What is Hot Wallet?
A hot wallet is a hardware wallet that is connected to the internet.
When you use a “hot wallet” it’s like carrying around your real wallet all the time. Anyone with an internet connection could potentially hack into your account.
In order to protect your wallet from looters and thieves, people will usually leave their wallets on a removable device that is not connected to the internet. Which brings us to cold wallets:
What is Cold Storage?
Cold storage is “cold” because it is a storage device that is not directly connected to the internet – making it much more secure.
Hot Wallet: Pros & Cons
- Quick access to your bitcoins.
- Numerous support for different devices.
- User-friendly applications make transactions simple to manage.
- Your bitcoins are under constant risk of attack.
- Permanently losing all your funds is possible. Damaging your device could destroy your wallet.
Cold Storage: Pros & Cons
- One of the best methods of storing large amounts of bitcoin for a long period of time.
- As it’s completely offline this provides a greater level of safety.
- Susceptible to external damage, theft and general human error.
- Not ideal for quick or regular transactions.
Having a bitcoin wallet is the best method of securing your bitcoins, but no method is 100%. In my opinion stay flexible, keep some in hot storage but most in cold storage.
Generally as a rule of thumb it’s suggested that you leave as much money in your hot wallet as you would with a real wallet. For example if you were held at gunpoint you’d only lose everything in your real wallet, but not your entire bank account.
Remember, it is no one else’s responsibility to ensure your crypto investments are kept safe!
What is the best wallet?
Here at One Month we use Trezor. Trezor is a hardware wallet on which you can store Bitcoin, ether, Dash, Zcash, Litecoin, bitcoin cash, and any ERC-20 token. It allows for 2-Factor Authentication, and if you lose your Trezor – as long as you remember your secret password you can quickly regain access to all your keys, money, history, accounts and emails. If you own or are thinking of owning cryptocurrency, you’ll want to pick up a Trezor!