

Mobile Wallet
Mobile wallets are cryptocurrency wallets that can be downloaded from marketplaces Google Play and App Store. This type of wallet option will certainly suit the user for whom fast and unhindered access to their assets plays an important role. Such wallets store private keys that allow access to transactions. It is controlled only by the owners and is encrypted on the user's local device.

Web Wallet
These are wallets that users can access directly through their computer's browser. Go to the wallet page and enter your personal information to access your assets, including your username and password. Like mobile wallets, they are practical and convenient and multifunctional.

Desktop Wallet
Desktop wallets are programs that can be downloaded and installed on your computer's hard drive. Unlike web and mobile wallets, desktop wallets store user information on the computer, not the browser. In general, they are more secure than mobile and web-based cryptocurrency wallets. However, the user must be careful and protect the device from malware, viruses and other things.

Browser Extension
Browser extended wallets are a type of hot wallet that can be added as an extension to your web browser. It allows users to easily manage cryptocurrencies directly from their browser without downloading and installing additional software on their devices.

Browser extension hot wallets work by generating private and public keys, just like other hot wallets. Once a wallet has been created, it can usually be accessed using the browser extension icon in the browser toolbar. Users can view their account balances, send and receive cryptocurrency, and view transaction history through the browser.
What is a Cold Wallet?

Simply put, this wallet allows the storage of cryptocurrencies without an Internet connection. Not for nothing is this storage method considered the most reliable and safe. Increased offline protection provides reliable protection against hackers and scammers. It should be noted that offline storage makes it difficult for the user to access coins instantly. Therefore, this option is more suitable for the user who does not need to perform operations regularly.

How Do Cold Wallets Work?

Cold wallets or cold storage are physical devices that store and manage cryptocurrency offline. A cold wallet creates a private key that is stored on the device and never goes online.

To use a cold wallet, you connect it to a computer or mobile device with Internet access to initiate transactions signed with the cold wallet's private key and then broadcast them online.

Cold wallets are more secure than hot wallets, come in a variety of forms, including USB drives and paper, and are often equipped with additional security features to protect your cryptocurrency.

Hardware Wallet
This is a compact and modern way to store funds. Specially designed devices such as flash drives that can easily fit in your pocket are considered one of the most reliable ways to recover cryptocurrencies. It is also equipped with SEED emoticons and password protection, as well as no connection to most networks.

Paper Wallet
Although controversial in this technological and information age, paper is considered one of the most reliable methods of storing cryptocurrencies. More precisely, it is recorded on public and private keys. And this is a truly free method to 100% protect funds from hacker attacks.

However, you should understand that if you lose or damage the paper carrier you will lose access to your funds. That's why it's a good idea to keep your keys safe. To create a paper wallet, you need to create a public and private key for the wallet and then write them on a paper carrier.